1) A tax on insulin is likely to cause a very large deadweight loss to society.
a.True
b.False
2) Trevor’s Tire Company produced and sold 500 tires. The average cost of production
per tire was $50. Each tire sold for a price of $65. Trevor’s Tire Company’s total profits
are
a. $7,500.
b. $25,000.
c. $32,500.
d. $67,500.
3) Table 16-6
Beatrice’s Birthday Cakes is one bakery among many in the market for birthday cakes.
The following table presents cost and revenue data for birthday cakes at Beatrice’s.
When maximizing profit, what price does Beatrice’s charge for a cake?
a.$24
b.$30
c.$36
d.$42
4) A good is an inferior good if the consumer buys less of it when
a.his income rises.
b.the price of the good rises.
c.the price of a substitute good falls.
d.his income falls.
5) If a tax shifts the supply curve upward (or to the left), we can infer that the tax was
levied on
a.buyers of the good.
b.sellers of the good.
c.both buyers and sellers of the good.
d.We cannot infer anything because the shift described is not consistent with a tax.
6) We know that people tend to overuse common resources. This problem can be
viewed as an example of
a.a game in which the players succeed in reaching the cooperative outcome.
b.the prisoners’ dilemma.
c.a situation to which game theory does not apply because of a lack of strategic
thinking.
d.a situation to which game theory does not apply because of too many
decision-makers.
7) Figure 15-8
What is the monopoly price and quantity?
a.price = A; quantity = X
b.price = B; quantity = Y
c.price = B; quantity = X
d.price = C; quantity = X
8) Long-run profit earned by a monopolistically competitive firm is driven to the
competitive level due to a(n)
a.change in the technology that the firm utilizes.
b.shift of its demand curve.
c.shift of its supply curve.
d.increase in the firm’s average cost of production.
9) The Sherman Antitrust Act prohibits competing firms from even talking about fixing
prices.
a.True
b.False
10) Table 20-11
Poverty Thresholds in 2011, by Size of Family and Number of Related Children
Under 18 Years [Dollars]
Source: U. S. Bureau of the Census, Current Population Survey.
Refer to Table 20-11. What is the poverty line for a family of six with three children?
a.$29,494
b.$31,005
c.$32,181
d.$26,844
11) If the median voter theorem holds,
a.a Borda count will violate the principle of transitivity.
b.the Condorcet paradox also holds.
c.minority views will not receive much consideration.
d.All of the above are correct.
12) It is not possible for demand and supply to shift at the same time.
a.True
b.False
13) Which of the following is not a necessary condition for the Coase theorem?
a.Property rights are clearly defined.
b.There are no bargaining costs.
c.The government intervenes to internalize the externality.
d.There are only a few parties involved.
14) Assume that a 4 percent increase in income results in a 2 percent increase in the
quantity demanded of a good. The income elasticity of demand for the good is
a.negative, and the good is an inferior good.
b.negative, and the good is a normal good.
c.positive, and the good is a normal good.
d.positive, and the good is an inferior good.