Table 7.2
Inputs Required to Produce a Product Using Alternative Technologies
Refer to Table 7.2. If the hourly price of labor is $10 and the hourly price of capital is
$1, which production technology should be selected?
A) A
B) B
C) C
D) D
Figure 4.3
Figure 4.3. If the government will not allow retailers to charge less than $0.50 for a
pencil, which of the following will happen?
A) Demand must eventually increase so that the market will come into equilibrium at a
price of $0.50.
B) Supply must eventually decrease so that the market will come into equilibrium at a
price of $0.50.
C) Retailers will have an excess supply of pencils.
D) The market will be in equilibrium at a price of $0.50.
Figure 3.7
Refer to Figure 3.7. A decrease in quantity demanded is represented by movement
A) fromD2 to D1.
B) from D2 to D3.
C) along D2 from Point B to Point A.
D) alongD2 from Point B to Point C.
Table 14.1
B’s Strategy
Refer to Table 14.1. If both firms follow a maximin strategy, the equilibrium in the
game is ________.
A) (Raise Price, Don’t Raise Price)
B) (Raise Price, Raise Price)
C) (Don’t Raise Price, Raise Price)
D) (Don’t Raise Price, Don’t Raise Price)
An effective price ceiling must be set
A) above the equilibrium price.
B) below the equilibrium price.
C) at the equilibrium price.
D) either at or above the equilibrium price.
Labor is the only variable input for Elliot’s dog-walking service. His labor costs are
$300 a day and his service walks 25 dogs per day. His labor costs increase to $315.50 a
day to walk 26 dogs per day. The marginal cost of walking that 26th dog is
A) $15.50.
B) $19.50.
C) $29.50.
D) indeterminate from the information given.
Figure 2.5
Refer to Figure 2.5. The best point for society would be
A) Point C, as at this point there are approximately equal amounts of LCD and plasma
televisions being produced.
B) either Point B or Point C, as the total amount being produced at either of these points
is approximately the same.
C) at any of the labeled points, as all of the points represent an efficient allocation of
resources.
D) indeterminate from this information, as we don’t have any information about the
society’s desires.
According to ________, the redistribution of income from the rich to the poor causes an
increase in total utility because of the law of decreasing marginal utility.
A) utilitarian justice
B) distributional justice
C) legal precedent
D) the labor theory of value
According to ________, an efficient mix of public goods is produced when local
land/housing prices and taxes reflect consumer preferences.
A) Samuelson’s theory
B) the Tiebout hypothesis
C) the Theory of Public Choice
D) the Coase theorem
The largest portion of ________ comes from the individual income tax.
A) federal government revenues
B) state revenues
C) local municipality revenues
D) All of the above are correct.
If marginal cost is above average total cost, average total cost will
A) be minimized.
B) decrease.
C) increase.
D) remain constant.
There are 10 families in a neighborhood that are affected by noise pollution from a local
factory. The noise could be reduced if the company spent $5,000 on technological
improvements. The company agrees to make these improvements if the affected
families contribute the $5,000. Since there are no legal restrictions governing the
factory’s noise the negotiations fail. This outcome is an example of the
A) free rider problem.
B) drop-in-the-bucket problem.
C) Coase theorem.
D) problem that arises when property rights are not defined.
In the ________ market structure, the behavior of any given firm depends on the
behavior of the other firms in the industry.
A) perfect competition
B) monopoly
C) monopolistic competition
D) oligopoly
The principle that irrelevant detail should not be included in a model is known as
A) a fallacy.
B) ceteris paribus.
C) Ockham’s razor.
D) normative economics.
An individual earning $60,000 pays $12,000 in taxes. The marginal tax rate on any
income earned above $60,000 is 25%.
When this person earns $60,000, her average tax rate is
A) 5%.
B) 20%.
C) 25%.
D) indeterminate from this information.
Figure 3.15
Refer to Figure 3.15. A decrease in quantity supplied is represented by a movement
from
A) S2 to S1.
B) S2 toS3.
