1) Figure 8-9
The vertical distance between points A and C represents a tax in the market.
The per-unit burden of the tax on sellers is
a. $20.
b. $200.
c. $300.
d. $500.
2) When a market experiences a positive externality,
a.the demand curve does not reflect the value to society of the good.
b.too much of the good is being produced.
c.the government can internalize the externality by imposing a tax on the product.
d.the private value is greater than the social value.
3) An advance in farm technology that results in an increased market supply is
a.good for farmers because it raises prices for their products but bad for consumers
because it raises prices consumers pay for food.
b.bad for farmers because total revenue will fall but good for consumers because prices
for food will fall.
c.good for farmers because it raises prices for their products and also good for
consumers because more output is available for consumption.
d.bad for farmers because total revenue will fall and bad for consumers because farmers
will raise the price of food to increase their total revenue.
4) Which of the following statements is correct?
a.Followers of the liberalism political philosophy believe that society should maximize
the total of individual utilities.
b.The poverty line is adjusted for regional differences in the costs of raising children.
c.One advantage to the Earned Income Tax Credit (EITC) is that it benefits the working
poor.
d.Libertarians pursue policies to redistribute income from the rich to the poor.
5) In the short run, which of the following is not correct?
a.Increasing the money supply increases the demand for goods and services.
b.Increasing the money supply encourages firms to hire more workers.
c.Lowering the money supply leads to a higher level of unemployment.
d.Policies that encourage higher employment will also induce a lower rate of inflation.
6) When the government enacts policies to redistribute income,
a.the objective is to enhance efficiency and a side effect is that the allocation of
resources becomes more equal.
b.the objective is to enhance efficiency and a side effect is that the allocation of
resources becomes less equal.
c.the objective is to enhance equality and a side effect is that the allocation of resources
becomes more efficient.
d.the objective is to enhance equality and a side effect is that the allocation of resources
becomes less efficient.
7)
One difference between points F and G is that
a.Point G is unattainable with current resources, but point F is attainable.
b.All resources are fully employed at point F but there is unemployment at point G.
c.More output can be produced at point F but no additional output can be produced at
point G.
d.This economy produces more cookies at point G than at point F.
8) A profit-maximizing monopolist charges a price of $14. The intersection of the
marginal revenue curve and the marginal cost curve occurs where output is 15 units and
marginal cost is $7. What is the monopolist’s profit?
a. $90
b. $105
c. $180
d. Not enough information is given to determine the answer.
9) By definition, exports are
a.limits placed on the quantity of goods brought into a country.
b.goods in which a country has an absolute advantage.
c.people who work in foreign countries.
d.goods produced domestically and sold abroad.
10) Steak and chicken are substitutes. A sharp reduction in the supply of steak would
a.increase consumer surplus in the market for steak and decrease producer surplus in
the market for chicken.
b.increase consumer surplus in the market for steak and increase producer surplus in the
market for chicken.
c.decrease consumer surplus in the market for steak and increase producer surplus in
the market for chicken.
d.decrease consumer surplus in the market for steak and decrease producer surplus in
the market for chicken.
11) If government regulations make a certain job less dangerous, then we’d expect that
the supply of labor for that job
would
a.increase, which by itself would raise the wage for that job.
b.increase, which by itself would reduce the wage for that job.
c.decrease, which by itself would raise the wage for that job.
d.decrease, which by itself would reduce the wage for that job.
12) Firm A
Firm B
If these are the only two sellers in the market, then the market quantity supplied at a
price of $6 is
a.2 units.
b.10 units.
c.12 units.
d.22 units.
13) For a typical consumer, most indifference curves are bowed inward.
a.True
b.False
14) A dominant strategy is a strategy that is best for a player in a game regardless of the
strategies chosen by the other players.
a.True
b.False
15) Argentina’s Production Possibilities FrontierPeru’s Production Possibilities
Frontier
If
Argentina and Peru each divides its time equally between producing corn and fish, then
total production is
a.13 tons of corn and 15 tons of fish.
b.13 tons of corn and 10 tons of fish.
c.12 tons of corn and 16 tons of fish.
d.12 tons of corn and 11 tons of fish
16) With the understanding that people respond to incentives, outline the possible
outcome for teachers if the K-12 school year is extended to 11 months per year instead
of the existing 9 months per year.
17) What are the two largest categories of federal tax receipts?
18)
19) Table 13-18
What is the shape of the average-total-cost curve?
20) Suppose there is a market in which the firms hold the following market shares:
25%, 20%, 18%, 15%, 8%, 7%, 4%, 2%, 1%. What is the concentration ratio for this
market?
21) Why would a firm in a perfectly competitive market always choose to set its price
equal to the current market price? If a firm set its price below the current market price,
what effect would this have on the market?