1) Utility measures the
a.income a consumer receives from consuming a bundle of goods.
b.satisfaction a consumer receives from consuming a bundle of goods.
c.satisfaction a consumer places on her budget constraint.
d.All of the above are correct.
2)
Efficient production is represented by which point(s)?
a.A, B
b.A, B, D
c.A, B, C
d.C
3) The flatter the demand curve through a given point, the
a.greater the at that point.
b.smaller the at that point.
c.closer the will be to the slope of the curve.
d.greater the absolute value of the change in total revenue when there is a movement
from that point upward and to the left along the demand curve.
4) The following table shows a portion of the demand schedule for a particular good at
various levels of income.
Using the midpoint method, when income equals $5,000, what is the between $8 and
$12?
a.0.56
b.0.75
c.1.33
d.1.80
5) Table 17-1
Imagine a small town in which only two residents, Rochelle and Alec, own wells that
produce safe drinking water. Each week Rochelle and Alec work together to decide how
many gallons of water to pump. They bring the water to town and sell it at whatever
price the market will bear. To keep things simple, suppose that Rochelle and Alec 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 is shown
in the table below:
Refer to Table 17-1. If this market for water were perfectly competitive instead of
monopolistic, what price would be charged?
a.$0
b.$30
c.$40
d.$60
6) Assume that Japan and Korea can switch between producing cars and producing
airplanes at a constant rate.
Suppose Korea decides to increase its production of cars by 18. What is the opportunity
cost of this decision?
a.3 airplanes
b.6 airplanes
c.16 airplanes
d.150 airplanes
7) A tax on gasoline is an incentive that encourages people to drive smaller more
fuel-efficient cars.
a.True
b.False
8) In analyzing the gains and losses from international trade, to say that Moldova is a
small country is to say that
a.Moldova can only import goods; it cannot export goods.
b.Moldova’s choice of which goods to export and which goods to import is not based on
the principle of comparative advantage.
c.only the domestic price of a good is relevant for Moldova; the world price of a good is
irrelevant.
d.Moldova is a price taker.
9) Which of the following is not a key feature of monopolistic competition?
a.Excess capacity
b.A markup of price over marginal cost
c.Positive economic profits for firms in the long run
d.Differentiated products among firms in the market
10) Assume that Brad and Theresa can switch between producing wheat and producing
beef at a constant rate.
What is Theresa’s opportunity cost of producing one pound of beef?
a.5/6 bushel of wheat
b.6/5 bushel of wheat
c.3/5 bushel of wheat
d.5/3 bushels of wheat
11) Figure 8-18
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 largest in the market
represented by
a.S1.
b.S2.
c.S3.
d.S4.
12) Between the two ordered pairs (3, 6) and (7, 18), the slope is
a. 1/3
b.-1/3
c.3
d.-3
13) Scenario 10-1
The demand curve for gasoline slopes downward and the supply curve for gasoline
slopes upward. The production of the 1,000th gallon of gasoline entails the following:
♦ private cost of $3.10;
♦ social cost of $3.55;
♦ value to consumers of $3.70.
From the given information, it is apparent that
a.the production of gasoline involves a negative externality, so the market will produce
a smaller quantity of gasoline than is socially desirable.
b.the production of gasoline involves a negative externality, so the market will produce
a larger quantity of gasoline than is socially desirable.
c.the production of gasoline involves a positive externality, so the market will produce a
smaller quantity of gasoline than is socially desirable.
d.the production of gasoline involves a positive externality, so the market will produce a
larger quantity of gasoline than is socially desirable.
14) Point B represents an inefficient outcome for this
economy.
a.True
b.False
15) A consumer is currently spending all of her available income on two goods: music
CDs and DVDs. At her current consumption bundle, she is spending twice as much on
CDs as she is on DVDs. If the consumer has $120 of income and is consuming 10 CDs
and 2 DVDs, what is the price of a CD?
a.$4
b.$8
c.$12
d.$20
16)
An increase in price from $10 to $15 would
a.increase total revenue by $1,000.
b.decrease total revenue by $1,000.
c.increase total revenue by $500.
d.decrease total revenue by $500.
17) Which of the following statements is correct?
a.National defense and health are the two largest spending categories for the federal
government.
b.Welfare programs and highways are the two largest spending categories for state and
local governments.
c.Sales taxes and property taxes are the two most important revenue sources for state
and local governments.
d.Corporate income taxes are the largest source of revenue for the federal government.