1) If a government could successfully achieve the maximin criterion, each member of
society would have an equal income.
a.True
b.False
2) The following diagram shows a budget constraint for a particular consumer.
If the price of X is $5, what is the consumer’s income?
a.$10
b.$30
c.$150
d.$300
3) A market demand curve shows how the total quantity demanded of a good varies as
a.income varies.
b.price varies.
c.price of the nearest substitute good varies.
d.supply varies.
4) When the price of a normal good decreases,
a.both the income and substitution effects encourage the consumer to purchase more of
the good.
b.both the income and substitution effects encourage the consumer to purchase less of
the good.
c.the income effect encourages the consumer to purchase more of the good, and the
substitution effect encourages the consumer to purchase less of the good.
d.the income effect encourages the consumer to purchase less of the good, and the
substitution effect encourages the consumer to purchase more of the good.
5) Table 13-1
What is total output when 2 workers are hired?
a.15
b.45
c.75
d.120
6) Consider monopoly, monopolistic competition, and perfect competition. In which of
these three market structures does a profit-maximizing firm experience zero economic
profit?
a.perfect competition only
b.perfect competition and monopolistic competition only
c.perfect competition, monopolistic competition, and monopoly
d.The answer cannot be determined without knowing whether the market is in the long
run or short run.
7) Corrective taxes
a.encourage consumers to avoid sales taxes by shopping online.
b.are frequently used to discourage imports.
c.are less efficient than direct regulation.
d.give factory owners an economic incentive to reduce pollution.
8) When firms internalize a negative externality, the market supply curve shifts to the
left.
a.True
b.False
9) The higher the concentration ratio, the
a.more control an individual firm has to set prices.
b.more competitive the industry.
c.less competitive the industry.
d.Both a and c are correct.
10) In the United States, the earnings gap between workers with college degrees and
workers with high school degrees
a.has never been documented by reliable evidence.
b.is evident, but it has remained roughly constant over the past several years.
c.is evident, but it has diminished over the last several years.
d.is evident, and it has widened over the last several years.