1) A monopoly firm can sell 150 units of output for $10 per unit. Alternatively, it can
sell 151 units of output for $9.90 per unit. The marginal revenue of the 151st unit of
output is
a. -$5.10.
b. -$0.10.
c. $2.45.
d. $5.10.
2) Figure 20-1 Number of Poor
Refer to Figure 20-1. The absolute number of people in poverty
a.is higher in 2011 than in 1959.
b.is lower in 2011 than in 1959.
c.has not changed between 1959 and 2011.
d.has steadily decreased between 1959 and 2011.
3) We can use the theory of consumer choice to analyze
a.why most demand curves slope downward.
b.the tradeoff between work and leisure
c.how interest rates affect household saving.
d.All of the above are correct.
4) If a competitive firm is currently producing a level of output at which profit is not
maximized, then it must be true that
a.marginal revenue exceeds marginal cost.
b.marginal cost exceeds marginal revenue.
c.total cost exceeds total revenue.
d.None of the above is correct.
5) Figure 10-15
Which graph illustrates a corrective tax?
a.the left graph
b.the right graph
c.both graphs
d.neither graph
6) When profit-maximizing firms in competitive markets are earning profits,
a.market demand must exceed market supply at the market equilibrium price.
b.market supply must exceed market demand at the market equilibrium price.
c.new firms will enter the market.
d.the most inefficient firms will be encouraged to leave the market.
7) Human capital is
a.a stock of equipment and structures.
b.the result of investments workers make in themselves such as education.
c.a difference in wages that arises to offset the nonmonetary characteristics of different
jobs.
d.a characteristic that affects a worker’s selfesteem but not her wages.
8) Table 20-2
Percentage of Before-Tax Income Received by Families in Hapland
Refer to Table 20-2. According to the table, from 1950 to 2000, the Hapland income
distribution became
a.less equal.
b.more equal.
c.more equal at the lowest level of income but less equal at highest level of income.
d.less equal at the lowest level of income but more equal at highest level of income.
9) Suppose that 50 hot dogs are demanded at a particular price. If the price of hot dogs
rises from that price by 5 percent, the number of hot dogs demanded falls to 48. Using
the midpoint approach to calculate the , it follows that the
a.demand for hot dogs in this price range is unit elastic.
b.price increase will decrease the total revenue of hot dog sellers.
c. for hot dogs in this price range is about 1.22.
d. for hot dogs in this price range is about 0.82.
10) Productivity is defined as the
a.amount of goods and services produced from each unit of labor input.
b.number of workers required to produce a given amount of goods and services.
c.amount of labor that can be saved by replacing workers with machines.
d.actual amount of effort workers put into an hour of working time.
11) One implication of the Condorcet paradox is
a.that the order in which things are voted on can affect the result.
b.that the order in which things are voted on is irrelevant.
c.that you do not want to be in charge of arranging which items are voted upon first.
d.that when there are only two items being voted on the order matters.
12) Figure 9-11
Producer surplus plus consumer surplus in this market after trade is
a.A + B.
b.A + B + C.
c.B + C + D.
d.A + B + C + D.
13) Which of the following
movements would illustrate the effect in the market for swimming lessons of an
increase in the incomes of parents with school-aged children?
a.Point A to Point B
b.Point C to Point B
c.Point C to Point D
d.Point A to Point D
14) People are willing to invest in human capital because
a.the demand for skilled labor is higher than for unskilled labor.
b.it increases the marginal product of their labor.
c.firms are willing to pay more for more productive workers.
d.All of the above are correct.
15) If some resources used in the production of a good are only available in limited
quantities, then the long run market supply curve will be perfectly elastic.
a.True
b.False
16) Table 17-14
This table shows a game played between two players, A and B. The payoffs in the table
are shown as (Payoff to A, Payoff to B).
Refer to Table 17-14. Which of the following statements about this game is true?
a.Up is a dominant strategy for A and Right is a dominant strategy for B.
b.Up is a dominant strategy for A and Left is a dominant strategy for B.
c.Down is a dominant strategy for A and Right is a dominant strategy for B.
d.Down is a dominant strategy for A and Left is a dominant strategy for B.
17) A firm that shuts down temporarily has to pay
a.its variable costs but not its fixed costs.
b.its fixed costs but not its variable costs.
c.both its variable costs and its fixed costs.
d.neither its variable costs nor its fixed costs.
18) Table 22-15
Diane, Henry, and Linda are voting for who to promote. They can only promote one
candidate. Their preferences are given in the table below.
Refer to Table 22-15. If the vote were conducted according to a Borda count system
where each person’s first choice receives 3 points, second choice 2 points, and third
choice 1 point,
a.Beth would win.
b.Fred would win.
c.Mary would win.
d.Fred and Mary would tie.
19) Table 13-18
What is the shape of the marginal-cost curve?
20) Does the restoration of historic buildings create a positive externality or does it
create a negative externality?
21) Explain what is meant by “asymmetric information.” Identify and explain the two
basic types of problems that arise when there is asymmetric information.
22) Scenario 17-6
Assume that a local telecommunications company sells high speed internet access and
cable television. The company’s only two customers are Taylor and Tim. Taylor is
willing to pay $50 per month for high speed internet access and $50 per month for cable
television. Tim is willing to pay only $20 per month for high speed internet access, but
is willing to pay $70 per month for cable television. Assume that the
telecommunications company can provide each of these products at zero marginal cost.
Refer to Scenario 17-6. If the telecommunications company is unable to use tying,
what is the profit-maximizing price to charge for cable television?
23) Use a graph to demonstrate the circumstances that would prevail in a competitive
market where firms are earning economic profits. Can this scenario be maintained in
the long run? Explain your answer.
24) Scenario 10−3:
Suppose there is an external cost of $12 associated with the production of each unit of
the good. What is the equation of the social-cost curve?
25) Figure 21-32
The figure shows three indifference curves and a budget constraint for a consumer
named Hannah. When young, Hannah works and earns income. When old, she is retired
and earns no income.
Refer to Figure 21-32. Of the four labeled points, which is (are) affordable to Hannah?