Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
If two goods are complements, their cross-price elasticity of demand is:
A) less than 0.
B) equal to 0.
C) positive but almost equal to 0.
D) greater than 0.
(Table: Marginal and Total Benefit) Look at the table Marginal and Total Benefit. Sed is
deciding how many football games he wants to attend this year. His marginal benefit
from increasing the number of games that he attends from two to three is:
A) 40.
B) 30.
C) 10.
D) 20.
Technological improvements will:
A) leave the production possibility frontier unchanged.
B) shift the production possibility frontier inward.
C) shift the production possibility frontier outward.
D) necessarily lead to increased unemployment.
The concept of the margin deals with:
A) making incremental choices.
B) all or none of something.
C) engaging in unethical activities.
D) making difficult choices.
Nancy is consuming her optimal consumption bundle of burritos and margaritas. The
marginal utility of her last burrito was 75 utils, and each burrito costs $3. Her marginal
utility of her last margarita was 100 utils. What is the price of a margarita?
A) $1
B) $2
C) $3
D) $4
If the United States removed the tariffs and quotas on sugar, in the U.S. market for
sugar:
A) consumer surplus would not change.
B) consumer surplus would decrease.
C) total surplus would decrease.
D) producer surplus would decrease.
Figure: The Time Allocation Budget Line
(Figure: The Time Allocation Budget Line) Look at the figure The Time Allocation
Budget Line. If the wage rate decreases, then the time allocation budget line will rotate
_____ along the _____ axis.
A) left; leisure
B) up; income
C) right; leisure
D) down; income
(Table: Demand for Crude Oil) Look at the table Demand for Crude Oil. Assume that
the crude oil industry is a duopoly and the marginal and fixed cost of producing crude
oil equals zero. Suppose that the two firms are maximizing industry profit and splitting
the profit evenly. If both firms engage in noncooperative behavior, the industry output
will be _____ barrels, and the price of crude oil will be _____.
A) 0; $160
B) 80; $80
C) 100; $60
D) 160; $0
If the price of chocolate-covered peanuts decreases from $2.00 to $1.55 and the
quantity demanded increases from 180 bags to 220 bags, then the price elasticity of
demand (by the midpoint method) is:
A) 0.
B) 0.5.
C) 0.8.
D) 2.
(Table: Externalities from Parks) The table Externalities from Parks shows the marginal
social benefit and the marginal social cost of preserving various amounts of land in a
city for a public park. The socially optimum amount of land dedicated to the public park
will be _____ acres.
A) 0
B) 1
C) 3
D) 9
In 2014 the poverty threshold for a household with one person was about:
A) $11,670.
B) $21,100.
C) $25,600.
D) $38,000.
Figure: The Demand for Shirts
(Figure: The Demand for Shirts) Look at the figure The Demand for Shirts. The
Demand for Shirts. At a price of $40, total revenue is:
A) $40.
B) $200.
C) $4,000.
D) $8,000.
An economy moves from autarky to free international trade. In the import sector
consumer surplus _____, producer surplus _____, and the economy as a whole _____.
A) rises; rises; gains
B) rises; falls; gains
C) falls; rises; gains
D) rises; falls; loses
A firm that faces a downward-sloping demand curve is a:
A) price setter.
B) quantity minimizer.
C) quantity taker.
D) price taker.
When a fine caterer produces 30 catered meals, its marginal cost and average variable
cost each equal $10. Therefore, assuming normally shaped cost curves, at 29 meals its
marginal cost is _____ $10 and its average variable cost is _____ $10.
A) more than; less than
B) less than; more than
C) more than; more than
D) equal to; equal to
A tax system _____ when taxes are distributed fairly.
A) is efficient
B) is equitable
C) has no deadweight loss
D) is in equilibrium
Diminishing returns are a reason:
A) the marginal cost curve is downward-sloping.
B) fixed costs remain constant.
C) the marginal cost curve is upward-sloping.
D) the average fixed cost curve is downward-sloping.
An economy is efficient when:
A) the problem of scarcity is eliminated.
B) output is distributed equitably.
C) all opportunities to make some people better off without making other people worse
off have been taken.
D) all opportunities to make some people worse off without making other people better
off have been taken.
When tradable emissions permits are used, if the demand for goods that produce
emissions shifts to the right, the equilibrium price of permits _____ and the equilibrium
quantity _____.
A) falls; increases
B) increases; stays the same
C) falls; falls
D) stays the same; increases
The long-run average cost curve will be upward-sloping when the firm has:
A) economies of scale.
B) diseconomies of scale.
C) constant returns to scale.
D) diminishing returns.
Figure: Kristin's Budget Line
(Figure: Kristin's Budget Line) Look at the figure Kristin's Budget Line. The price of a
cup of cappuccino is $3, and the price of an apple is $1. Given her income and the
prices of the two goods, Kristin can consume _____ cappuccinos and _____ apples.
A) 20; 10
B) 15; 15
C) 15; 20
D) 10; 40
If two variables are negatively related, they will always be represented by:
A) a line or curve that slopes downward.
B) a straight line.
C) a horizontal line.
D) a line or curve that slopes upward.
(Table: Demand Schedule for Gadgets) Look at the table Demand Schedule for
Gadgets. The market for gadgets consists of two producers, Margaret and Ray. Each
firm can produce gadgets with no marginal cost or fixed cost. Suppose that these two
producers have formed a cartel, agreed to split production of output evenly and are
maximizing total industry profits. If Margaret decides to cheat on the agreement and
sell 100 more gadgets but Ray continues to sell 250 gadgets, Ray's profits will be:
A) $1,400.
B) $1,250.
C) $1,000.
D) $400.
China, which is labor-abundant, has a comparative advantage in clothing production,
which is labor-intensive. Which of the following models explains this pattern of
comparative advantage?
A) the Ricardian model
B) a model of increasing returns
C) the Heckscher"Ohlin model
D) a model of autarky
(Table: The Market for Chocolate-Covered Peanuts) Look at the table The Market for
Chocolate-Covered Peanuts. The equilibrium quantity and the equilibrium price are
_____ bags and _____.
A) 140; $0.40
B) 175; $0.60
C) 175; $0.80
D) 210; $0.50
Figure: Efficiency and Pollution
(Figure: Efficiency and Pollution) Look at the figure Efficiency and Pollution. An
optimal Pigouvian tax of _____ can move this market to the socially optimal quantity of
pollution.
A) $5
B) $15
C) $25
D) $45
The provision of specific goods and services (rather than cash) to needy people by way
of welfare programs is:
A) the income effect.
B) the wealth effect.
C) in-kind benefits.
D) Rawlsian assistance.
(Table: Demand for Lenny's Coffee) Look at the table Demand for Lenny's Coffee.
Lenny's Café is the only source of coffee for hundreds of miles in any direction. If
Lenny's marginal cost of selling coffee is a constant $2, his profit-maximizing level of
output is _____ cups at _____ per cup.
A) four; $6
B) eight; $3
C) five; $5
D) three; $7
(Table: Cherry Farm) Look at the table Cherry Farm. If Hank and Helen have one of
100 farms in the perfectly competitive cherry industry and if the price is $4, in the short
run the industry will supply _____ pounds.
A) 200
B) 400
C) 600
D) 700
