1) If four firms comprise the entire golf club industry, the market would be
a.competitive.
b.characterized by interdependence of firms.
c.a duopoly.
d.a monopoly.
2) In the signaling theory of education,
a.schooling itself does not lead to more productive workers.
b.chance plays more of a role than in the human-capital theory.
c.schooling enhances worker productivity.
d.compensating differentials do not matter.
3) When determining whether to shut down in the short run, a competitive firm should
ignore
(i)fixed costs.
(ii)variable costs.
(iii)sunk costs.
a.(iii) only
b.(i) and (iii) only
c.(ii) only
d.(i), (ii), and (iii)
4) The shift from Db to Da is called
a.an increase in demand.
b.a decrease in demand.
c.a decrease in quantity demanded.
d.an increase in quantity demanded.
5)
Which of the following would most likely have caused the production possibilities
frontier to shift outward from A to B?
a.a decrease in unemployment
b.a technological advance in the consumer goods industries
c.a general technological advance
d.an increase in the availability of capital-producing resources
6) Fewer than three percent of families are poor for eight or more years.
a.True
b.False
7) In a competitive market, a firm’s supply curve dictates the amount it will supply. In a
monopoly market the
a.same is true.
b.supply curve conceptually makes sense, but in practice is never used.
c.supply curve will have limited predictive capacity.
d.decision about how much to supply is impossible to separate from the demand curve
it faces.
8) Each of the following is likely to be a successful way for the government to solve the
problem of overuse of a common resource except
a.regulating the use or consumption of the common resource.
b.taxing the use or consumption of the common resource.
c.selling the common resource to a private entity.
d.asking individuals to voluntarily reduce their use of the resource.
9) Martha routinely has her prescriptions filled at her local SVC pharmacy. Each time
that Martha goes to pick up a prescription, there is some problem and Martha has to
return to the pharmacy later to get the prescription. Martha finds these return trips very
annoying and time-consuming, but continues to request that her doctor send her
prescriptions to this pharmacy even though there are several other options in her town.
Which of the following is correct?
a.Economists would say that Martha is behaving rationally.
b.Martha’s behavior appears to exhibit inertia.
c.Martha’s behavior is inconsistent over time.
d.Martha gives too much weight to a small number of vivid observations.
10) Figure 7-16
If the supply curve is S and the demand curve is D, what is total producer surplus at the
equilibrium price?
a. $202.50
b. $405
c. $810
d. $1,215
11) Figure 9-1
The figure illustrates the market for coffee in Guatemala.
With trade, Guatemala will
a.export 22 units of coffee.
b.export 10 units of coffee.
c.import 30 units of coffee.
d.import 12 units of coffee.
12) A shortage is the same as an excess demand.
a.True
b.False
13) You lose your job and, as a result, you buy fewer iTunes music downloads. This
shows that you consider iTunes music downloads to be a(n)
a.luxury good.
b.inferior good.
c.normal good.
d.complementary good.
14) Which of the following is an example of a compensating differential?
a.Two workers with different undergraduate majors earn different salaries.
b.Two workers with different years of experience earn different salaries.
c.Two workers whose jobs entail different risks earn different salaries.
d.Two workers with different levels of personal attractiveness earn different salaries.
15) The privately-owned school system in Smalltown has a virtually unlimited capacity.
It accepts all applicants and operates on both tuition and private donations. Although
every resident places value on having an educated community, the school’s revenues
have suffered lately due to a large decline in private donations from the elderly
population. Since the benefit that each citizen receives from having an educated
community is a public good, which of the following would not be correct?
a.The free-rider problem causes the private market to undersupply education to the
community.
b.The government can potentially help the market reach a socially optimal level of
education.
c.A tax increase to pay for education could potentially make the community better off.
d.The private market is the best way to supply education.
16) Table 22-1
Three friends — Linda, Stephanie, and Jamie — are deciding where to go together for
vacation. They all agree that they should go to one of three places: France, Greece, or
Italy. They also agree that they will have two pairwise votes to determine where to go
on vacation, with the majority determining the outcome on each vote. The first, second,
and third choices for each person are as indicated in the table below.
Refer to Table 22-1. If the first vote pits Greece against Italy and the second vote pits
France against the winner of the first vote, then the outcome is as follows:
a.Greece wins the first vote and France wins the second vote, so they go to France.
b.Greece wins the first vote and Greece wins the second vote, so they go to Greece.
c.Italy wins the first vote and Italy wins the second vote, so they go to Italy.
d.Italy wins the first vote and France wins the second vote, so they go to France.
17) Figure 10-10
Which of the following statements is correct?
a.The private cost of producing the 120th unit of output is $12.
b.The social cost of producing the 120th unit of output is $22.
c.The external cost of producing the 120th unit of output is $2.
d.All of the above are correct.
18) Which of the following is not an example of a principal-agent relationship?
a.a soccer player and her coach
b.a man and his neighbor
c.an construction worker and his foreman
d.a driver and her insurance agent