Figure 618
The vertical distance between points A and B represents the tax in the market.
Refer to Figure 618. The perunit burden of the tax on sellers is
a. $6.
b. $8.
c. $10.
d. $14.
Figure 219
In the following graph the xaxis shows the number of times a commuter rail train stops
at a station per hour and the yaxis shows the number of commuter rail passengers per
hour.
Commuter Rail Passengers by Frequency of Service
Refer to Figure 219. Which of the following conclusions should not be drawn from
observing this graph?
a. There is a positive correlation between the frequency of service and the number of
passengers.
b. When there are 5 stops per hour, there are approximately 200 passengers.
c. More stops per hour is associated with more passengers per hour.
d. No other factors besides the frequency of service affect the number of passengers.
Which of the following statements best captures the relationship between
microeconomics and macroeconomics?
a. For the most part, microeconomists are unconcerned with macroeconomics, and
macroeconomists are unconcerned with microeconomics.
b. Microeconomists study markets for small products, whereas macroeconomists study
markets for large products.
c. Microeconomics and macroeconomics are distinct from one another, yet they are
closely related.
d. Microeconomics is oriented toward policy studies, whereas macroeconomics is
oriented toward theoretical studies.
Figure 913
Refer to Figure 913. With trade, domestic production and domestic consumption,
respectively, are
a. 600 and 600.
b. 600 and 300.
c. 300 and 900.
d. 600 and 900.
President Bush imposed temporary tariffs on imported steel in 2002. The reasons for
this trade restriction is most consistent with the
a. nationalsecurity argument.
b. infantindustry argument.
c. unfair competition argument.
d. protectionasabargaining chipargument.
Figure 926
The diagram below illustrates the market for baseballs in the U.S.
Refer to figure 926. After opening the U.S. baseball market to international trade, total
surplus is
a. $4800.
b. $5400.
c. $6000.
d. $1200
If the government were to intervene and set the rent for apartments in New York City
below the market rent, then we would expect, relative to the market outcome,
a. an increase in the number of people wanting to live in apartments in New York City.
b. a decrease in the number of people wanting to live in apartments in New York City.
c. an increase in the number of apartments available for rent in New York City.
d. None of the above is correct.
Demand is said to be price elastic if
a. the price of the good responds substantially to changes in demand.
b. demand shifts substantially when income or the expected future price of the good
changes.
c. buyers do not respond much to changes in the price of the good.
d. buyers respond substantially to changes in the price of the good.
Following the implementation of laws requiring automobiles to have seat belts, which
of the following occurred?
a. An individual’s probability of surviving an auto accident rose.
b. There was an increase in pedestrian deaths.
c. There was an increase in automobile accidents.
d. All of the above are correct.
After a binding price floor becomes effective, a
a. smaller quantity of the good is bought and sold.
b. a larger quantity of the good is demanded.
c. a smaller quantity of the good is supplied.
d. All of the above are correct.
Figure 818
Refer to Figure 818. Suppose the government imposes a $1 tax in each of the four
markets represented by supply curves S1, S2, S3, and S4. The deadweight will be the
smallest in the market represented by
a. S1.
b. S2.
c. S3.
d. S4.
Suppose that in a particular market, the supply curve is highly elastic and the demand
curve is highly inelastic. If a tax is imposed in this market, then the
a. buyers will bear a greater burden of the tax than the sellers.
b. sellers will bear a greater burden of the tax than the buyers.
c. buyers and sellers are likely to share the burden of the tax equally.
d. buyers and sellers will not share the burden equally, but it is impossible to determine
who will bear the greater burden of the tax without more information.
Which of the following is likely to have the most price elastic demand?
a. laptop computers
b. tablets
c. Microsoft Surface tablets
d. cell phones
Table 324
Assume that England and Spain can switch between producing cheese and producing
bread at a constant rate.
Labor Hours Needed to Make 1 Unit ofNumber of Units Produced in 40 Hours
CheeseBreadCheeseBread
England 144010
Spain 48105
Refer to Table 324. The opportunity cost of 1 unit of cheese for Spain is
a. 1/2 unit of bread.
b. 2 hours of labor.
c. 2 units of bread.
d. 4 hours of labor.
Figure 413
Refer to Figure 413. If Producer A and Producer B are the only producers in the
market, then the market quantity supplied when the price is $4 is
a. 4 units.
b. 8 units.
c. 12 units.
d. 16 units.
When a country allows trade and becomes an importer of a good,
a. consumer surplus and producer surplus both increase.
b. consumer surplus and producer surplus both decrease.
c. consumer surplus increases and producer surplus decreases.
d. consumer surplus decreases and producer surplus increases.
