1) Figure 21-18
Refer to Figure 21-18. Bundle B represents a point where
a.MRSxy > Py/Px.
b.MRSxy = Px/Py.
c.MRSxy < Px/Py.
d.MRSxy > Px/Py.
2) Technology spillover is one type of
a.negative externality.
b.positive externality.
c.subsidy.
d.producer surplus.
3) To increase living standards, public policy should
a.ensure that workers are well educated and have the necessary tools and technology.
b.make unemployment benefits more generous.
c.move workers into jobs directly from high school.
d.ensure a greater degree of equality, taking all income-earners into account.
4) If the imposition of a binding minimum wage results in much higher unemployment
among workers seeking minimum wage jobs,
a.firms will respond by demanding more labor.
b.those workers who are employed will be worse off than before the minimum wage
law.
c.labor demand is relatively elastic.
d.labor demand is relatively inelastic.
5) Table 14-9
Suppose that a firm in a competitive market faces the following revenues and costs:
If the firm‘s marginal cost is $5, it should
a.reduce fixed costs by lowering production.
b.increase production to maximize profit.
c.decrease production to maximize profit.
d.maintain its current level of production to maximize profit.
6) When employers sort employment applications into high-ability and low-ability
people based on whether or not the applicant has a college degree (irrespective of
major), they are providing evidence in support of the
a.human-capital theory of education.
b.signaling theory of education.
c.principle that education reduces marginal productivity.
d.principle that most business owners are more interested in discriminating against a
particular group than in maximizing profits.
7) A decrease in the price of a good will
a.increase demand.
b.decrease demand.
c.increase quantity demanded.
d.decrease quantity demanded.
8) For state and local governments, in 2011, sales taxes and property taxes made up
approximately
a.10 percent of all receipts.
b.22 percent of all receipts.
c.33 percent of all receipts.
d.43 percent of all receipts.
9) One of the defining characteristics of a perfectly competitive market is
a.a small number of sellers.
b.a large number of buyers and a small number of sellers.
c.a similar product.
d.significant advertising by firms to promote their products.
10) Figure 9-3. The domestic country is China.
Relative to a no-trade situation, which of the following comes with trade?
a.Consumer surplus increases by $1,800 and producer surplus increases by $1,600.
b.Consumer surplus decreases by $1,000 and producer surplus increases by $1,500.
c.Consumer surplus decreases by $1,000 and producer surplus increases by $1,750.
d.Total surplus increases by $400.
11) Economic models
a.are people who act out the behavior of firms and households so that economists can
study this behavior.
b.are usually detailed replications of reality.
c.incorporate simplifying assumptions that often contradict reality, but also help
economists better understand reality.
d.are useful to researchers but not to teachers because economic models omit many
details of the real-world economy.
12) Trade between countries
a.allows each country to consume at a point outside its production possibilities frontier.
b.limits a country’s ability to produce goods and services on its own.
c.must benefit both countries equally; otherwise, trade is not mutually beneficial.
d.can best be understood by examining the countries’ absolute advantages.
13) Assuming that all other things are equal, including the wage, which of the following
statements is correct?
a.The quantity of labor supplied for difficult jobs exceeds that for easy jobs.
b.The quantity of labor supplied for fun jobs exceeds that for dull jobs.
c.The quantity of labor supplied for dangerous jobs exceeds that for safe jobs.
d.All of the above are correct.
14)
Consider the production possibilities curve for a country that can produce sweaters,
apples (in bushels), or a combination of the two.
If this society moves from point U to point V,
a.it gives up 40 bushels of apples to get 80 sweaters.
b.it gives up 140 bushels of apples to get 80 sweaters.
c.it gives up 80 sweaters to get 140 bushels of apples.
d.it gives up 80 sweaters to get 40 bushels of apples.
15) Kara receives a promotion at work, which increases her income. We would expect
Kara’s demand for
a.each good she purchases to remain unchanged.
b.normal goods to decrease.
c.substitute goods to increase.
d.inferior goods to decrease.
16) The idea of paying workers an efficiency wage is that
a.employers will find it profitable to hire more workers.
b.workers receive wages consistent with their specific compensating differentials.
c.workers and management gain at the expense of the stockholders of the company.
d.workers have the incentive to work harder, thus increasing their marginal productivity.
17) Which of the following could decrease the labor-supply curve for teachers?
a.a decrease in the wages paid to teachers
b.an increase in immigration
c.a change in the work preferences of men, with more of them preferring to be
stay-at-home fathers
d.any factor that would decrease the labor-demand curve
18) Figure 9-4. The domestic country is Nicaragua.
With trade, Nicaragua
a.imports 150 calculators.
b.imports 250 calculators.
c.exports 100 calculators.
d.exports 250 calculators.
19) What is meant by a perfectly equal distribution of income? Use a graph to depict
such a situation.
20) Suppose the world price of coffee is $2 per pound and Brazil’s domestic price of
coffee without trade is $3 per pound. If Brazil allows free trade, will Brazil be an
importer or an exporter of coffee?
21) Economists use the term to refer to the ability to produce a good at a lower
opportunity cost than another producer.
22) Consider two groups of workers of equal skill level and experience: those who
collect garbage and those who stuff envelopes with campaign fliers. Which group is
likely to be paid more and why?
23) Figure 9-28
The following diagram shows the domestic demand and domestic supply curves in a
market.
Suppose the world price in this market is $6. If the country allows free trade, how much
is consumer surplus?
24) A highly-paid research scientist works 12 hours a day, while a common laborer
works only 5 hours a day. Offer a likely explanation, using the concept of opportunity
cost.
25) Scenario 8-3
Suppose the market demand and market supply curves are given by the equations:
Suppose that a tax of T is placed on buyers so that the demand curve becomes:
What will be the deadweight loss from this tax?
26) Suppose the supply and demand of corn both increase. As a result, what will happen
to the equilibrium price and equilibrium quantity in the market?