1) The monopolist’s profit-maximizing quantity of output is determined by the
intersection of which of the following two curves?
a.marginal cost and demand
b.marginal cost and marginal revenue
c.average total cost and marginal revenue
d.average variable cost and average revenue
2) In a market economy, who makes the decisions that guide most economic activity?
a.firms only
b.households only
c.firms and households
d.government
3) Since almost all forms of transportation produce some type of pollution,
a.the government should ban all transportation.
b.the government should ban all pollution.
c.society has to weigh the cost and benefits when deciding how much pollution to
allow.
d.refrain from intervening because the market can best solve this problem.
4) Table 22-3
Three family members — Seamus, Maeve, and Siobhan — are deciding what type of
movie to attend. The three choices are an action adventure, comedy, or horror. The first,
second, and third choices for each person are as indicated in the table below.
Refer to Table 22-3. Suppose the three decide to make the decision based on pairwise
majority voting. If they first choose between Action and Horror and then choose
between the winner of the first vote and Comedy, which movie alternative will win?
a.Action
b.Comedy
c.Horror
d.There is no clear winner – Action and Horror will tie.
5) A budget constraint shows
a.the maximum utility that a consumer can achieve for a given level of income.
b.a series of bundles that cost the consumer the same amount of money.
c.a series of bundles that give the consumer the same level of utility.
d.All of the above are correct.
6) Hunter is an ambitious, competitive person who has always tried to be the best at
everything he does. Consider the following job options facing Hunter and choose the
option that will likely afford him the highest wage.
a.elementary school teacher who works 9 months of the year
b.manager in a large firm who earns an annual salary with no potential for bonuses or
commissions
c.salesperson who earns a small base salary plus a percentage of the sales he makes
d.local television news anchor who works during the day
7) Scenario 15-9
Suppose executives at an art museum know that 100 adults are willing to pay $12 for
admission to the museum on a weekday. Suppose the executives also know that 200
students are willing to pay $8 for admission on a weekday. The cost of operating the
museum on a weekday is $2,000.
How much additional profit will the museum earn if it engages in price discrimination
compared to charging each customer $8 for admission?
a.$0
b.$200
c.$400
d.$800
8) Assume that Jamaica and Norway can switch between producing coolers and
producing radios at a constant rate. The following table shows the number of coolers or
number of radios each country can produce in one day.
Jamaica has an absolute advantage in the production of
a.coolers and Norway has an absolute advantage in the production of radios.
b.radios and Norway has an absolute advantage in the production of coolers.
c.both goods and Norway has an absolute advantage in the production of neither good.
d.neither good and Norway has an absolute advantage in the production of both goods.
9) Scenario 19-4
Assume that the labor market for barbers is competitive and that it is differentiated into
two groups: barbers who are bald (or going bald) and those who have a full head of
hair. Assume that the barbers in this market have identical hair-cutting ability,
regardless of whether they are bald or not. Currently the equilibrium wage in the bald
barber market is lower than that in the nonbald market. Further assume that the market
for haircuts is competitive.
Refer to Scenario 19-4. If consumers do not discriminate between bald barbers and
barbers with hair, then
a.competitive pressure in the market for haircuts will eventually cause the equilibrium
wage in both markets to be identical.
b.the equilibrium wage in the “bald” market will eventually fall.
c.the equilibrium wage in the “hairy” market will eventually rise.
d.wages in the market for barbers can never be in equilibrium.
10) The invisible hand of the marketplace acts to allocate resources efficiently, but it
does not necessarily ensure that resources are allocated fairly.
a.True
b.False
11) According to behavioral economics, participants in a half-marathon are likely to
have trained
a.more than they planned and run faster than they anticipated.
b.more than they planned but run slower than they anticipated.
c.less than they planned and run slower than they anticipated.
d.less than they planned but run faster than they anticipated.
12) Herbert Simon suggested that people are not rational maximizers but satisficers,
meaning that they choose a course of action that is
a.personally satisfying, with a greater emphasis on personal consumption than on
fairness.
b.socially satisfying, with a greater emphasis on fairness than on personal consumption.
c.good enough.
d.risk averse.
13) If demand is perfectly inelastic, the demand curve is vertical, and the equals 0
a.True
b.False