1) The typical firm in the US economy
a.has some degree of market power.
b.sells its product for a price that is equal to the marginal cost of producing the last unit.
c.is perfectly competitive.
d.is a monopoly.
2) Panel (a)
Panel (b)
The graphs show the demand for cigarettes. In Panel (b), the arrows are consistent with
which of the following events?
a.an increase in the price of cigarettes
b.placing a tax on cigarettes
c.the prohibition of cigarette advertisements on television
d.decreasing the price of marijuana, given that tobacco and marijuana are complements
3) Many economists believe that
a.the corporate income tax satisfies the goal of horizontal equity.
b.the corporate income tax does not distort the incentives of customers.
c.the corporate income tax is more efficient than the personal income tax.
d.workers and customers bear much of the burden of the corporate income tax.
4) Table 20-10
*A Gini coefficient is a commonly used measure of income inequality, with values
between 0 and 1 (0 corresponds to perfect equality whereby everyone has exactly the
same income, and 1 corresponds to perfect inequality where one person has all the
income, while everyone else has zero income).
Source: The World Bank
Refer to Table 20-10. Which country has the most equal income distribution?
a.Latvia
b.Italy
c.France
d.Sweden
5) One of the least regulated common resources today is
a.state parks.
b.the ocean.
c.forest preserves.
d.the Great Lakes.
6) Explicit costs
a.require an outlay of money by the firm.
b.include all of the firm’s opportunity costs.
c.include the value of the business owner’s time.
d.Both b and c are correct.
7) Profit is defined as
a.net revenue minus depreciation.
b.total revenue minus total cost.
c.average revenue minus average total cost.
d.marginal revenue minus marginal cost.
8) Relationship between Price and Restaurant Meals
A movement from point A to point B is called
a.a shift in demand.
b.a movement along the demand curve.
c.a shift in supply.
d.a movement along the supply curve.
9) Economists in the field of industrial organization study how
a.central banking policies affect financial markets.
b.firms’ demand for labor and individuals’ supply of labor affect resource markets.
c.firms’ decisions about prices and quantities depend on market conditions.
d.externalities and public goods affect the environment.
10) For a firm, strategic interactions with other firms in the market become more
important as the number of firms in the market becomes larger.
a.True
b.False
11) In constructing models, economists
a.leave out equations, since equations and models tend to contradict one another.
b.ignore the long run, since models are useful only for short-run analysis.
c.sometimes make assumptions that are contrary to features of the real world.
d.try to include every feature of the economy.
12) A key determinant of the price elasticity of supply is the
a.time horizon.
b.income of consumers.
c. .
d.importance of the good in a consumer’s budget.
13) A goal of libertarians is to provide citizens with equal opportunities rather than to
ensure equal outcomes.
a.True
b.False
14) Based on studies of human decision making, many people care more about the
fairness of a game than about their personal winnings.
a.True
b.False
15) When a tax is levied on the buyers of a good, the
a.supply curve shifts upward by the amount of the tax.
b.quantity supplied increases for all conceivable prices of the good.
c.buyers of the good will send tax payments to the government.
d.demand curve shifts to the right by the horizontal distance of the tax.
16) The diagram below pertains to the demand for turkey in the United States.
All else equal, a sale on chicken would cause a move from
a.DA to DB.
b.DB to DA.
c.x to y.
d.y to x.
17) The social cost of a monopoly is equal to its
a.economic profit.
b.fixed cost.
c.dead weight loss.
d.variable cost.