1) What would happen to the equilibrium price and quantity of peanut butter if the price
of peanuts went up, the price of jelly fell, fewer firms decided to produce peanut butter,
and health officials announced that eating peanut butter was good for you?
a.Price will fall, and the effect on quantity is ambiguous.
b.Price will rise, and the effect on quantity is ambiguous.
c.Quantity will fall, and the effect on price is ambiguous.
d.Quantity will rise, and the effect on price is ambiguous.
2) Assume that the farmer and the rancher can switch between producing pork and
producing tomatoes at a constant rate.
Assume that the farmer and the rancher each has 24 labor hours available. If each
person spends all his time producing the good in which he has a comparative advantage
and trade takes place at a price of 1 pound of pork for 2 pounds of tomatoes, then
a.the farmer and the rancher will both gain from this trade.
b.the farmer will gain from this trade, but the rancher will not.
c.the rancher will gain from this trade, but the farmer will not.
d.neither the farmer nor the rancher will gain from this trade.
3) When a country allows trade and becomes an exporter of a good,
a.domestic producers gain and domestic consumers lose.
b.domestic producers lose and domestic consumers gain.
c.domestic producers and domestic consumers both gain.
d.domestic producers and domestic consumers both lose.
4) Table 13-4
Charles’s Math Tutoring
What is the marginal product of the third worker?
a.15 students
b.20 students
c.35 students
d.60 students
5) Nurses who work in hospitals often are required to work on weekends, whereas
nurses who work in doctors’ offices generally only work Monday through Friday.
Hospital nurses who must work on weekends are usually paid more than nurses
working in doctors’ offices for the same work even if they have the same skills and
education.
This difference in pay is attributed to
a.an efficiency wage.
b.compensating differential.
c.differences in the marginal product of labor.
d.differences in human capital.
6)
To reach point L, the economy would have to
a.acquire more resources or experience a technological advance.
b.begin using its available resources more efficiently than it is currently using them.
c.shift resources away from the production of nails and toward the production of
hammers.
d.None of the above are correct; the economy will never be able to reach point L.
7) Libertarians believe that
a.the government should choose just policies as evaluated by an impartial observer
behind a “veil of ignorance.”
b.the government should aim to maximize the well-being of the worst-off person in
society.
c.everyone in society should have equal utility.
d.the government should not redistribute income.
8) Table 15-11
The following table shows quantity, price, and marginal cost information for a
monopoly:
What level of output should the firm produce to maximize its profit?
a.2 units
b.3 units
c.4 units
d.5 units
9) The argument that each person should pay taxes according to how well the individual
can shoulder the burden is called
a.the ability-to-pay principle.
b.the equity principle.
c.the benefits principle.
d.regressive.
10) Which of the following is NOT a way of internalizing technology spillovers?
a.subsidies
b.patent protection
c.industrial policy
d.taxes