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1) Which of the following is correct?
a.The word economy comes from the Greek word for rational thinker.
b.Economists study the management of scarce resources.
c.Because economists believe that people pursue their best interests, they are not
interested in how people interact.
d.All of the above are correct.
2) The amount of money that a firm pays to buy inputs is called
a.total cost.
b.variable cost.
c.marginal cost.
d.fixed cost.
3) Many kindergarten teachers have advanced education degrees, yet they have lower
average earnings than other individuals with similar education levels. A potential
explanation for the differences in earnings is that kindergarten teachers
a.have more pleasant working conditions.
b.have less pleasant working conditions.
c.work longer hours.
d.must pass certification tests.
4) A consumer chooses an optimal consumption point where the
a.marginal rate of substitution is maximized.
b.rate at which the consumer is willing to trade one good for another equals the price
ratio.
c.price ratio is minimized.
d.All of the above are correct.
5) Scenario 15-6
The concert promoters of a heavy-metal band, WeR2Loud, know that there are two
types of concert-goers: die- hard fans and casual fans. For a particular WeR2Loud
concert, there are 1,000 die-hard fans who will pay $150 for a ticket and 500 casual
fans who will pay $50 for a ticket. There are 1,500 seats available at the concert venue.
Suppose the cost of putting on the concert is $50,000, which includes the cost of the
band, lighting, security, etc.
How much additional profit can the concert promoters earn by charging each customer
their willingness to pay relative to charging a flat price of $150 per ticket?
a. $25,000
b. $50,000
c. $75,000
d. $100,000
6) Suppose the long-run supply curve for a good is upward-sloping. The upward slope
could be explained by
a.decreases in production costs resulting from more firms coming into the market.
b.a breakdown of the €free entry and exit€ feature of competition.
c.a breakdown of the €price taking€ feature of competition.
d.the fact that a resource used in the production of the good is available only in limited
quantities.
7) One hypothesis to explain the changing gap in wages between unskilled and skilled
workers in the United States is that international trade has altered the relative demands
for skilled and unskilled workers.
a.True
b.False
8) If the price of calculators increases by 15 percent and the quantity demanded per
week falls by 45 percent as a result, then the is 3.
a.True
b.False
9) In 2012, the total income of all U.S. residents was about
a.$10 billion.
b.$15 billion.
c.$10 trillion.
d.$15 trillion.
10) Figure 15-5
A profit-maximizing monopoly will charge a price of
a.P1.
b.P2.
c.P3.
d.P4.
11) The view held by Arthur Laffer and Ronald Reagan that cuts in tax rates would
encourage people to increase the quantity of labor they supplied became known as
a.California economics.
b.welfare economics.
c.supply-side economics.
d.elasticity economics.
12) In order to sell more of its product, a monopolist must
a.lobby the government for a subsidy.
b.lower its price.
c.advertise.
d.enact barriers to entry in related markets.
13) When interest income from savings is taxed, people will save
a.more to make up for what is lost in taxes.
b.the same amount as they would have without the tax.
c.less than they would without the tax.
d.None of the above is correct since the government would not tax interest on savings.
14) In a certain economy, jam and bread are produced, and the economy currently
operates on its production possibilities frontier. Which of the following events would
allow the economy to produce more jam and more bread, relative to the quantities of
those goods that are being produced now?
a.Unemployed labor is put to work producing jam and bread.
b.The economy puts its idle capital to work producing jam and bread.
c.The economy experiences economic growth.
d.All of the above are correct.
15) Suppose that a firm operating in perfectly competitive market sells 100 units of
output. Its total revenues from the sale are $500. Which of the following statements is
correct?
(i)Marginal revenue equals $5.
(ii)Average revenue equals $5.
(iii)Price equals $5.
a.(i) only
b.(iii) only
c.(i) and (ii) only
d.(i), (ii), and (iii)
