1) The laws governing patents and copyrights
a.promote monopolies.
b.are intended to serve private interests, not the public’s interest.
c.have costs but not benefits.
d.eliminate the need for firms to engage in research and development.
2) The difference between a supply schedule and a supply curve is that a supply
schedule
a.incorporates demand and a supply curve does not.
b.incorporates profit and a supply curve does not.
c.can shift, but a supply curve cannot shift.
d.is a table, and a supply curve is drawn on a graph.
3) Suppose a firm in a competitive market produces and sells 150 units of output and
earns $1,800 in total revenue from the sales. If the firm increases its output to 200 units,
total revenue will be
a. $2,000.
b. $2,400.
c. $4,200.
d. We do not have enough information to answer the question.
4) The poverty line is adjusted each year to reflect changes in the
a.number of people currently on public assistance.
b.level of prices.
c.nutritional content of an “adequate” diet.
d.size of a family.
5) If the government were to intervene and set the rent for apartments in New York City
below the market rent, then we would expect, relative to the market outcome,
a.an increase in the number of people wanting to live in apartments in New York City.
b.a decrease in the number of people wanting to live in apartments in New York City.
c.an increase in the number of apartments available for rent in New York City.
d.None of the above is correct.
6) A compensating differential is
a.a difference in pay due to nonmonetary characteristics of different jobs.
b.a high wage paid by employers to entice workers to be more productive.
c.the difference between the quantity of labor supplied and the quantity of labor
demanded at the minimum wage.
d.due only to difference in the productivity of workers with different skills.
7) To measure the gains and losses from a tax on a good, economists use the tools of
a.macroeconomics.
b.welfare economics.
c.international-trade theory.
d.circular-flow analysis.
8) 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 economies of scale.
a.True
b.False
9) A macroeconomist, rather than a microeconomist, would study the effects on a
market from two firms merging.
a.True
b.False
10) Table 12-19
The tax system is
a.progressive.
b.regressive.
c.proportional.
d.lump sum.
11) Scenario 18-2
Gertrude Kelp owns three boats that participate in commercial fishing for fresh Pacific
salmon off the coast of Alaska. As part of her business she hires a captain and several
crew members for each boat. In the market for fresh Pacific salmon, there are thousands
of firms like Gertrude’s. While Gertrude usually catches a significant number of fish
each year, her contribution to the entire harvest of salmon is negligible relative to the
size of the market.
Refer to Scenario 18-2. If the price of fresh Pacific salmon were to decrease
significantly, it is most likely that Gertrude would
a.reduce her demand for crew members.
b.hire more boats.
c.become a seller in at least one factor market.
d.hire more crew members.
12) Because people can borrow when they are young, the life cycle theory would
suggest that one’s standard of living depends on
a.lifetime income rather than annual income.
b.aggregate income rather than annual personal income.
c.annual extended-family income rather than annual personal income.
d.income averaged across seasons rather than across years.
13) Drug companies are allowed to be monopolists in the drugs they discover in order
to
a.allow drug companies to charge a price that is equal to their marginal cost.
b.discourage new firms from entering the drug market.
c.allow the government to earn patent revenue.
d.None of the above is correct.
14) Use the following graph shown to fill in the table that follows.
15) Teresa faces prices of $6.00 for a unit of good X and $1.50 for a unit of good Y. At
her optimum, Teresa is willing to give up 1 unit of good X for______units of good Y.
16) Briefly describe the practice of resale price maintenance.
17) One tradeoff society faces is between efficiency and equality. Define each term. If
the U.S. government redistributes income from the rich to the poor, explain how this
action affects equality as well as efficiency in the economy.
18) Figure 15-25
If a regulator requires this firm to charge a socially optimal price, how much
deadweight loss results?
19) As a substitute for laboratory experiments, economists use evidence available
through history’s