1) Table 10-3
Taking into account private and external costs, the maximum total surplus that can be
achieved in this market is
a.$18.
b.$38.
c.$46.
d.$55.
2) A yard sale is an example of a market.
a.True
b.False
3) Which of the following conditions is characteristic of a monopolistically competitive
firm in long-run equilibrium?
a.P > MR and P = MC
b.ATC = demand and MR = MC
c.P < MC and demand = ATC
d.P > ATC and demand > MR
4) When a country is on the downward-sloping side of the Laffer curves, a cut in the tax
rate will
a.decrease tax revenue and decrease the deadweight loss.
b.decrease tax revenue and increase the deadweight loss.
c.increase tax revenue and decrease the deadweight loss.
d.increase tax revenue and increase the deadweight loss.
5) Table 12-17
The following table shows the marginal tax rates for unmarried individuals for two
years.
20092010
Which of the following best describes the tax schedule in 2009?
a.proportional tax
b.progressive tax
c.regressive tax
d.vertical tax
6) In the country of Freedonia, men and women have the same level of education and
choose different forms of work in the same proportions. The only real difference is that
men typically stay home to raise young children, returning to the work force after their
children enter elementary school. If no discrimination exists, then we would expect that,
on average,
a.women would earn less than men.
b.women would earn more than men.
c.men and women would earn the same wage.
d.wage differences between men and women would be due to differences in beauty.
7) Tiffany is a black 21-year-old female, and Danielle is a black 41-year-old female.
Both Tiffany and Danielle were accounting majors, and they graduated from the same
college with the same GPA – Tiffany in 2013 and Danielle in 1992. Tiffany and Danielle
are both auditors at the same accounting firm. Tiffany earns $63,000 a year, and
Danielle earns $95,000 a year. Select the best explanation for this wage difference.
a.Tiffany has more human capital than Danielle.
b.Tiffany has less human capital than Danielle.
c.Tiffany has been discriminated against because she is young.
d.Danielle has been discriminated against because she is old.
8) Countries that restrict foreign trade are likely to
a.forgo the additional surplus that trade allows, but will probably enjoy economies of
scale.
b.forgo the additional surplus that trade allows, but will be compensated by a higher
rate of technological change.
c.forgo the additional surplus that trade allows, but will have a lower rate of
unemployment.
d.have more firms with domestic market power.
9) A production possibilities frontier shifts outward when
a.the economy experiences economic growth.
b.the desires of the economy’s citizens change.
c.at least one of the basic principles of economics is violated.
d.opportunity costs are lessened.
10) Karen, Tara, and Chelsea each buy ice cream and paperback novels to enjoy on hot
summer days. Ice cream costs $5 per gallon, and paperback novels cost $8 each. Karen
has a budget of $80, Tara has a budget of $60, and Chelsea has a budget of $40 to spend
on ice cream and paperback novels. Who can afford to purchase 8 gallons of ice cream
and 5 paperback novels?
a.Karen, Tara, and Chelsea
b.Karen only
c.Tara and Chelsea but not Karen
d.none of the women
11) Scenario 13-9
Ellie has been working for an engineering firm and earning an annual salary of $80,000.
She decides to open her own engineering business. Her annual expenses will include
$15,000 for office rent, $3,000 for equipment rental, $1,000 for supplies, $1,200 for
utilities, and a $35,000 salary for a secretary/bookkeeper. Ellie will cover her start-up
expenses by cashing in a $20,000 certificate of deposit on which she was earning
annual interest of $500.
Ellie’s annual accounting costs will equal
a. $55,200.
b. $75,200.
c. $80,500.
d. $165,700.
12) Figure 8-6
The vertical distance between points A and B represents a tax in the market.
When the tax is imposed in this market, buyers effectively pay what amount of the $10
tax?
a.$0
b.$4
c.$6
d.$10
13) Table 13-17
Consider the following table of long-run total cost for four different firms:
Which firm has constant returns to scale over the entire range of output?
a.Firm 1
b.Firm 2
c.Firm 3
d.Firm 4
14) Which of the following might cause the demand curve for an inferior good to shift
to the left?
a.a decrease in income
b.an increase in the price of a substitute
c.an increase in the price of a complement
d.None of the above is correct.
15) When a consumer spends less time enjoying leisure and more time working, she has
a.lower income and therefore cannot afford more consumption.
b.lower income and therefore can afford more consumption.
c.higher income and therefore cannot afford more consumption.
d.higher income and therefore can afford more consumption.