1) The task of economic regulation is to
a.protect monopoly profits.
b.approximate the results of the competitive market.
c.replace competition with government ownership.
d.increase competition within the market.
2) One drawback to industrial policy is that
a.technology spillovers are too expensive to control.
b.measuring the size of spillovers from different markets is difficult.
c.spillovers often occur in industries that produce undesirable products for society.
d.positive side effects are often outweighed by negative side effects.
3) In a market economy, who or what determines who produces each good and how
much is produced?
a.the government
b.lawyers
c.lotteries
d.prices
4) Figure 9-5
The figure illustrates the market for tricycles in a country.
With trade, producer surplus is a. $500.
b. $1,000.
c. $1,500.
d. $2,000.
5) Figure 15-11
Which area represents the deadweight loss from monopoly?
a.J
b.H
c.A+B+C+D+F+I+J+H
d.J+H
6) Table 12-9
United States Income Tax Rates for a Single Individual, 2012 and 2013.
Harry is a single person whose taxable income is $35,000 a year. What happened to his
marginal tax rate between 2012 and 2013?
a.It increased.
b.It decreased.
c.It did not change.
d.We do not have enough information to answer this question.
7) In studying oligopolistic markets, economists assume that
a.there is no conflict or tension between cooperation and self-interest.
b.it is easy for a group of firms to cooperate and thereby establish and maintain a
monopoly outcome.
c.each oligopolist cares only about its own profit.
d.strategic decisions do not play a role in such markets.
8) Robin owns a horse stables and riding academy and gives riding lessons for children
at €pony camp.€ Her business operates in a competitive industry. Robin gives riding
lessons to 20 children per month. Her monthly total revenue is $4,000. The marginal
cost of pony camp is $200 per child. In order to maximize profits, Robin should
a.give riding lessons to more than 20 children per month.
b.give riding lessons to fewer than 20 children per month.
c.continue to give riding lessons to 20 children per month.
d.We do not have enough information to answer the question.
9) A follower of liberalism would not support a redistribution of income but rather
would focus on equalizing opportunities.
a.True
b.False
10) In recent years, the amount of international trade in which the United States
engages has increased. Which of the following accurately describes the effect(s) on
labor demanded by firms in the United States?
a.The demand for both skilled and unskilled labor has increased.
b.The demand for both skilled and unskilled labor has decreased.
c.The demand for skilled labor relative to unskilled labor has risen.
d.The demand for unskilled labor relative to skilled labor has risen.
11) Table 12-1
Assume that the price of a weekend ski pass is $45 and that the price reflects the actual
unit cost of providing a weekend of skiing. How much consumer surplus accrues to
Anna and Clem individually?
a.$125 and $20 respectively
b.$105 and $30 respectively
c.$85 and $40 respectively
d.$65 and $50 respectively
12) Suppose a firm operates in the short run at a price above its average total cost of
production. In the long run the firm should expect
a.new firms to enter the market.
b.the market price to rise.
c.its profits to rise.
d.Both b and c are correct.
13) Table 13-1
What is total output when 4 workers are hired?
a. -10
b.50
c.135
d.185
14) A consumer’s optimal choice occurs when the
a.consumer’s valuation of the two goods equals the market’s valuation of the two goods.
b.consumer minimizes her expenditures.
c.consumer attains the highest indifference curve.
d.consumer’s valuation of the two goods exceeds the market’s valuation of the two
goods.
15) A typical firm in the US economy would be classified as
a.perfectly competitive.
b.imperfectly competitive.
c.a duopolist.
d.an oligopolist.
16) Which of the following is an example of human capital?
a.Machines built by people.
b.Formal education acquired in schools.
c.On-the-job training.
d.Both b and c are correct.
17)
Figure 8-4
The vertical distance between points A and B represents a tax in the market.
The amount of tax
revenue received by the government is equal to
a. $245.
b. $350.
c. $490.
d. $700.
18) In the long run a company that produces and sells popcorn incurs total costs of
$1,050 when output is 90 canisters and $1,200 when output is 120 canisters. The
popcorn company exhibits
a.diseconomies of scale because total cost is rising as output rises.
b.diseconomies of scale because average total cost is rising as output rises.
c.economies of scale because total cost is rising as output rises.
d.economies of scale because average total cost is falling as output rises.