1) Figure 16-9
The figure is drawn for a monopolistically-competitive firm.
The quantity of output at which the MC and ATC curves cross is the
a.efficient scale of the firm.
b.short-run equilibrium quantity of output for the firm.
c.long-run equilibrium quantity of output for the firm.
d.All of the above are correct.
2) When the government creates a monopoly, the social loss may include
a.declining marginal costs.
b.the cost of lawyers and lobbyists hired to convince lawmakers to continue the
monopoly.
c.excessive monopoly profits.
d.diminishing marginal revenue.
3) Economies of scale occur when
a.long-run average total costs rise as output increases.
b.long-run average total costs fall as output increases.
c.average fixed costs are falling.
d.average fixed costs are constant.
4) Turkey is an importer of wheat. The world price of a bushel of wheat is $7. Turkey
imposes a $3-per-bushel tariff on wheat. Turkey is a price-taker in the wheat market. As
a result of the tariff,
a.Turkish consumers of wheat become worse off and Turkish producers of wheat
become worse off.
b.Turkish consumers of wheat become worse off and Turkish producers of wheat
become better off.
c.Turkish consumers of wheat become better off and Turkish producers of wheat
become worse off.
d.Turkish consumers of wheat become better off and Turkish producers of wheat
become better off.
5) Which of the following is a commonly-cited benefit of advertising?
a.Advertising can be a signal of the quality of a product.
b.Advertising impedes competition.
c.Advertising reduces the deadweight loss associated with monopolistic competition.
d.Advertising encourages free entry, which increases profits.
6) The rule for redistribution proposed by John Rawls in his book A Theory of Justice is
called the
a.”optimal ignorance” rule.
b.libertarian justice rule.
c.maximin criterion.
d.egalitarian criterion.
7) Figure 21-5
Refer to Figure 21-5. In graph (b), if income is equal to $420, then the price of good Y
is
a. $1.
b.$3.
c.$10.
d.$30.
8) Joel has a 1966 Mustang, which he sells to Susie, an avid car collector. Susie is
pleased since she paid $8,000 for the car but would have been willing to pay $11,000
for the car. Susie’s consumer surplus is $2,000.
a.True
b.False
9) In the circular-flow diagram,
a.taxes flow from households to firms, and transfer payments flow from firms to
households.
b.income payments flow from firms to households, and sales revenue flows from
households to firms.
c.resources flow from firms to households, and goods and services flow from
households to firms.
d.inputs and outputs flow in the same direction as the flow of dollars, from firms to
households.
10) Pollution is a
a.problem that is entirely unrelated to the parable called the Tragedy of the Commons.
b.problem that cannot be remedied with regulations or corrective taxes.
c.negative externality that can be viewed as a public-goods problem.
d.negative externality that can be viewed as a common-resource problem.
11) Assuming transaction costs are small, the Coase theorem would predict that private
parties could arrive at an efficient solution for which of the following problems?
a.One neighbor doesn€t mow his lawn.
b.One neighbor doesn’t paint her house.
c.One neighbor comes home on his noisy motorcycle late at night.
d.All of the above are correct.
12) Under which of the following scenarios would a park be considered a common
resource?
a.Visitors to the park must pay an admittance fee, but there are always plenty of empty
picnic tables.
b.Visitors to the park must pay an admittance fee and frequently all of the picnic tables
are in use.
c.Visitors can enter the park free of charge and there are always plenty of empty picnic
tables.
d.Visitors can enter the park free of charge, but frequently all of the picnic tables are in
use.
13) Assume the production of a good causes a negative externality. In the market
equilibrium, the marginal consumer values the good at
a.less than the social cost of producing it.
b.less than the private cost of producing it.
c.more than the social cost of producing it.
d.more than the private cost of producing it.
14) The tendency of many people to procrastinate supports the view that people are
consistent over time.
a.True
b.False
15) Oligopolies would like to act like a
a.duopoly, but self-interest often drives them closer to the perfectly competitive
outcome.
b.competitive firm, but self-interest often drives them closer to the duopoly outcome.
c.monopoly, but self-interest often drives them to charge a higher price than would be
charged by a monopoly.
d.monopoly, but self-interest often drives them closer to the perfectly competitive
outcome.
16) Which of the following professionals is most likely to generate the income of a
superstar?
a.the best teacher
b.the best dentist
c.the best guitar player
d.the best airplane pilot
17) Japan imposes a $300 per ton tariff on imported steel, raising the price charged in
Japan to $1,000. Using only this information, which of the following statements is
correct?
a.The world price for steel is $300.
b.The world price for steel is $700.
c.The world price for steel is $1,000.
d.The world price for steel is $1,300.
18) Suppose the cost of flying a 100-seat plane for an airline is $50,000 and there are 10
empty seats on a flight. The marginal cost of flying a passenger is
a.$50.
b.$500.
c.$50,000.
d.This cannot be determined from the information given.
19) Maxine’s Production Possibilities FrontierDaisy’s Production Possibilities
Frontier