If the student whose marginal benefits and costs of good health are noted in this table,
how many units of good health should the student obtain in order to maximize her net
benefits of good health?
a. 2 units
b. 3 units
c. 4 units
d. 5 units
e. 6 units
When Hurricane Katrina hit the Gulf Coast of the United States in 2005 it destroyed
5,000,000 acres of timber.Given that lumber is timber that has been sawed or split into
planks and boards, explain in terms of supply and/or demand how the hurricane
impacted each of the following markets (be sure to note the expected resulting impact
on equilibrium price and quantity):
a. Domestic lumber
b. Imported lumber
c. New home construction
If a negative externality exists, __________ for the socially optimal output to be
reached.
a. supply needs to increase
b. supply needs to decrease
c. demand needs to increase
d. b and c
e. none of the above
There is demand for and supply of dollars and a demand for and supply of pesos. Under
a flexible exchange rate system, if income growth in the United States is greater than
income growth in Mexico, then
a. the demand for dollars will shift to the right and the demand for pesos will shift to the
left.
b. the demand for pesos will shift to the right and the supply of dollars will shift to the
left.
c. the demand for pesos will shift to the left and the supply of pesos will shift to the
right.
d. the supply of pesos will shift to the right and the supply of dollars will shift to the
right.
e. none of the above
Which of the following statements is true?
a. For a monopoly firm, its marginal revenue curve and demand curve share two points
in common.
b. A monopoly firm is a price taker; it takes the price government sets.
c. A firm that maximizes revenue automatically maximizes profit.
d. Maximizing revenues is the same as maximizing profits only when the firm has no
variable costs.
e. a and d
The demand for seats in 10 a.m. classes at the university is higher than the demand for
seats in 8 a.m. classes. The supply of seats is fixed. If the university can only charge a
single price and wishes to maximize the total number of seats purchased during the day,
it should set the price
a. at equilibrium for 8 a.m. classes.
b. at equilibrium for 10 a.m. classes.
c. midway between the two equilibria.
d. below either 8 a.m. or 10 a.m. equilibrium price.
If the demand for investment loans rises, this could be the result of
a. the discovery of new and better roundabout methods of production.
b. a lower rate of time preference in society.
c. a lower interest rate.
d. a higher interest rate.
e. a and c
Unlike the New York Stock Exchange, NASDAQ is an electronic stock market with
trades executed through a sophisticated computer and telecommunications network.
a. True
b. False
Suppose that the MU/P ratio for good X is the same as for good Y: 12 utils per dollar. If
the price of good X then rises to $2 from $1, a consumer who seeks to maintain
consumer equilibrium will buy more of good __________ until the marginal utility of
that good falls to __________ utils.
a. Y; 12
b. Y; 24
c. X; 12
d. Y; there is not enough information to answer this part of the question
e. X; there is not enough information to answer this part of the question
When countries engage in specialization and international trade, every individual
person in those countries will gain.
a. True
b. False
Exhibit 23-2
For the firm that faces the demand curve in the exhibit,
a. marginal revenue is constant.
b. price equals marginal revenue.
c. if the firm maximizes profits, it produces the quantity of output at which price equals
marginal cost.
d. a and c
e. a, b, and c
Exhibit 3-11
Fill in blanks (C) and (D) respectively with “Exchange” or “No Exchange” to indicate
whether or not exchange would take place at the given prices.
a. Exchange; Exchange
b. Exchange; No Exchange
c. No Exchange; Exchange
d. No Exchange; No Exchange
Maria lives next door to Alice. Alice regularly plays loud music, which often disturbs
Maria. Maria went over to Alice’s house yesterday and asked her to turn down her
music because loud music adversely affects her. Alice has complied. Which of the
following best describes the economists€ view of what has happened?
a. The marginal social benefits of loud music were greater than the marginal private
costs of loud music and the problem was solved by Maria persuading Alice to
internalize her (Maria’s) external costs.
b. The marginal social costs of loud music were greater than the marginal private costs
of loud music and the problem was solved by Maria persuading Alice to internalize her
(Maria’s) external costs.
c. The marginal social costs of loud music were greater than the marginal private costs
of loud music and the problem was solved through a reassignment of property rights.
d. The marginal social costs of loud music were greater than the marginal social
benefits of loud music and the problem was solved by Maria persuading Alice to
internalize her (Maria’s) external costs.
e. none of the above
One way to reduce the degree of income inequality is to
a. increase transfer payments going to people with low labor and asset incomes and
increase taxes on people with high labor and asset incomes.
b. decrease transfer payments going to people with low labor and asset incomes and
decrease taxes on people with high labor and asset incomes.
c. increase transfer payments going to people with low labor and asset incomes by less
than taxes are increased on the same people.
d. increase transfer payments going to people with high labor and asset incomes by
more than taxes are increased on the same people.
e. a and c