Rick buys a 1966 Mustang for $3,000, planning to restore and sell the car. He goes on
to spend $9,000 restoring the car. At this point he can sell the car for $10,000. As an
alternative, he can spend an additional $3,000 replacing the engine. With a new engine
the car would sell for $13,000. Rick should
a. complete the repairs and sell the car for $13,000.
b. sell the car now for $10,000.
c. never try such an expensive project again.
d. be indifferent between (i) selling the car now and (ii) replacing the engine and then
selling it.
Figure 517
Refer to Figure 517. Using the midpoint method, what is the price elasticity of supply
between point B and point C?
a. 1.44
b. 1.29
c. 0.96
d. 0.69
Figure 721
Refer to Figure 721. Which area represents producer surplus when the price is P1?
a. A
b. B
c. C
d. D
Suppose the equilibrium price of a physical examination (“physical”) by a doctor is
$200, and the government imposes a price ceiling of $150 per physical. As a result of
the price ceiling, the
a. demand curve for physicals shifts to the right.
b. supply curve for physicals shifts to the left.
c. quantity demanded of physicals increases, and the quantity supplied of physicals
decreases.
d. number of physicals performed stays the same.
The use of the coordinate system allows
a. for the display of the flows of dollars, goods and services, and factors of production
in an economic system.
b. for the display of how labor and other resources are organized in the production
process.
c. for the display of two variables on a single graph.
d. for the creation of pie charts and bar graphs.
Table 325
Assume that Maya and Miguel can switch between producing mixers and producing
toasters at a constant rate.
Hours Needed to Make 1Amount Produced in 40 Hours
mixertoastermixerstoasters
Maya8558
Miguel201024
Refer to Table 325. At which of the following prices would both Maya and Miguel
gain from trade with each other?
a. 4 mixers for 7 toasters
b. 8 mixers for 10 toasters
c. 12 mixers for 18 toasters
d. Maya and Miguel could not both gain from trade with each other at any price.
Once the demand curve for a product or service is drawn, it
a. remains stable over time.
b. can shift either rightward or leftward.
c. is possible to move along the curve, but the curve will not shift.
d. tends to become steeper over time.
Suppose that quantity demand falls by 30% as a result of a 5% increase in price. The
price elasticity of demand for this good is
a. inelastic and equal to 6.
b. elastic and equal to 6.
c. inelastic and equal to 0.17.
d. elastic and equal to 0.17.
Figure 216
Refer to Figure 216. If this economy devotes all of its resources to the production of
gadgets, then it will produce
a. 0 gadgets and 100 widgets.
b. 50 gadgets and 70 widgets.
c. 100 gadgets and 0 widgets.
d. 80 gadgets and 90 widgets.
The price paid by buyers in a market will increase if the government
(i)increases a binding price floor in that market.
(ii)increases a binding price ceiling in that market.
(iii)decreases a tax on the good sold in that market.
a. (ii) only
b. (iii) only
c. (i) and (ii) only
d. (i), (ii), and (iii)
Table 65
PriceQuantity
DemandedQuantity
Supplied
$01500
$312045
$69090
$960135
$1230180
$150225
Refer to Table 65. Suppose the government imposes a price ceiling of $3 on this
market. What will be the size of the shortage in this market?
a. 0 units
b. 30 units
c. 45 units
d. 75 units
Refer to Figure 25. If this economy devotes all of its resources to the production of
dryers, then it will produce
a. 0 dryers and 100 washers.
b. 60 dryers and 50 washers.
c. 80 dryers and 0 washers.
d. 80 dryers and 50 washers.
The gains from trade are
a. evident in economic models, but seldom observed in the real world.
b. evident in the real world, but impossible to capture in economic models.
c. a result of more efficient resource allocation than would be observed in the absence
of trade.
d. based on the principle of absolute advantage.
Figure 76
Refer to Figure 76. At the equilibrium price, consumer surplus is
a. $1,600.
b. $800.
c. $1,400.
d. $700.
Table 23
Production Possibilities for Footville
ShoesSocks
8000
600400
400700
200900
01000
Refer to Table 23. What is the opportunity cost to Footville of increasing the
production of shoes from 400 to 600?
a. 400 socks
b. 300 socks
c. 200 socks
d. 100 socks
If a binding price floor is imposed on the video game market, then
a. the demand for video games will decrease.
b. the supply of video games will increase.
c. a surplus of video games will develop.
d. All of the above are correct.
A company that formerly produced music CDs went out of business because too many
potential customers bought illegallyproduced copies of the CDs instead of buying the
product directly from the company. This instance serves as an example of
a. market power.
b. inefficient trade.
c. inadequate enforcement of property rights.
d. the invisible hand at work.