1) Which of the following statements is correct?
a.If the monopolist’s marginal revenue is greater than its marginal cost, the monopolist
can increase profit by selling more units at a lower price per unit.
b.If the monopolist’s marginal revenue is greater than its marginal cost, the monopolist
can increase profit by selling fewer units at a higher price per unit.
c.When a monopolist produces where price equals the minimum of average total cost, it
earns a positive economic profit.
d.If the monopolist is earning a positive economic profit, it must be producing where
MR = MC.
2) The diagram below pertains to the demand for turkey in the United States.
All else equal, an increase in the productivity of turkey farmers would cause a move
from
a.DA to DB.
b.DB to DA.
c.x to y.
d.y to x.
3) Refer to Figure 9-22. With free trade, total surplus is
a. $30,000.
b. $66,000.
c. $96,000.
d. $120,000.
4)
Using the midpoint method, what is the price elasticity of supply between point A and
point B?
a.0.4
b.0.6
c.1.67
d.2.16
5) Consumer surplus in a market can be represented by the
a.area below the demand curve and above the price.
b.distance from the demand curve to the horizontal axis.
c.distance from the demand curve to the vertical axis.
d.area below the demand curve and above the horizontal axis.
6) A firm that practices resale price maintenance
a.has incentive to reduce competition between its retailers. Resale price maintenance
can lead to more service.
b.has incentive to reduce competition between its retailers. Resale price maintenance
cannot lead to more service.
c.has no incentive to reduce competition between its retailers. Resale price maintenance
can lead to more service.
d.has no incentive to reduce competition between its retailers. Resale price maintenance
cannot lead to more service.
7) Taxes on specific goods such as cigarettes, gasoline, and alcoholic beverages are
called
a.sales taxes.
b.excise taxes.
c.social insurance taxes.
d.consumption taxes.
8) As a result of their experiment economists Muriel Niederle and Lise Vesterlund
found that
a.women choose competitive environments more than men.
b.women and men choose competitive environments equally.
c.women choose competitive environments less than men.
d.women are just as likely as men to have high-paying corporate jobs.
9) Table 22-2
Three longtime friends-Allen, Brian, and Cody-are deciding how they will spend their
Sunday afternoon. They all agree that they should do one of three things: go to a movie,
play golf, or go to a baseball game. They also agree that they will have two pairwise
votes to determine how to spend their afternoon, 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 22-2. Which of the following statements is correct regarding the
Condorcet paradox and the results of pairwise voting by Allen, Brian, and Cody?
a.The paradox implies that pairwise voting never produces transitive preferences, and
so the voting by Allen, Brian, and Cody fails to produce transitive preferences.
b.The paradox implies that pairwise voting sometimes (but not always) produces
transitive preferences, and the voting by Allen, Brian, and Cody does produce transitive
preferences.
c.The paradox implies that pairwise voting sometimes (but not always) fails to produce
transitive preferences, and the voting by Allen, Brian, and Cody fails to produce
transitive preferences.
d.The paradox does not apply to the case at hand, because Brian’s preferences are not
individually transitive.
10) Figure 14-7
Suppose the price of the good is $175. If the firm produces and sells 515 units of
output, its total revenue is
a. $100,525. b. $90,125. c. $84,500. d. $75,250.
11) A demand curve reflects each of the following except the
a.willingness to pay of all buyers in the market.
b.value each buyer in the market places on the good.
c.highest price buyers are willing to pay for each quantity.
d.ability of buyers to obtain the quantity they desire.
12) Which theory explains the fact that some firms may choose to pay their employees
more then they would earn as determined by equilibrium in the labor market?
a.the theory of efficiency wages
b.the marginal-productivity theory
c.human-capital theory
d.signaling theory
13) Refer to Scenario 9-2. Suppose the world price of cardboard is $45. Then
Boxland’s gains from international trade
in cardboard amount to
a. $88.75.
b. $102.50.
c. $122.50.
d. $135.00.
14) Scenario 17-2.
Imagine that two oil companies, BQ and Exxoff, own adjacent oil fields. Under the
fields is a common pool of oil worth $144 million. Drilling a well to recover oil costs
$5 million per well. If each company drills one well, each will get half of the oil and
earn a $67 million profit ($72 million in revenue – $5 million in costs). Assume that
having X percent of the total wells means that a company will collect X percent of the
total revenue.
Refer to Scenario 17-2. If each firm is permitted to drill two wells at most, the firms
are in a Nash equilibrium when
a.BQ drills one well and Exxoff drills two wells.
b.BQ drills two wells and Exxoff drills one well.
c.both firms drill one well.
d.both firms drill two wells.
15) Describe how government is involved in creating a monopoly. Why might the
government create one? Give an example.
16) Figure 15-25
If this firm profit maximizes, which letter represents the quantity it will produce?
17) Figure 21-32
The figure shows three indifference curves and a budget constraint for a consumer
named Hannah. When young, Hannah works and earns income. When old, she is retired
and earns no income.
Refer to Figure 21-32. From the figure we can determine how much income Hannah
earns when young and we can determine the interest rate. Could the interest rate rise to
a level at which Hannah could afford to be at point D?
18) Suppose the for a product is 1. If a supplier wants to increase revenue, what change
should it make to price, if any?
19) Consider the markets for mobile and landline telephone service. Suppose that when
the average income of residents of Plainville is $55,000 per year, the quantity demanded
of landline telephone service is 12,500 and the quantity demanded of mobile service is
28,000. Suppose that when the price of mobile service rises from $100 to $120 per
month, the quantity demanded of landline service decreases to 11,000. Suppose also
that when the average income increases to $60,000, the quantity demanded of mobile
service increases to 33,000.
Considering the income elasticity, what type of good is mobile telephone service?