1)
Using the midpoint method, what is the price elasticity of supply between points B and
C? a. 1.67
b.1.19
c.0.84
d.0.61
2) Based on the studies of human decision making, which of the following statements is
correct?
a.Most people are not bothered by perceived unfairness as long as they receive some
compensation, even if the amount is very small.
b.Most people are very willing to change their minds.
c.Many people’s preferences are inconsistent over time.
d.All of the above are correct.
3) Almost all economists agree that local and state governments should
a.eliminate subsidies to professional sports franchises.
b.increase subsidies to professional sports franchises.
c.copy economic policy from Washington, D.C.
d.prevent companies from outsourcing work.
4) Suppose the government taxes 30 percent of the first $70,000 and 50 percent of all
income above $70,000. For a person earning $200,000, the marginal tax rate is
a.30 percent, and the average tax rate is 50 percent.
b.30 percent, and the average tax rate is 43 percent.
c.50 percent, and the average tax rate is 40 percent.
d.50 percent, and the average tax rate is 43 percent.
5) A tariff on a product makes
a.domestic sellers better off and domestic buyers worse off.
b.domestic sellers worse off and domestic buyers worse off.
c.domestic sellers better off and domestic buyers better off.
d.domestic sellers worse off and domestic buyers better off.
6) One reason we need government, even in a market economy, is that
a.there is insufficient market power in the absence of government.
b.property rights are too strong in the absence of government.
c.the invisible hand is not perfect.
d.Both a and b are correct.
7) A market structure in which there are many firms selling products that are similar but
not identical is known as
a.oligopoly.
b.monopoly.
c.monopolistic competition.
d.perfect competition.
8) If a competitive firm is currently producing a level of output at which marginal cost
exceeds marginal revenue, then
a.a one-unit increase in output will increase the firm‘s profit.
b.a one-unit decrease in output will increase the firm‘s profit.
c.total revenue exceeds total cost.
d.total cost exceeds total revenue.
9) Table 22-7
Suppose that residents of a town are asked to vote on the best way to improve the safety
of an intersection. The three choices are: a stoplight, a 4-way stop, and a 2-way stop.
The voters are divided into three groups based on their preferences.
Voter Type
Refer to Table 22-7. Based on the information in the table, which of the following
statements is true?
a.In a vote between a 2-way stop and a stoplight, stoplight wins because 40% of voters
have stoplight as their 1st choice.
b.In a vote between a 2-way stop and a 4-way stop, the 4-way stop wins getting 80% of
the total vote.
c.In a vote between a 4-way stop and a stoplight, there is a tie because each gets 40% of
the vote.
d.None of the above are true.
10) The field of industrial organization addresses how the number of firms affects
prices in a market and the efficiency of the market outcome.
a.True
b.False
11) Figure 10-8
What is the equilibrium price in this market?
a.$8
b.Between $8 and $10
c.$10
d.More than $10
12) Which of the following statements about models is correct?
a.The more details a model includes, the better the model.
b.Models assume away irrelevant details.
c.Models cannot be used to explain how the economy functions.
d.Models cannot be used to make predictions.
13) The proposition that if private parties can bargain without cost over the allocation of
resources, they can solve the problem of externalities on their own, is called
a.the Pigovian theorem.
b.a corrective tax.
c.the externality theorem.
d.the Coase theorem.
14) Both theory and history point to a close relationship between increases in
a.labor demand and increases in labor supply.
b.labor demand and decreases in real wages.
c.the productivity of labor and increases in real wages.
d.interest rates and decreases in real wages.
15) In terms of their economic effects, which of the following policies toward pollution
are most similar to one another?
a.regulation and corrective taxes
b.regulation and tradable pollution permits
c.corrective taxes and tradable pollution permits
d.All of these policies produce the same economic effects.
16)
Consider the production possibilities curve for a country that can produce sweaters,
apples (in bushels), or a combination of the two.
Which combination of points show production possibilities only achievable with
improvements in technology or increases in resources?
a.Q, R, U, and V
b.S and X
c.T and W
d.None of the above is correct.
17) The statement that “coal miners are paid more than workers with similar levels of
education” is likely to reflect the fact that
a.coal mining is a declining industry.
b.coal mining jobs are potentially more dangerous than jobs with comparable education
requirements.
c.all coal mines use nonunion labor.
d.coal imports are rising.
18) Which of the following would shift the supply of Packers football jerseys to the
right?
a.The Packers make it to the Super Bowl.
b.The price of the jerseys increases by $15.
c.The cost to distribute the jerseys increases.
d.The cost of the fabric used to make the jerseys decreases.