1) Figure 21-24
The figure shows three indifference curves and a budget constraint for a certain
consumer named Steve.
Refer to Figure 21-24. Steve
a.gains 1.1 pounds of pears and becomes better off by moving from point A to point B.
b.gains 1.1 pounds of pears and becomes better off by moving from point A to point C.
c.gains 1.1 pounds of pears and becomes better off by moving from point B to point C.
d.gives up 1.1 pounds of pears and becomes better off by moving from point C to point
B.
2) Welfare economics is the study of the welfare system.
a.True
b.False
3) A small island off the coast of Cape Cod contains two restaurants and two retail
stores. Tourists need to take a ferry boat to reach the island, but with a recent slowdown
in the economy, tourists are less willing to pay for the boat ride to visit the island. The
owners of the restaurants and stores on the island – Restaurants 1 and 2, and Stores A
and B – think that if tourists could ride the ferry for free, they would be happy to visit
the island, eat and shop. The business owners are considering contributing to a pool of
money that will be used to pay for roundtrip ferry service each day. The table represents
their willingness to pay, that is, the maximum amount that each business owner is
willing to contribute, per day, to pay for each ferry trip.
Suppose the cost to run the ferry for each roundtrip is $750. Then total surplus for the 4
business owners is
a.$330 if there is 1 ferry trip.
b.$370 if there are 2 ferry trips.
c.$150 if there are 3 ferry trips.
d.All of the above are correct.
4) Which supply schedules obey the law of supply?
a.Firm A’s only
b.Firm B’s, Firm C’s, and Firm D’s only
c.Firm A’s and Firm C’s only
d.Firm B’s and Firm D’s only
5) The direction of the substitution effect is not influenced by whether the good is
normal or inferior.
a.True
b.False
6) Figure 7-15
When the price rises from P1 to P2, what area represents the increase in producer
surplus?
a.A
b.A+B
c.A+B+C
d.G
7) Since the early 1970s, welfare benefits have declined,
a.which is largely due to the success of the negative income tax program.
b.which is largely due to the success of private charities.
c.yet the percentage of children living with only one parent has increased.
d.and the percentage of children living with only one parent has decreased.
8) A movie theater can increase its profits through price discrimination by charging a
higher price to adults and a lower price to children if it
a.can prevent children from buying the lower-priced tickets and selling them to adults.
b.has some degree of monopoly pricing power.
c.can easily distinguish between the two groups of customers.
d.All of the above are correct.
9) Table 12-9
United States Income Tax Rates for a Single Individual, 2012 and 2013.
Jake is a single person whose taxable income is $20,000 a year. What is his average tax
rate in 2013?
a.10%
b. 12.5%
c.15%
d.28%
10) Figure 8-1
Suppose the government imposes a tax of P’ – P”’. The tax revenue is measured by the
area
a.K+L.
b.I+Y.
c.J+K+L+M.
d.I+J+K+L+M+Y.
11) When some resources used in production are only available in limited quantities, it
is likely that the long-run supply curve in a competitive market is
a.downward sloping.
b.upward sloping.
c.horizontal.
d.vertical.
12) Most of the total income earned in the U.S. economy is ultimately paid to
a.landowners in the form of rent.
b.owners of capital in the form of interest.
c.households in the form of wages and fringe benefits.
d.households in the form of welfare, disability, and Social Security payments.
13) Figure 21-24
The figure shows three indifference curves and a budget constraint for a certain
consumer named Steve.
Refer to Figure 21-24. About what percentage of his income is Steve spending on
apples when he is at his optimum?
a.33.3 percent
b.38.2 percent
c.44.4 percent
d.56.7 percent
14) Which of the following is an illustration of the market for original paintings by
deceased artist Vincent Van Gogh?