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1) Music compact discs are normal goods. What will happen to the equilibrium price
and quantity of music compact discs if musicians accept lower royalties, compact disc
players become cheaper, more firms start producing music compact discs, and music
lovers experience an increase in income?
a.Price will fall, and the effect on quantity is ambiguous.
b.Price will rise, and the effect on quantity is ambiguous.
c.Quantity will fall, and the effect on price is ambiguous.
d.Quantity will rise, and the effect on price is ambiguous.
2) Perry's Production Possibilities FrontierJordan's Production Possibilities
Frontier
d.are unrelated to the forces of supply and demand.
4) Figure 21-7
Refer to Figure 21-7. Suppose a consumer has $200 in income, the price of a book is
$5, and the price of a DVD is $10. What is the value of A?
a.40
b.20
c.10
d.2
5) Scenario 13-13
Christine is an artist who creates custom cookie jars. Her annual revenue from selling
the cookie jars is $90,000. The annual explicit costs of the materials used to make the
cookie jars are $54,000.
Christine could earn $6,000 per year preparing taxes. In calculating the economic profit
of her cookie jar business, the $6,000 that Christine gives up is counted as part of her
business's
a.total revenue.
b.explicit costs.
c.implicit costs.
d.marginal costs.
6) Which of the following statements is correct?
a.Less than three percent of families are categorized as poor for eight years or more.
b.In the United States, the grandson of a millionaire is much more likely to be rich than
the grandson of an average-income person.
c.The majority of millionaires in the United States inherited their wealth.
d.Most workers have about the same income (adjusted for inflation) when they are
young as when they are middle-aged.
7) When the production of a good results in a positive externality, the social value curve
is
a.below the demand curve, indicating that the total value to society is less than the
private benefit.
b.above the demand curve, indicating that the total value to society is greater than the
private benefit.
c.identical to the demand curve, indicating that the total cost to society is the equal to
the private benefit.
d.above the supply curve, indicating that the total cost to society exceeds the private
cost.
8) Figure 8-14
Which of the following combinations will maximize the deadweight loss from a tax?
a.supply 1 and demand 1
b.supply 2 and demand 2
c.supply 1 and demand 2
d.supply 2 and demand 1
9) Suppose Brazil has an absolute advantage over other countries in producing almonds,
but other countries have a comparative advantage over Brazil in producing almonds. If
trade in almonds is allowed, Brazil
a.will import almonds.
b.will export almonds.
c.will either import almonds or export almonds, but it is not clear from the given
information.
d.would have nothing to gain either from exporting or importing almonds.
10)
This economy cannot produce at which point(s)?
a.Q
b.Q, S
c.Q, S, T
d.S
