1) If a production function shows declining marginal product of an input as the quantity
of the input increases, then the production function exhibits
a.diminishing profitability.
b.increasing returns to scale.
c.increasing marginal product.
d.decreasing marginal product.
2) If the signaling theory of education is correct,
a.education increases productivity and educated workers are paid more.
b.education increases productivity but educated workers are not paid more.
c.education does not increase productivity but educated workers earn more.
d.education does not increase productivity and educated workers do not earn more
3) Suppose that when the price rises by 20% for a particular good, the quantity
demanded of that good falls by 10%.
The for this good is equal to 2.0.
a.True
b.False
4) A regional lobster management board recently proposed a five-year moratorium on
lobster fishing in the Atlantic waters south of Cape Cod based on a study of the lobster
population. Which of the following statements is not correct?
a.Lobsters are rival but not excludable.
b.The lobster population is an example of the tragedy of the commons.
c.Reducing the quota on the number of lobsters any fisher can catch would have a
protective effect on the lobster population.
d.If left unregulated, the lobster population will likely increase.
5) Most economists believe that an increase in the quantity of money results in
a.an increase in the demand for goods and services.
b.lower unemployment in the short run.
c.higher inflation in the long run.
d.All of the above are correct.
6) Edward Chamberlin argued that brand names
a.hampered market efficiency.
b.were instrumental in enhancing market efficiency.
c.were useful in enhancing market efficiency when the government enforced the use of
exclusive trademarks.
d.were likely to be more socially efficient when used in conjunction with advertising.
7) Table 13-2
At which number of workers does diminishing marginal product begin?
a.1
b.2
c.3
d.4
8) When new professors are hired, their job performance is monitored closely. If they
meet their institution’s standards, they will eventually receive tenure. After receiving
tenure, professors’ job performance is less closely monitored, and they become difficult
to fire. Tenure thus creates
a.adverse selection.
b.a Condorcet paradox.
c.a screening problem.
d.a moral hazard problem.
9) Figure 21-18
Refer to Figure 21-18. Given the budget constraint depicted in the graph, the
consumer’s optimal choice will be point
a.B.
b.C.
c.D.
d.E.
10) Table 17-18
This table shows a game played between two firms, Firm A and Firm B. In this game
each firm must decide how much output (Q) to produce: 10 units or 12 units. The profit
for each firm is given in the table as (Profit for Firm A, Profit for Firm B).
Refer to Table 17-18. The dominant strategy For Firm A is to produce
a.10 units and the dominant strategy for Firm B is to produce 10 units.
b.10 units and the dominant strategy for Firm B is to produce 12 units.
c.12 units and the dominant strategy for Firm B is to produce 10 units.
d.12 units and the dominant strategy for Firm B is to produce 12 units.
11) Consider the market for new DVDs. If DVD players became cheaper, buyers
expected DVD prices to fall next year, used DVDs became more expensive, and DVD
production technology improved, then the equilibrium price of a new DVD would
a.rise.
b.fall.
c.stay the same.
d.could rise, fall, or remain unchanged.
12) When firms focus on profit maximization, which form of wage discrimination is
least likely to occur?
a.discrimination based on race
b.discrimination in sports
c.consumer discrimination
d.discrimination based on educational attainment
13) After much consideration, you have chosen Ireland over Spain for your Study
Abroad program next year. However, the deadline for your final decision is still months
away and you may reverse this decision. Which of the following events would prompt
you to reverse this decision?
a.The marginal benefit of going to Spain increases.
b.The marginal cost of going to Spain increases.
c.The marginal benefit of going to Ireland increases.
d.The marginal cost of going to Ireland decreases.
14)
At a price of $70 per unit, sellers’ total revenue equals
a. $700.
b. $1050.
c. $1250.
d. $1400.
15) Scenario 17-1.
Assume that the countries of Irun and Urun are the only two producers of crude oil.
Further assume that both countries have entered into an agreement to maintain certain
production levels in order to maximize profits. In the world market for oil, the demand
curve is downward sloping.
Refer to Scenario 17-1. As long as the combined level of output is less than the Nash
equilibrium level, both Irun and Urun have the individual incentive to
a.hold production constant.
b.decrease production.
c.increase production.
d.increase price.
16) Assume that the government proposes a negative income tax that calculates the
taxes owed as follows: Taxes Owed = (1/3 x Income) – 10,000. If a family doesn’t earn
any income, how does the negative income tax affect it?
a.It will receive an income subsidy of $1,000.
b.It will receive an income subsidy of $3,000.
c.It will receive an income subsidy of $10,000.
d.It will not be affected at all, since the negative income tax requires a family to earn
income.
17) GATT is an example of a successful unilateral approach to achieving free trade.
a.True
b.False
18) Table 18-10
Refer to Table 18-10. This table describes the number of baseballs a manufacturer can
produce per day with different quantities of labor. Each baseball sells for $5 in a
competitive market. What is the total revenue per day that the firm will earn if it
employs five workers?
a.$500
b.$300
c.$2,200
d.$2,500
19) A survey which sought the opinion of professional economists on fourteen
propositions about economic policy found that
a.the respondents were almost equally divided on the propositions.
b.the respondents favored the propositions by a slight margin.
c.the respondents disagreed with the propositions by a slight margin.
d.there was overwhelming endorsement of the propositions among the respondents.
20) When drawing a demand curve,
a.demand is measured along the vertical axis, and price is measured along the
horizontal axis.
b.quantity demanded is measured along the vertical axis, and price is measured along
the horizontal axis.
c.price is measured along the vertical axis, and demand is measured along the
horizontal axis.
d.price is measured along the vertical axis, and quantity demanded is measured along
the horizontal axis.