1) Figure 15-9
The monopolist’s maximum profit
a. is $1,600.
b. is $2,000.
c. is $2,500.
d. cannot be determined from the diagram.
2) The characteristics of jobs and workers affect
a.labor supply.
b.labor demand.
c.equilibrium wages.
d.All of the above are correct.
3) Figure 15-6
What area measures the monopolist’s profit?
a.(K-C)*W
b.(L-A)*T
c.(K-B)*W
d. 0.5[(K-C)*(Z-T)]
4) The President receives economic policy advice from economists at each of the
following except
a.the Council of Economic Advisors.
b.the Department of the Treasury.
c.the Congressional Budget office.
d.the Department of Labor.
5) After a certain nation changed its policy from one that banned international trade in
wheat to one that allowed international trade in wheat, the nation began importing
wheat. As a result, total surplus in the wheat market increased by $10 million. Which of
the following changes could have occurred as well?
a.The price of wheat in that nation increased with the adoption of the new policy.
b.The domestic quantity of wheat supplied increased with the adoption of the new
policy.
c.Consumer surplus in the wheat market increased by $7 million and producer surplus
in the wheat market increased by $3 million.
d.Consumer surplus in the wheat market increased by $15 million and producer surplus
in the wheat market decreased by $5 million.
6) Figure 10-9
d.the slope of the demand curve.
8) Suppose that candy producers create a positive externality equal to $1 per pound of
candy. Further suppose that the government offers a $1-per-pound subsidy to the
producers. What is the relationship between the equilibrium quantity and the socially
optimal quantity of candy?
a.The equilibrium quantity is greater than the socially optimal quantity.
b.The equilibrium quantity is less than the socially optimal quantity.
c.They are equal.
d.There is not enough information to answer the question.
9) Table 10-1
The following table shows the private value, private cost, and external cost for various
quantities of output in a market.
What is the socially-optimal quantity of output in this market?
a.1 unit
b.2 units
c.3 units
d.4 units
10) Who is a price taker in a competitive market?
a.buyers only
b.sellers only
c.both buyers and sellers
d.neither buyers nor sellers
11) For a good that is a necessity,
a.quantity demanded tends to respond substantially to a change in price.
b.demand tends to be inelastic.
c.the law of demand does not apply.
d.All of the above are correct.
12) Suppose the wage earned by pear pickers suddenly rises. Which of the following
effects would we most likely observe as a result?
a.The supply of apple pickers would decrease and the equilibrium wage of apple
pickers would decrease.
b.The supply of apple pickers would decrease and the equilibrium wage of apple
pickers would increase.
c.The demand for apple pickers would increase and the equilibrium wage of apple
pickers would decrease.
d.The demand for apple pickers would decrease and the equilibrium wage of apple
pickers would decrease.
13) Table 13-17
Consider the following table of long-run total cost for four different firms:
Which firm’s long-run marginal cost decreases as output increases?
a.Firm 1
b.Firm 2
c.Firm 3
d.Firm 4
14) Economic models
a.are constructed to mirror reality as closely as possible, and in this respect economic
models are no different from other scientific models.
b.are constructed to mirror reality as closely as possible, and in this respect economic
models are very different from other scientific models.
c.are simplifications of reality, and in this respect economic models are no different
from other scientific models.
d.are simplifications of reality, and in this respect economic models are very different
from other scientific models.
15) A decrease in supply will cause an increase in price, which will cause a decrease in
quantity demanded.
a.True
b.False
16) The greater the elasticity of demand, the smaller the deadweight loss of a tax.
a.True
b.False
17) If the marginal-cost curve is rising, then so is the average-total-cost curve.
a.True
b.False