1) Table 22-21
The following table shows the number of voters preferring various amounts of spending
to develop a river to make it more attractive for canoeing and kayaking.
Refer to Table 22-21. What is the preferred spending amount of the median voter?
a.$1.0
b.$1.5
c.$2.0
d.None of the above are correct.
2) An optimizing consumer will select the consumption bundle in which the
a.ratio of total utilities is equal to the relative price ratio.
b.ratio of income to price equals the marginal rate of substitution.
c.marginal rate of substitution is equal to the relative price ratio of the goods.
d.marginal rate of substitution is equal to marginal utility.
3) Table 14-11
Suppose that a firm in a competitive market faces the following prices and costs:
The marginal revenue from producing the 3rd unit equals
(i)$6.
(ii)the price.
(iii)the marginal cost.
a.(i) only
b.(i) and (ii) only
c.(iii) only
d.(i), (ii), and (iii)
4) Which two curves are tangent to each other in a monopolistically competitive market
with zero economic profit?
a.demand and average variable cost
b.demand and average total cost
c.marginal revenue and average variable cost
d.marginal revenue and average total cost
5) Resale price maintenance prevents retailers from competing on price.
a.True
b.False
6) If car manufacturers begin using new labor-saving technology on their assembly
lines, we would not expect
a.a smaller quantity of labor to be used.
b.the supply of cars to increase.
c.the firms’ costs to fall.
d.individual car manufacturers to move up and to the right along their individual supply
curves.
7) The difference between a corrective tax and a tradable pollution permit is that
a.a corrective tax sets the price of pollution and a permit sets the quantity of pollution.
b.a corrective tax creates a more efficient outcome than a permit.
c.a corrective tax sets the quantity of pollution and a permit sets the price of pollution.
d.a permit creates a more efficient outcome than a corrective tax.
8) Figure 7-28
Refer to Figure 7-28. At the quantity Q2, the marginal value to buyers
a.and the marginal cost to sellers are both P2.
b.is P2, and the marginal cost to sellers is P3.
c.and the marginal cost to sellers are both P3.
d.is P3, and the marginal cost to sellers is P2.
9) The long-run market supply curve in a competitive market will
a.always be horizontal.
b.be the portion of the MC that lies above the minimum of AVC for the marginal firm.
c.typically be more elastic than the short-run supply curve.
d.be above the competitive firm‘s efficient scale.
10) Which of the following is a characteristic of a monopoly?
a.rising average total costs
b.one buyer
c.rising fixed costs
d.a product without close substitutes
11) Figure 8-1
Suppose the government imposes a tax of P’ – P”’. The area measured by J+K+L+M
represents
a.total surplus after the tax.
b.total surplus before the tax.
c.deadweight loss from the tax.
d.tax revenue.
12) A movement upward and to the left along a given demand curve is called a decrease
in demand.
a.True
b.False
13) When a profit-maximizing firm in a monopolistically competitive market is in
long-run equilibrium,
a.the demand curve will be perfectly elastic.
b.price exceeds marginal cost.
c.marginal cost must be falling.
d.marginal revenue exceeds marginal cost.