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1) Table 17-25
There are just two producers of a certain product. Each is considering offering
promotional discounts.
Refer to Table 17-25. The dominant strategy
a.for both firms is to offer the discount.
b.for both firms is to not offer the discount.
c.for firm A is to offer the discount. The dominant strategy for firm B is to not offer the
discount.
d.for firm A is to not offer the discount. The dominant strategy for firm B is to offer the
discount.
2) Private markets usually provide lighthouses because ship captains have the incentive
to navigate using the lighthouse and therefore will pay for the service.
a.True
b.False
3) A common theme among examples of market failure is
a.the good being provided harms society in some systematic way.
b.some item of value does not have an owner with the legal authority to control it.
c.cost-benefit analysis will show that private markets should provide the goods and
services.
d.government intervention decreases the social benefits.
4) When a country takes a multilateral approach to free trade, it
a.removes trade restrictions on its own.
b.reduces its trade restrictions while other countries do the same.
c.does not remove trade restrictions no matter what other countries do.
d.is willing to trade with multiple countries at once.
5) An ordered pair is
a.the process of checking calculations twice before placing them on a graph.
b.two numbers that can be represented by a single point on a graph.
c.two numbers that are represented by two points on a graph.
d.two points on a graph that are of equal distance from the origin.
6) An example of an explicit cost would be the wages that a business owner pays her
employees.
a.True
b.False
7) Canada's Production Possibilities FrontierMexico's Production Possibilities
Frontier
Canada has a comparative advantage in the production of
a.Good X and Mexico has a comparative advantage in the production of Good Y.
b.Good Y and Mexico has a comparative advantage in the production of Good X.
c.both goods and Mexico has a comparative advantage in the production of neither
good.
d.neither good and Mexico has a comparative advantage in the production of both
goods.
8) You and your friends eat potato chips in your bedroom. For you and your friends, the
potato chips are rival in consumption.
a.True
b.False
9) Price will rise to eliminate a surplus.
a.True
b.False
10) If the U.S. government determines that the cost of feeding an urban family of four
is $5,200 per year, then the official poverty line for a family of that type is
a.$10,400.
b.$15,600.
c.$20,800.
d.$26,000.
