1) Refer to Figure 9-23. With free trade, the domestic price and domestic quantity
demanded are
a.$90 and 5.
b.$90 and 10.
c.$120 and 5.
d.$120 and 18.
2) Figure 21-23
Refer to Figure 21-23. When the price of X is $80, the price of Y is $20, and the
consumer’s income is $160, the consumer’s optimal choice is D. Then the price of X
decreases to $20. The income effect can be illustrated as the movement from
a.D to E.
b.D to C.
c.C to E.
d.E to D.
3) When consumers face rising gasoline prices, they typically
a.reduce their quantity demanded more in the long run than in the short run.
b.reduce their quantity demanded more in the short run than in the long run.
c.do not reduce their quantity demanded in the short run or the long run.
d.increase their quantity demanded in the short run but reduce their quantity demanded
in the long run.
4) Firms can freely enter a market
a.only when the market is a monopoly.
b.only when the market is a monopoly or monopolistically competitive.
c.only when the market is monopolistically competitive or perfectly competitive.
d.when the market is perfectly competitive, monopolistically competitive, or
monopolistic.
5) When quantity demanded responds strongly to changes in price, demand is said to be
a.fluid.
b.elastic.
c.dynamic.
d.highly variable.
6) The demand schedule below pertains to sandwiches demanded per week.
Suppose x = 1. Then the slope of the market demand curve is
a. -3.
b. -1/3.
c.1/3.
d.3
7) Hamid spends an hour studying instead of watching TV with his friends. The
opportunity cost to him of studying is
a.the improvement in his grades from studying for the hour.
b.the improvement in his grades from studying minus the enjoyment of watching TV.
c.the enjoyment he would have received if he had watched TV with his friends.
d.zero. Since Hamid chose to study rather than to watch TV, the value of studying must
have been greater to him than the value of watching TV.
8) Assume that Jamaica and Norway can switch between producing coolers and
producing radios at a constant rate. The following table shows the number of coolers or
number of radios each country can produce in one day.
At which of the following prices would both Jamaica and Norway gain from trade with
each other?
a.1 radio for 1 cooler
b.1 radio for 4 coolers
c.1 radio for 10 coolers
d.Jamaica and Norway would both gain from trade at all of the above prices.
9) Table 16-3
The following table shows the output produced by each of the top eight firms in four
industries as well as the total industry output for those industries.
Based on the concentration ratio, which industry is the least competitive?
a.Industry A
b.Industry B
c.Industry C
d.Industry D
10) Which of the following represents the firm‘s long-run condition for exiting a
market?
a.exit if P < MC
b.exit if P < FC
c.exit if P < ATC
d.exit if MR < MC
11) Figure 8-3
The vertical distance between points A and C represents a tax in the market.
The amount of deadweight loss associated with the tax is equal to
a.P3ACP1.
b.ABC.
c.P2ADP3.
d.P1DCP2.
12) Suppose Luke values a scoop of Italian gelato at $4. Leia values a scoop of Italian
gelato at $6. The pre-tax price of a scoop of Italian gelato is $2. The government
imposes a “fat tax” of $3 oneach scoop of Italian gelato, and the price rises to $5. The
deadweight loss from the tax is
a.$4, and the deadweight loss comes from both Luke and Leia.
b.$4, and the deadweight loss comes only from Luke because he does not buy gelato
after the tax.
c.$2, and the deadweight loss comes from both Luke and Leia.
d.$2, and the deadweight loss comes only from Luke because he does not buy gelato
after the tax.
13) Refer to Figure 16-2. Suppose ATC = $36 when Q = 24. Then the
a.firm is in a long-run equilibrium when it produces 24 units of output.
b.firm is in a long-run equilibrium when it produces 32 units of output.
c.best the firm can do is sustain a loss of $48.
d.best the firm can do is earn a profit of $96.
14) Table 7-1
If the price of the product is $122, then the total consumer surplus is
a. $28.
b. $41.
c. $43.
d. $405.
15) Figure 15-2
Which of the following reasons describes the fundamental barrier to entry for the
monopoly in the figure?
a.monopoly resources
b.government regulation
c.the production process
d.Both a and b are correct.
16) According to the median voter theorem, majority rule will produce an outcome that
is inconsistent with transitive preferences.
a.True
b.False
17) As a result of increasing its workforce from 9 workers to 10 workers, a firm’s total
revenue per day increases from $60,000 to $60,250 and its total cost per day increases
from $58,500 to $58,700. The marginal profit of the 10th worker is
a.-$50.
b.$50.
c.$200.
d.$250.
18) Figure 16-6
Which of the graphs shown would be consistent with a firm in a monopolistically
competitive market that is doing its best but still losing money?
a.panel a
b.panel b
c.panel c
d.panel d
19) The ocean remains one of the largest unregulated resources for each of the
following reasons except
a.many countries have access to the ocean.
b.it is difficult to get international cooperation among countries that hold different
values.
c.the oceans are so vast that enforcing any agreements would be difficult.
d.All of the above are reasons the ocean remains one of the largest unregulated
resources.