C) Point B to Point A along supply curve S2.
D) Point B to Point C along supply curve S2.
Figure 4.1
Refer to Figure 4.1. If a 10-cent-per-apple tax is levied on imported apples, the United
States will
A) import 2 million apples per day.
B) import 4 million apples per day.
C) import 6 million apples per day.
D) import 8 million apples per day.
Refer to the information provided in Figure 16.1 below to answer the questions that
follow.
Figure 16.1
Refer to Figure 16.1. To force this firm to produce the efficient level of output, the
government should impose a tax of
A) $5.00 per bag of fertilizer.
B) $10.00 per bag of fertilizer.
C) $15.00 per bag of fertilizer.
D) an amount that is indeterminate from this information.
Figure 2.5
Refer to Figure 2.5. The economy is currently at Point A. The opportunity cost of
moving from Point A to Point B is the
A) 90 LCD televisions that must be forgone to produce 20 additional plasma
televisions.
B) 30 LCD televisions that must be forgone to produce 60 additional plasma
televisions.
C) 120 LCD televisions that must be forgone to produce 40 additional plasma
televisions.
D) 30 LCD televisions that must be forgone to produce 20 additional plasma
televisions.
Figure 9.7
Refer to Figure 9.7. In which of the following price ranges will the firm continue to
operate but at a loss?
A) $5-$6
B) $6-$7
C) $7-$8
D) $8-$9
Which of the following statements is true?
A) Developing countries have a higher per capita income compared to developed
countries.
B) Developing countries have a lower infant mortality rate compared to developed
countries.
C) Developing countries have lower life expectancy compared to developed countries.
D) A larger percentage of the population live in urban areas in developing countries
compared to developed countries.
You have decided that you want to attend a costume party as Iron Man. You estimate
that it will cost $40 to assemble your costume. After spending $40 on the costume, you
realize that the additional pieces you need will cost you $25 more. The marginal cost of
completing the costume is
A) $15.
B) $25.
C) $40.
D) $65.
Papa Ray owns a pizzeria. He is more efficient at making pizza than anyone he could
hire. Does this mean that he should make all of the pizzas himself?
Amy borrowed $20,000 from her parents to open a bagel shop. She pays her parents a
5% yearly return on the money they lent her. Her other yearly fixed costs equal $9,000.
Her variable costs equal $30,000. In her first year, Amy sold 40,000 dozen at a price of
$1.50 per dozen.
Amy’s profit is
A) $0.
B) $20,000.
C) $30,000.
D) $50,000.
Public goods are ________ in consumption, and their benefits are ________.
A) rival; excludable
B) nonrival; excludable
C) nonrival; nonexcludable
D) rival; nonexcludable
An economy produces capital goods and consumer goods. This economy is operating at
a point on its production possibility frontier associated with a large amount of capital
goods and a small amount of consumer goods. This is most likely to be a
A) “poor” country because such a nation has difficulty devoting many resources to the
production of consumer goods.
B) “rich” country because such a nation can afford to sacrifice.
C) country with a free market.
D) country with a command economy.
When quantity demanded equals quantity supplied,
A) there must be no government intervention in the market.
B) the demand curve must be the same as the supply curve.
C) the market is in equilibrium.
D) all of the above
Figure 18.4
Refer to Figure 18.4. Suppose that the Lorenz curve ________. This would mean that
the distribution of income is equal.
A) was above the 45-degree line OB
B) was below the 45-degree line OB
C) was perfectly vertical
D) was the same as the 45-degree line OB
Figure 20.2
Refer to Figure 20.2. The opportunity cost of 1 ________ is 4 ________ in the United
States and 1.5 ________ in England.
A) car; trucks; trucks
B) truck; cars; cars
C) car; cars; trucks
D) truck; trucks; cars
Figure 7.4
Refer to Figure 7.4. The marginal product of the second worker is
A)
B)
C)
D)
A gas tax holiday would
A) affect the market for gasoline.
B) affect the market for air travel.
C) affect the level of congestion on roads.
D) All of the above are correct.