1) Figure 14-3
Suppose a firm operating in a competitive market has the following cost curves:
The firm will earn positive economic profit if the market price is
a.positive.
b.$6.
c.above $6.
d.There is no price at which the firm earns positive economic profits.
2) A pie chart is a way to display information regarding two variables.
a.True
b.False
3) Irrespective of whether she is at her optimum, Jenna’s valuation of coffee relative to
orange juice can be measured by
a.her marginal rate of substitution between coffee and orange juice.
b.the price of coffee relative to the price of orange juice.
c.the ratio of the quantity of coffee that she buys relative to the quantity of orange juice
that she buys.
d.the ratio of the quantity of coffee supplied in the market to the quantity of orange
juice supplied in the market.
4) The signaling theory of education maintains that workers who complete specific
levels of education signal their high productivity to potential employers.
a.True
b.False
5) The primary claim of defenders of advertising is that it
a.conveys information about firm profitability.
b.is psychological rather than informational.
c.enhances the information available to consumers.
d.reduces the elasticity of demand for a firm’s product.
6) Figure 10-9
a.most games present zero-sum alternatives.
b.it identifies the fundamental difficulty in maintaining cooperative agreements.
c.strategic decisions faced by prisoners are identical to those faced by firms engaged in
competitive agreements.
d.all interactions among firms are represented by this game.
9) When demand is perfectly inelastic, the
a.is zero, and the demand curve is vertical.
b.is zero, and the demand curve is horizontal.
c.approaches infinity, and the demand curve is vertical.
d.approaches infinity, and the demand curve is horizontal.
10) If an economy can produce more of one good without giving up any of another
good, then the economy’s current production point is inefficient.
a.True
b.False
11) Figure 21-16
Refer to Figure 21-16. The price of X is $25, the price of Y is $25, and the consumer’s
income is $100. Which point represents the consumer’s optimal choice?
a.A
b.B
c.C
d.D
12) Alfonso has noticed that increases in unemployment insurance claims are associated
with recessions, and therefore he advocates limits on unemployment insurance so as to
prevent recessions. Mary has noticed that most drug addicts once attended schools, and
therefore she advocates getting rid of schools so as to prevent drug addiction.
a.The reasoning of both Alfonso and Mary suffers from the omitted variable problem.
b.The reasoning of both Alfonso and Mary suffers from the reverse causality problem.
c.Alfonso’s reasoning suffers from the reverse causality problem, and Mary’s reasoning
suffers from the omitted variable problem.
d.Mary’s reasoning suffers from the reverse causality problem, and Alfonso’s reasoning
suffers from the omitted variable problem.
13) In the circular-flow diagram, which of the following is not a factor of production?
a.labor
b.land
c.capital
d.money
14) A group of firms that act in unison to maximize collective profits is called a
a.monopolistically competitive industry.
b.monopoly.
c.cartel.
d.Nash equilibrium market.
15) When supply is perfectly elastic, the value of the price elasticity of supply is
a.0
b.1
c.greater than 0 and less than 1
d.infinity
16) For widgets, the supply curve is the typical upward-sloping straight line, and the
demand curve is the typical downward-sloping straight line. A tax of $15 per unit is
imposed on widgets. The tax reduces the equilibrium quantity in the market by 300
units. The deadweight loss from the tax is
a. $1,750.
b. $2,250.
c. $3,000.
d. $4,500.
17) Figure 9-12
With trade allowed, this country
a.exports 400 units of the good.
b.exports 800 units of the good.
c.imports 400 units of the good.
d.exports 1,600 units of the good.
18) Suppose Jim and Tom can both produce baseball bats. If Jim’s opportunity cost of
producing baseball bats is lower than Tom’s opportunity cost of producing baseball bats,
then
a.Tom must have an absolute advantage in the production of baseball bats.
b.Jim must have an absolute advantage in the production of baseball bats.
c.Tom has a comparative advantage in the production of baseball bats.
d.Jim has a comparative advantage in the production of baseball bats.
19) Which of the following is not an example of human capital for a college economics
professor?
a.years of experience
b.a doctorate in economics
c.chalk
d.what the professor has learned from seminar courses on effective teaching methods