1) Maxine’s Production Possibilities FrontierDaisy’s Production Possibilities
Frontier
Each has in mind a maximum amount that he will bid. This maximum is called
a.a resistance price.
b.willingness to pay.
c.consumer surplus.
d.producer surplus.
4) The statement that “measures of the distribution of income are based on money
income” relates to which problem in measuring inequality?
a.in-kind transfers
b.economic life cycle
c.transitory versus permanent income
d.economic mobility
5) Fred trades 2 tomatoes to Barney in exchange for 1 pumpkin. Fred and Barney both
gain from the exchange. We can conclude that, for Barney, the opportunity cost of
producing 1 pumpkin is greater than 2 tomatoes.
a.True
b.False
6)
If the price decreased from $36 to $12, total revenue would
a.increase by $4,800, and demand is elastic between points X and Z.
b.increase by $7,200, and demand is elastic between points X and Z.
c.decrease by $4,800, and demand is inelastic between points X and Z.
d.decrease by $7,200, and demand is inelastic between points X and Z.
7) Tom walks Bethany’s dog once a day for $50 per week. Bethany values this service
at $60 per week, while the opportunity cost of Tom’s time is $30 per week. The
government places a tax of $35 per week on dog walkers. After the tax, what is the loss
in total surplus?
a.$50
b.$30
c.$25
d. $0
8) When demand is elastic, an increase in price will cause
a.an increase in total revenue.
b.a decrease in total revenue.
c.no change in total revenue but an increase in quantity demanded.
d.no change in total revenue but a decrease in quantity demanded.
9) Medicaid and food stamps are
a.available only to the elderly.
b.forms of in-kind assistance.
c.forms of cash assistance.
d.transfer payments.
10) Which of the following represents a problem in measuring inequality?
a.Measurements of income distributions typically include in-kind transfers, which
distort the measure of inequality.
b.A normal life-cycle pattern causes inequality in the income distribution but may not
reflect inequality in living standards.
c.Transitory income is a better measure of inequality than permanent income.
d.Both a and b are correct.
11) Which of the following is not a determinant of the demand for a particular good?
a.the prices of related goods
b.income
c.tastes
d.the prices of the inputs used to produce the good
12) Figure 8-3
The vertical distance between points A and C represents a tax in the market.
The price that sellers effectively receive after the tax is imposed is
a.P1
b.P2
c.P3
d.P4
13) Table 17-27
Each year the United States considers renewal of Most Favored Nation (MFN) trading
status with Farland (a mythical nation). Historically, legislators have made threats of
not renewing MFN status because of human rights abuses in Farland. The non-renewal
of MFN trading status is likely to involve some retaliatory measures by Farland. The
payoff table below shows the potential economic gains associated with a game in which
Farland may impose trade sanctions against U.S. firms and the United States may not
renew MFN status with Farland. The table contains the dollar value of all trade-flow
benefits to the United States and Farland.
Refer to Table 17-27. If both countries follow a dominant strategy, the value of trade
flow benefits for Farland will be
a.$5 b.
b.$75 b.
c.$275 b.
d.$285 b.
14) Pete consumes two goods, rice and fish. When the price of fish rises, he consumes
less fish. When the price of rice rises, he consumes more rice. For Pete,
a.fish is not a Giffen good but rice is.
b.rice is not a Giffen good but fish is.
c.both fish and rice are normal goods.
d.both fish and rice are Giffen goods.
15) The demand for a good or service is determined by
a.those who buy the good or service.
b.the government.
c.those who sell the good or service.
d.both those who buy and those who sell the good or service.
16) To say that a firm is competitive in the labor market is to say that the firm can
choose
a.both the wage it pays its workers and the number of workers it hires.
b.neither the wage it pays its workers nor the number of workers it hires.
c.the wage it pays its workers, but it cannot choose how many workers to hire.
d.the number of workers it hires, but it cannot choose the wage it pays its workers.
17) Figure 16-11
If this firm profit-maximizes, how much output will it produce?