1) Table 12-20
The following table presents the total tax liability for an unmarried taxpayer under four
different tax schedules for the income levels shown.
Which tax schedules are progressive?
a.Tax Schedule A only
b.Tax Schedule A and Tax Schedule B
c.Tax Schedule A, Tax Schedule B, and Tax Schedule C
d.All four Tax Schedules are progressive.
2) If these are the only four buyers in the market, then when the price increases from
$1.00 to $1.50, the market quantity demanded
a.decreases by 1.75 units.
b.increases by 2 units.
c.decreases by 7 units.
d.decreases by 24 units.
3) Which of the following events would lead to an increase in the supply of labor?
a.The price of a firm’s product increases.
b.A country experiences an increase in immigrant labor.
c.The development of a new labor-augmenting technology.
d.All of the above are correct.
4) Which of the following conditions is characteristic of a monopolistically competitive
firm in short-run equilibrium?
a.P > ATC
b.P = ATC
c.P < ATC
d.Any of the above could be correct.
5) If the price elasticity of supply is 0.8, and price increased by 5%, quantity supplied
would
a.increase by 4%.
b.increase by 6.25%.
c.decrease by 4%.
d.decrease by 6.25%.
6) In the circular-flow diagram,
a.firms own the factors of production.
b.the factors of production are labor, land, and capital.
c.the factors of production are also called output.
d.All of the above are correct.
7) Suppose a firm is considering producing zero units of output. We call this shutting
down in the short run and exiting an industry in the long run.
a.True
b.False
8) Figure 21-5
Refer to Figure 21-5. In graph (a), what is the price of good Y relative to the price of
good X (i.e., Py/Px)?
a. 1/4
b.1/3
c.3
d.4
9) Figure 8-5
Suppose that the government imposes a tax of P3 – P1.
After the tax is levied, producer surplus is
represented by area
a.A.
b.A+B+C.
c.D+H+F.
d.F.
10) Table 22-1
Three friends — Linda, Stephanie, and Jamie — are deciding where to go together for
vacation. They all agree that they should go to one of three places: France, Greece, or
Italy. They also agree that they will have two pairwise votes to determine where to go
on vacation, with the majority determining the outcome on each vote. The first, second,
and third choices for each person are as indicated in the table below.
Refer to Table 22-1. Depending on the order of the pairwise voting,
a.the friends could go to either France, Italy, or Greece.
b.the friends could go to either France or Italy, but they will not go to Greece.
c.the friends could go to either Italy or Greece, but they will not go to France.
d.the friends could go to either France or Greece, but they will not go to Italy.
11) In 1789 the percentage of the average American’s income that went to pay taxes was
about
a.5%. Today it is about 50%.
b.5%. Today it is about 25%.
c.50%. Today it is about 33%.
d.25%. Today it is about 33%.
12) If a person chooses self-sufficiency, then she can only consume what she produces.
a.True
b.False
13) Figure 8-17
Suppose the government imposes a $1 tax in each of the four markets represented by
demand curves D1, D2, D3, and D4. The deadweight will be the smallest in the market
represented by
a.D1.
b.D2.
c.D3.
d.D4.
14) Which of the following tax systems is the most fair?
a.proportional taxes
b.regressive taxes
c.progressive taxes
d.There is no objective way to assess fairness among the three systems.
15) A college degree makes a person more productive according to
a.both the human-capital and the signaling theories of education.
b.the human-capital but not the signaling theory of education.
c.the signaling but not the human-capital theory of education.
d.neither the human-capital nor the signaling theory of education.
16) The shift from Da to Db is called
a.an increase in demand.
b.a decrease in demand.
c.a decrease in quantity demanded.
d.an increase in quantity demanded.
17) The two basic reasons why economists often appear to give conflicting advice to
policymakers are differences in
a.opinions and education.
b.opinions and values.
c.scientific judgments and education.
d.scientific judgments and values.
18) Denmark’s opportunity cost of producing 1dozen eggs is
a.5/4 pounds of ham. This is higher than Finland’s opportunity cost of producing 1dozen
eggs.
b.5/4 pounds of ham. This is lower than Finland’s opportunity cost of producing 1
dozen eggs.
c.4/5 pounds of ham. This is higher than Finland’s opportunity cost of producing 1
dozen eggs.
d.4/5 pounds of ham. This is lower than Finland’s opportunity cost of producing 1
dozen eggs.
19) Table 17-8
For a certain small town, the table shows the demand schedule for water. Assume the
marginal cost of supplying water is constant at $4 per bottle.
Refer to Table 17-8. If there were only one supplier of water, what would be the price
and quantity?
a.The price would be $7 per gallon and the quantity would be 600 gallons.
b.The price would be $6 per gallon and the quantity would be 800 gallons.
c.The price would be $5 per gallon and the quantity would be 1000 gallons.
d.The price would be $4 per gallon and the quantity would be 1200 gallons.
20) Suppose Ecuador imposes a tariff on imported bananas. If the increase in producer
surplus is $50 million, the reduction in consumer surplus is $150 million, and the
deadweight loss of the tariff is $30 million, then the tariff generates $130 million in
revenue for the government.
a.True
b.False