1) The purchase price of capital is
a.the value of the capital to the firm.
b.always less than the rental price.
c.the price received from the flow of some capital services.
d.the price a person pays to own that factor of production indefinitely.
2) Steve borrowed some money from Summit Bank, telling the loan officer that he
intended to use the money to remodel his restaurant. After getting the loan, Steve and
his girlfriend immediately took the money and went gambling in Vegas.
a.This is an example of adverse selection since banks have difficulty selecting their
customers.
b.This example does not involve asymmetric information.
c.From the given information, Steve is the principal and Summit Bank is the agent.
d.None of the above are correct.
3) The OPEC oil cartel has difficulty maintaining high prices in the long run because
the supply of oil is more inelastic in the long run than in the short run.
a.True
b.False
4) The y-coordinate of an ordered pair specifies the
a.diagonal location of the point.
b.vertical location of the point.
c.horizontal location of the point.
d.quadrant location in which the point is located.
5) Table 16-7
A monopolistically competitive firm faces the following demand schedule for its
product. In addition, the firm has total fixed costs equal to 20.
If the firm has a constant marginal cost of $7 per unit, how many units should the firm
produce to maximize profit?
a.3 units
b.4 units
c.5 units
d.6 units
6) Which of the following illustrates the market demand curve?
a.
b.
c.
d.
7) Scenario 18-2
Gertrude Kelp owns three boats that participate in commercial fishing for fresh Pacific
salmon off the coast of Alaska. As part of her business she hires a captain and several
crew members for each boat. In the market for fresh Pacific salmon, there are thousands
of firms like Gertrude’s. While Gertrude usually catches a significant number of fish
each year, her contribution to the entire harvest of salmon is negligible relative to the
size of the market.
Refer to Scenario 18-2. Labor-market theory assumes that Gertrude’s demand for crew
members and her supply of fresh Pacific salmon result from her
a.intrinsic desire to hire crew members.
b.primary goal of maximizing profit.
c.altruistic motives to provide fresh salmon to consumers.
d.desire to strike a balance between environmental concerns and maximum profit.
8) Figure 8-12
Suppose a $3 per-unit tax is placed on this good. The loss of consumer surplus resulting
from this tax is
a.$35.
b.$45.
c.$70.
d.$80.
9) Table 22-9
Voter Type
Refer to Table 22-9. The table shows the preferences of four types of voters over four
possible outcomes: A, B, C, and D. In addition, the table shows the percentage of voters
of each type. Suppose a Borda count election is held in which each voter ranks the four
outcomes, giving 1 point to last place, 2 points to second to last, 3 points to the second
best, and 4 points to the best. In this case, which outcome would win?
a.A
b.B
c.C
d.D
10) Industrial organization is the study of
a.how labor unions organize workers in industries.
b.which managers are the most successful.
c.how industries organize for political advantage.
d.how firms’ decisions regarding prices and quantities depend on the market conditions
they face.
11) Figure 10-12
The graph, as drawn, could apply to the market for
a.fire extinguishers.
b.immunizations such as flu shots.
c.education.
d.All of the above are correct.
12) If a certain market were a monopoly, then the monopolist would maximize its profit
by producing 4,000 units of output. If, instead, that market were a duopoly, then which
of the following outcomes would be most likely if the duopolists successfully collude?
a.Each duopolist produces 4,000 units of output.
b.Each duopolist produces 1,500 units of output.
c.One duopolist produces 2,400 units of output and the other produces 1,600 units of
output.
d.One duopolist produces 3,000 units of output and the other produces 1,500 units of
output.
13) Suppose a consumer spends her income on two goods: music CDs and DVDs. The
consumer has $200 to allocate to these two goods, the price of a CD is $10, and the
price of a DVD is $20. What is the maximum number of CDs the consumer can
purchase?
a.10
b.20
c.40
d.50
14) If a good is inferior, then an increase in income will result in a(n)
a.increase in the demand for the good.
b.decrease in the demand for the good.
c.movement down and to the right along the demand curve for the good.
d.movement up and to the left along the demand curve for the good.
15) When an individual firm in a competitive market increases its production, it is
likely that the market price will fall.
a.True
b.False
16)
The for bread
a.is computed as the percentage change in quantity demanded of bread divided by the
percentage change in price of bread.
b.depends, in part, on the availability of close substitutes for bread.
c.reflects the many economic, social, and psychological forces that influence
consumers’ tastes for bread.
d.All of the above are correct.
17) Table 17-17
This table shows a game played between two firms, Firm A and Firm B. In this game
each firm must decide how much output (Q) to produce: 2 units or 3 units. The profit
for each firm is given in the table as (Profit for Firm A, Profit for Firm B).
Refer to Table 17-17. Which of the following outcomes represent the Nash equilibrium
in this game?
a.Q=2 for Firm A and Q=3 for Firm B.
b.Q=3 for Firm A and Q=2 for Firm B.
c.There is no Nash equilibrium in this game since neither player has a dominant
strategy.
d.Both a and b are correct.
18) Figure 18-12. The figure shows the relationship between the number of mechanics
hired and the number of car repairs performed per day at a car-repair shop.
Refer to Figure 18-12. What is the marginal product of the third mechanic?
19) Evaluate the following statement, “Warren Buffet is the second richest person in the
world. He doesn’t face any constraint on his ability to purchase commodities he wants.”
20) Which type of market structure has the fewest number of firms?
21) Average variable cost will decrease if _______.
22) Figure 19-6
Refer to Figure 19-6. Given demand, D1, and supply, S2, how many fewer people are
employed if a minimum wage of $8 per hour is imposed on this market as compared to
allowing wages to adjust to balance labor demand and labor supply?