Figure 629
Suppose the government imposes a $2 on this market.
Refer to Figure 629. Suppose D1 represents the demand curve for gasoline in both the
short run and long run, S1 represents the supply curve for gasoline in the short run, and
S2 represents the supply curve for gasoline in the long run. After the imposition of the
$2,
a. buyers bear a higher burden of the tax in the short run than in the long run.
b. sellers bear a higher burden of the tax in the short run than in the long run.
c. buyers and sellers bear an equal burden of the tax in both the short run and long run.
d. buyers and sellers bear an equal burden of the tax in the short run, but buyers bear a
higher burden of the tax in the long run.
It once took 90 percent of our population to grow our food. It now takes only 3 percent
of the population to grow our food. Which of the following statements is true?
a. This loss of jobs has been detrimental to our economy.
b. The government should provide subsidies to encourage more people to become
farmers.
c. The reduction in the number of farmers explains the increase in the price of food.
d. This is progress because freedup labor is used to produce other goods.
Suppose Raymond and Victoria attend a charity benefit and participate in a silent
auction. Each has in mind a maximum amount that he or she will bid for an oil painting
by a locally famous artist. This maximum is called
a. deadweight loss.
b. willingness to pay.
c. consumer surplus.
d. producer surplus.
Efficiency means that
a. society is conserving resources in order to save them for the future.
b. society’s goods and services are distributed equally among society’s members.
c. society’s goods and services are distributed fairly, though not necessarily equally,
among society’s members.
d. society is getting the maximum benefits from its scarce resources.
Table 331
Labor Hours Needed to Make 1 Pound of:
Amount Produced in 40 hours
Meat PotatoesMeatPotatoes
Farmer8 hours/pound5 hours/pound5 pounds8 pounds
Rancher4 hours/pound10 hours/pound10 pounds4 pounds
Refer to Table 331. Relative to the rancher, the farmer has a comparative advantage in
the production of
a. meat, but not in the production of potatoes.
b. potatoes, but not in the production of meat.
c. both meat and potatoes.
d. neither meat nor potatoes.
Tax incidence
a. depends on the legislated burden.
b. is entirely random.
c. depends on the elasticities of supply and demand.
d. falls entirely on buyers or entirely on sellers.
Economists generally agree that the most important tax in the U.S. economy is the
a. income tax.
b. tax on labor.
c. inheritance or death tax.
d. tax on corporate profits.
Figure 99
Refer to Figure 99. The change in total surplus in this market because of trade is
a. D, and this area represents a loss of total surplus because of trade.
b. D, and this area represents a gain in total surplus because of trade.
c. B + D, and this area represents a loss of total surplus because of trade.
d. B + D, and this area represents a gain in total surplus because of trade.
When a binding price floor is imposed on a market to benefit sellers,
a. every seller in the market benefits.
b. all buyers and sellers benefit.
c. every seller who wants to sell the good will be able to do so, but only if he appeals to
the personal biases of the buyers.
d. some sellers will not be able to sell any amount of the good.
Figure 37
Bintu’s Production Possibilities FrontierJuba’s Production Possibilities Frontier
Refer to Figure 37. If the production possibilities frontiers shown are each for 4 hours
of work, then which of the following combinations of bowls and cups could Bintu and
Juba together not make in a given 4hour production period?
a. 3 bowls and 9.5 cups
b. 4.5 bowls and 6 cups
c. 5 bowls and 4 cups
d. 6 bowls and 1 cups
Figure 218
Relationship between Price and Restaurant Meals
Refer to Figure 218. The slope of the line containing points Y and Z is
a. 0.5.
b. 1.
c. 2.
d. 4.
If the price elasticity of supply is 1.5, and a price increase led to a 1.8% increase in
quantity supplied, then the price increase is about
a. 0.67%.
b. 0.83%.
c. 1.20%.
d. 2.70%.
If Kindle ereaders and Nook ereaders are substitutes, a higher price for Nooks would
result in a(n)
a. increase in the demand for Nooks.
b. decrease in the demand for Nooks.
c. increase in the demand for Kindles.
d. decrease in the demand for Kindles.
When calculating the cost of college, which of the following should you probably not
include?
a. The cost of tuition
b. The cost of books required for college classes
c. The income you would have earned had you not gone to college
d. The cost of rent for your offcampus apartment.
Table 325
Assume that Maya and Miguel can switch between producing mixers and producing
toasters at a constant rate.
Hours Needed to Make 1Amount Produced in 40 Hours
mixertoastermixerstoasters
Maya8558
Miguel201024
Refer to Table 325. Miguel has an absolute advantage in the production of
a. both goods and a comparative advantage in the production of mixers.
b. both goods and a comparative advantage in the production of toasters.
c. neither good and a comparative advantage in the production of mixers.
d. neither good and a comparative advantage in the production of toasters.
