1) Figure 8-14
Which of the following combinations will minimize the deadweight loss from a tax?
a.supply 1 and demand 1
b.supply 2 and demand 2
c.supply 1 and demand 2
d.supply 2 and demand 1
2) Tax incidence refers to
a.what product or service the tax is levied on.
b.who bears the tax burden.
c.what sector of the economy is most affected by the tax.
d.the dollar value of the tax revenues.
3) Refer to Scenario 9-2. Suppose the world price of cardboard is $60. Then, if
Boxland goes from prohibiting international trade in cardboard to allowing international
trade in cardboard,
a.domestic producers of cardboard become better off and domestic consumers of
cardboard become better off.
b.domestic producers of cardboard become better off and domestic consumers of
cardboard become worse off.
c.domestic producers of cardboard become worse off and domestic consumers of
cardboard become better off.
d.domestic producers of cardboard become worse off and domestic consumers of
cardboard become worse off.
4) Figure 10-12
The graph, as drawn, could apply to the market for
a.automobiles.
b.aluminum.
c.industrial robots.
d.All of the above are correct.
5) When two variables move in the same direction, the curve relating them is
a.upward sloping, and we say the variables are positively related.
b.upward sloping, and we say the variables are negatively related.
c.downward sloping, and we say the variables are positively related.
d.downward sloping, and we say the variables are negatively related.
6) In the short run, a firm in a monopolistically competitive market operates much like
a
a.firm in a perfectly competitive market.
b.firm in an oligopoly.
c.monopolist.
d.monopsonist.
7) Figure 18-8
This figure below shows the labor market for automobile workers. The curve labeled S
is the labor supply curve, and the curves labeled D1 and D2 are the labor demand
curves. On the horizontal axis, L represents the quantity of labor in the market.
Refer to Figure 18-8. Which of the following events would most likely explain the
shift of the labor-demand curve from D1 to D2?
a.The price of automobiles decreased.
b.A large number of immigrants entered the automobile-worker market.
c.A technological advance increased the marginal product of automobile workers.
d.All of the above are correct.
8) When a country that exported a particular good abandons a free-trade policy and
adopts a no-trade policy,
a.producer surplus increases and total surplus increases in the market for that good.
b.producer surplus increases and total surplus decreases in the market for that good.
c.producer surplus decreases and total surplus increases in the market for that good.
d.producer surplus decreases and total surplus decreases in the market for that good.
9) The area below the demand curve and above the supply curve measures the producer
surplus in a market.
a.True
b.False
10) Among the people who are characterized below, who has the highest opportunity
cost of leisure?
a.an attorney who earns $200 per hour and who plays golf during her leisure time
b.a medical doctor who earns $210 per hour and who sleeps during his leisure time
c.a retail clerk who earns $15 per hour and who watches TV during her leisure time
d.a waiter who earns $12 per hour and who reads poetry during his leisure time
11) Table 17-6
Imagine a small town in which only two residents, Kunal and Naj, own wells that
produce safe drinking water. Each week Kunal and Naj work together to decide how
many gallons of water to pump, to bring the water to town, and to sell it at whatever
price the market will bear. Assume Kunal and Naj can pump as much water as they
want without cost so that the marginal cost of water equals zero.
The weekly town demand schedule and total revenue schedule for water are shown in
the table below.
Refer to Table 17-6. Since Kunal and Naj operate as a profit-maximizing monopoly in
the market for water, what price will they charge for water?
a.$2
b.$4
c.$6
d.$7
12) The willingness to pay is the maximum amount that a buyer will pay for a good and
measures how much the buyer values the good.
a.True
b.False
13) Efficiency
a.and equality both refer to how much a society can produce with its resources.
b.and equality both refer to how fairly the benefits from using resources are distributed
between members of a society.
c.refers to how much a society can produce with its resources. Equality refers to how
evenly the benefits from using resources are distributed among members of society.
d.refers to how evenly the benefits from using resources are distributed between
members of society. Equality refers to how much a society can produce with its
resources
14) Figure 16-10
The figure is drawn for a monopolistically-competitive firm.
As the figure is drawn, the firm is in
a.a short-run equilibrium but it is not in a long-run equilibrium.
b.a long-run equilibrium but it is not in a short-run equilibrium.
c.a short-run equilibrium as well as a long-run equilibrium.
d.neither a short-run equilibrium nor a long-run equilibrium.
15) For a particular competitive firm, the minimum value of average variable cost
(AVC) is $12 and is reached when 200 units of output are produced. For the same firm,
the minimum value of average total cost (ATC) is $15 and is reached when 230 units of
output are produced. Which of the following statements is correct?
a.In the short run, the firm will shut down if the price of its product is $14.
b.In the long run, the firm will shut down if the price of its product is $11.
c.For this firm, the minimum value of variable cost (VC) is $2,400.
d.If the firm‘s fixed cost (FC) amounts to $500, then the firm cannot earn a positive
profit unless the price of its product exceeds $16.
16) You love peanut butter. You hear on the news that 50 percent of the peanut crop in
the South has been wiped out by drought and that this will cause the price of peanuts to
double by the end of the year. As a result, your demand for peanut butter
a.will increase but not until the end of the year.
b.increases today.
c.decreases as you look for a substitute good.
d.shifts left today.
17) Before the flu season begins, Jeremy gets a flu shot. As a result, Jeremy and several
of his friends and relatives avoid the flu for the entire flu season. It would make sense
to argue that
a.flu shots provide a positive externality, and that flu shots should be subsidized.
b.if flu shots are not subsidized, then the number of people getting flu shots will be
smaller than the socially optimal number.
c.the externality generated by flu shots is more like the externality generated by
education than the externality generated by pollution.
d.All of the above are correct.