1) Table 13-20
Listed in the table are the long-run total costs for three different firms.
Refer to Table 13-20. Firm C is experiencing diseconomies of scale.
a.True
b.False
2) Figure 18-7
Refer to Figure 18-7. Assume W1 = $15 and W2 = $12, and the market is always in
equilibrium. A shift of the labor supply curve from S1 to S2 would
a.increase the value of the marginal product of labor by $3.
b.decrease the value of the marginal product of labor by $3.
c.decrease the value of the marginal product of labor by more than $3.
d.not change the value of the marginal product of labor.
3) Table 14-12
Bill’s Birdhouses
What is the marginal cost of the 5th unit?
a. $55
b. $60
c. $68
d. $80
4) Pete owns a shoe-shine business. His accountant most likely includes which of the
following costs on his financial statements?
(i)shoe polish
(ii)rent on the shoe stand
(iii)wages Pete could earn delivering newspapers
(iv)interest that Pete’s money was earning before he spent his savings to set up the shoe
shine business
a.(i) only
b.(i) and (ii) only
c.(iii) and (iv) only
d.(i), (ii), (iii), and (iv)
5) Figure 18-10
Refer to Figure 18-10. Which of the following would shift of the labor demand curve
from D1 to D2?
a.technological progress
b.an increase in the price of firms’ output
c.an increase in the supply of a relevant factor of production other than labor
d.All of the above are correct.
6) In the early 20th century, streetcars in many southern cities required that white
passengers sit in the front of the car while black passengers sat in the back. The firms
that ran the streetcars were
a.in favor of the segregation laws because they lowered costs and increased profits.
b.against the segregation laws because they increased costs and lowered profits.
c.lobbied local governments to enact such laws because their customers were willing to
pay more for service in order to maintain the segregation.
d.concerned about the effects of smoking. Since blacks smoked more than whites, they
were supportive of the segregation laws.
7) Refer to Figure 18-3. What is the marginal product of the third worker?
a.2 units
b.4 units
c.4.67 units
d.14 units
8) Which of the following movements
would illustrate the effect in the market for convertible automobiles of an increase in
the price of steel?
a.Point A to Point B
b.Point C to Point B
c.Point C to Point D
d.Point A to Point D
9) Assume that Aruba and Iceland can switch between producing coolers and producing
radios at a constant rate.
Aruba should export
a.coolers and import radios.
b.radios and import coolers.
c.both goods and import neither good.
d.neither good and import both goods.
10) What percentage of millionaires in the United States are self-made?
a.about 20 percent
b.about 40 percent
c.about 60 percent
d.about 80 percent
11) The ability of an individual to own and exercise control over scarce resources is
called
a.market failure.
b.property rights.
c.externality.
d.market power.
12) Which of the following statements is not correct?
a.Reducing taxes on interest income might encourage people to save more.
b.Reducing taxes on interest income might reduce saving.
c.A price increase will create income and substitution effects that will both always work
to reduce consumption of the good.
d.Utility is maximized when the marginal rate of substitution between any two goods
equals the relative prices of the two goods.
13) Which of the following is not an example of a natural experiment an economist
might use to evaluate a theory?
a.Transit ridership increased in Atlanta following an increase in gas prices.
b.Federal tax revenue increased following a decrease in the tax rate.
c.Students in a principles of microeconomics course are asked to play a game with
classmates to determine what decisions they make under certain circumstances.
d.Following the imposition of austerity measures, the growth rate of the economy in
Greece slowed.
14) Inflation increases the value of money.
a.True
b.False
15) The cross-price elasticity of garlic salt and onion salt is -2, which indicates that
garlic salt and onion salt are substitutes.
a.True
b.False
16) Suppose that there are 175 voters in an election and that 80 of them prefer a $100
budget while the remainder prefer a $150 budget. Which of the following statements is
true?
a.The Condorcet Paradox predicts that the $100 budget will win even though fewer
people prefer that budget.
b.The median voter theorem predicts that the winning budget will be $125, the median
of the preferences of the two types of voters.
c.Arrow’s impossibility theorem says that the winning budget cannot be determined in
this election since there is no unanimity.
d.None of the above.
17) In the prisoners’ dilemma,
a.the prisoners easily collude in order to achieve the best possible payoff for both.
b.only one player has a dominant strategy.
c.when each player chooses his dominant strategy the players achieve the best joint
outcome.
d.when each player chooses his dominant strategy the players reach a Nash equilibrium.
18) Most economists believe that a family bases its spending decisions on its transitory
income.
a.True
b.False