Figure 425
The graph below pertains to the supply of paper to colleges and universities.
Refer to Figure 425. All else equal, the return of college students to campus in the fall
would cause a move from
a. x to y.
b. y to x.
c. SA to SB.
d. SB to SA.
The goal of rent control is to
a. facilitate controlled economic experiments in urban areas.
b. help landlords by assuring them a low vacancy rate for their apartments.
c. help the poor by assuring them an adequate supply of apartments.
d. help the poor by making housing more affordable.
Figure 713
Refer to Figure 713. If the equilibrium price is $60, what is the producer surplus?
a. $600
b. $1,200
c. $2,400
d. $4,800
Figure 416
Refer to Figure 416. The shift from S’ to S in the market for chocolate cake could be
caused by a(n)
a. decrease in the number of commercial bakers.
b. improvement in oven technology.
c. decrease in the price of butter.
d. decrease in the price of chocolate cake.
For a competitive market,
a. a seller can always increase her profit by raising the price of her product.
b. if a seller charges more than the going price, buyers will go elsewhere to make their
purchases.
c. a seller often charges less than the going price to increase sales and profit.
d. a single buyer can influence the price of the product but only when purchasing from
several sellers in a short period of time.
Which of the following is not a question addressed by macroeconomists?
a. Why is average income high in some nations but low in others?
b. What, if anything, can the government do to promote growth in incomes, low
inflation, and stable employment?
c. What is the impact of foreign competition on the U.S. auto industry?
d. Why do production and employment expand in some years and contract in others?
Table 326
Assume that Japan and Korea can switch between producing cars and producing
airplanes at a constant rate.
Hours Needed to Make 1Quantity Produced in 2400 Hours
CarAirplaneCarsAirplanes
Japan301508016
Korea501504816
Refer to Table 326. Without trade, Japan produced and consumed 50 cars and 6
airplanes and Korea produced and consumed 27 cars and 7 airplanes. Then, each
country agreed to specialize in the production of the good in which it has a comparative
advantage and trade 28 cars for 8 airplanes. As a result, Japan gained
a. 0 cars and 2 airplanes and Korea gained 1 car and 1 airplane.
b. 2 cars and 2 airplanes and Korea gained 1 car and 1 airplane.
c. 28 cars and 8 airplanes and Korea gained 28 cars and 8 airplanes.
d. 52 cars and 8 airplanes and Korea gained 28 cars and 8 airplanes.
A decrease in the number of sellers in the market causes
a. the supply curve to shift to the left.
b. the supply curve to shift to the right.
c. a movement up and to the right along a stationary supply curve.
d. a movement downward and to the left along a stationary supply curve.
Mexico has imposed a tariff on the importation of chocolate. As a consequence of the
tariff,
a. Mexico as a whole is better off, since the tariff increases employment and production
in the domestic chocolate industry.
b. Mexico as a whole is better off, since the tariff results in tax revenue for the Mexican
government.
c. Mexico as a whole is worse off, since producer surplus and consumer surplus both
decrease.
d. Mexico as a whole is worse off, since the increase in producer surplus is smaller than
the drop in consumer surplus plus tariff revenues.
The property of society getting the most it can from its scarce resources is called
a. efficiency.
b. equality.
c. externality.
d. productivity.
Figure 911
Refer to Figure 911. Producer surplus plus consumer surplus in this market before
trade is
a. A + B.
b. A + B + C.
c. A + B + C + D.
d. B + C + D.
Figure 321
Uzbekistan’s Production Possibilities FrontierAzerbaijan’s Production Possibilities
Frontier
Refer to Figure 321. Suppose Azerbaijan decides to increase its production of nails by
20. What is the opportunity cost of this decision?
a. 1/4 bolt
b. 4 bolts
c. 5 bolts
d. 80 bolts
A likely effect of government policies that redistribute income and wealth from the
wealthy to the poor is that those policies
a. enhance equality.
b. reduce efficiency.
c. reduce the reward for working hard.
d. All of the above are correct.
Figure 821
Refer to Figure 821. Suppose the government places a $3 perunit tax on this good. The
smallest deadweight loss from the tax would occur in a market where demand is
represented by
a. Demand 1, and supply is represented by Supply 1.
b. Demand 1, and supply is represented by Supply 2.
c. Demand 2, and supply is represented by Supply 1.
d. Demand 2, and supply is represented by Supply 2.
You know an economist has crossed the line from policy adviser to scientist when he or
she
a. claims that the problem at hand is widely misunderstood by noneconomists.
b. makes positive statements.
c. talks about values.
d. makes a claim about how the world should be.