1) Total surplus is always equal to the sum of consumer surplus and producer surplus.
a.True
b.False
2) Which of the following is an example of labor-market discrimination? You may
assume that worker A and worker B have identical characteristics except for the ones
listed. A firm offers a higher salary to worker A than worker B because worker A
a.has more education.
b.is willing to work the night shift.
c.is a man, whereas worker B is a woman.
d.has better performance reviews, indicating higher productivity.
3) A monopolistically competitive firm is currently earning a positive economic profit.
If other firms enter the market, we would expect that the added competition will cause
this firm to adjust its output such that it
a.will operate closer to its efficient scale.
b.will operate further from its efficient scale.
c.will no longer be at its efficient scale.
d.might move either closer to or further from its efficient scale.
4) Which of the following events could shift the demand curve for gasoline to the left?
a.The income of gasoline buyers rises, and gasoline is a normal good.
b.The income of gasoline buyers falls, and gasoline is an inferior good.
c.Public service announcements run on television encourage people to walk or ride
bicycles instead of driving cars.
d.The price of gasoline rises.
5) For which of the following goods is the income elasticity of demand likely lowest?
a.subscriptions to premium movie channels through the local cable television provider
b.hi-definition DVD players
c.champagne
d.housing
6) US and French Production Opportunities
The US has a comparative advantage in the production of
a.wine.
b.cheese.
c.both wine and cheese.
d.neither wine nor cheese.
7) The before-trade price of fish in Denmark is $10.00 per pound. The world price of
fish is $6.00 per pound.
Denmark is a price-taker in the fish market. If Denmark begins to allow trade in fish, its
consumers of fish will become
a.better off, its producers of fish will become better off, and on balance the citizens of
Denmark will become better off.
b.worse off, its producers of fish will become better off, and on balance the citizens of
Denmark will become worse off.
c.worse off, its producers of fish will become better off, and on balance the citizens of
Denmark will become worse off.
d.better off, its producers of fish will become worse off, and on balance the citizens of
Denmark will become better off.
8) Research into new technologies provides a
a.negative externality, and too few resources are devoted to research as a result.
b.negative externality, and too many resources are devoted to research as a result.
c.positive externality, and too few resources are devoted to research as a result.
d.positive externality, and too many resources are devoted to research as a result.
9) Figure 9-7. The figure applies to the nation of Wales and the good is cheese.
Which of the following is a valid equation for Welsh consumer surplus with trade?
a.Consumer surplus with trade = (1/2)(Q0)(P1– P0).
b.Consumer surplus with trade = (1/2)(Q0)(P3– P0).
c.Consumer surplus with trade = (1/2)(Q1)(P3– P1).
d.None of the above is correct.
10) In the circular-flow diagram, which of the following items does not flow from firms
to households?
a.goods
b.services
c.capital
d.profit
11) A tax levied on the total amount spent in retail stores is called
a.a sales tax.
b.an excise tax.
c.a retail tax.
d.an income tax.
12) At a price of $16, there is a
a.surplus of 1 unit.
b.surplus of 3 units.
c.shortage of 1 unit.
d.shortage of 3 units.
13) Table 2-5 shows one set of production possibilities. Which of the following
statements is correct?
a.The opportunity cost of a bushel of corn does not depend on how many bushels of
wheat are being produced.
b.The opportunity cost of a bushel of corn increases as more corn is produced.
c.The opportunity cost of a bushel of corn decreases as more corn is produced.
d.The opportunity cost of a bushel of wheat decreases as more wheat is produced.
14) Firms pay out a portion of their earnings in the form of interest and dividends, and
those payments are a portion of the economy’s capital income.
a.True
b.False
15) Which of the following pairs of goods includes a good that is excludable and rival
in consumption as well as a good that is excludable and not rival in consumption?
a.pizza, cable TV
b.pair of pants, clean air
c.clean air, mathematical theorem
d.basic research, fireworks display