1) Which of the following industries is most likely to exhibit the characteristic of free
entry?
a.electricity
b.satellite radio
c.mineral mining
d.tennis shoes
2) A study conducted by economists Marianne Bertrand and Sendhil Mullainathan
found evidence of labor-market discrimination based on which of the following
findings?
a.Restaurant customers preferred to be waited on by white waitresses rather than black
waitresses.
b.Black basketball players earned more than white basketball players.
c.Employers were more likely to request interviews with job applicants with “white”
names such as Greg than from applicants with “black” names such as Jamal.
d.Employers were more likely to request interviews with job applicants with
“masculine” names such as Mark than from applicants with “feminine” names such as
Lisa.
3) Firms may experience diseconomies of scale when
a.they are too small to take advantage of specialization.
b.large management structures are bureaucratic and inefficient.
c.there are too few employees, and managers do not have enough to do.
d.average fixed costs begin to rise again.
4) Table 16-3
The following table shows the output produced by each of the top eight firms in four
industries as well as the total industry output for those industries.
Which industry has the highest concentration ratio?
a.Industry A
b.Industry B
c.Industry C
d.Industry D
5) The equilibrium rental income paid to the owners of capital at any point in time
equals the
a.marginal product of capital.
b.value of the marginal product of capital.
c.percentage of profits paid out to stockholders in the form of dividends.
d.equilibrium purchase price of capital.
6) Table 12-10
If Jace has $33,000 in taxable income, his average tax rate is
a. 13.7%.
b. 14.6%.
c. 15.0%.
d. 15.2%.
7) Something that induces a person to act is called
a.a trade-off.
b.a policy.
c.an incentive.
d.an opportunity cost.
8) Trade allows a country to consume outside its production possibilities frontier.
a.True
b.False
9) Table 15-6
A monopolist faces the following demand curve:
Suppose the monopolist has total fixed costs equal to $5 and a variable cost equal to $4
per unit for all units produced. What is the profit-maximizing price?
a.$6
b.$9
c.$12
d.$15
10) Figure 18-2
The figure below shows the production function for a particular firm.
Refer to Figure 18-2. Suppose the firm pays a wage equal to $160 per unit of labor and
sells its output at $10 per unit. How many units of labor should the firm hire to
maximize profit?
a.2 units
b.3 units
c.4 units
d.5 units
11) Which of the following statements is not correct?
a.If a firm discriminates by paying short workers less than tall workers, the firm may be
able to compete in the market if the firm’s customers also prefer taller workers to
shorter workers.
b.If the government passes regulations that prevent shorter workers from working in
higher paying jobs, taller workers may continue to earn higher wages than shorter
workers.
c.Government regulation that prohibits discrimination is economically necessary
because market forces support discrimination.
d.Competitive markets will eliminate discrimination in wages over time unless
customer preferences also reflect discrimination and/or government intervention
promotes discrimination.
12) Which of the following statements is not correct?
a.The poverty line is an absolute level of income set by the federal government below
which a family is considered to be in poverty.
b.The poverty line is approximately equal to three times the cost of providing an
adequate diet.
c.The poverty line is adjusted annually to reflect changes in price levels.
d.The poverty line is adjusted semiannually to reflect changes in fuel prices.
13) Suppose that the equilibrium price in the market for widgets is $5. If a law
increased the minimum legal price for widgets to $6,
a.the resulting increase in consumer surplus would be larger than any possible loss of
producer surplus.
b.the resulting increase in consumer surplus would be smaller than any possible loss of
producer surplus.
c.any possible increase in producer surplus would be larger than the loss of consumer
surplus.
d.any possible increase in producer surplus would be smaller than the loss of consumer
surplus.