1) Table 18-9
The following table shows the production function for a particular business. The
numbers represent the various labor and output combinations the firm may choose for
its output on a daily basis.
Refer to Table 18-9. Suppose this firm charges a price of $5 per unit of output and pays
workers a wage equal to $160 per day. What is the value of the marginal product of
labor for the third worker?
a.$90
b.$250
c.$300
d.$800
2) Cartels in the United States are
a.legal if price is competitively determined.
b.legal if all firms in the industry agree to the terms of the cartel.
c.legal if all conditions of the cartel are made public.
d.illegal.
3) The organized withdrawal of labor from a firm by a union is called
a.a strike.
b.a bargain.
c.a monopoly.
d.a tournament.
4) Which of the following statements is not correct about a market in equilibrium?
a.The price determines which buyers and which sellers participate in the market.
b.Those buyers who value the good more than the price choose to buy the good.
c.Those sellers whose costs are less than the price choose to produce and sell the good.
d.Consumer surplus will be equal to producer surplus.
5) Positive externalities
a.result in a larger than efficient equilibrium quantity.
b.result in smaller than efficient equilibrium quantity.
c.result in an efficient equilibrium quantity.
d.can be internalized with a corrective tax.
6) Which good(s) does Finland have an absolute advantage producing?
a.both eggs and ham.
b.eggs but not ham.
c.ham but not eggs.
d.neither ham nor eggs.
7) Deadweight loss measures the loss in society’s welfare that occurs because a
monopolist does not produce the socially efficient level of output.
a.True
b.False
8) Monopolistic competition is characterized by many buyers and sellers, product
differentiation, and barriers to entry.
a.True
b.False
9) Most goods in the economy are
a.club goods.
b.common resources.
c.public goods.
d.private goods.
10) Congressman Smith and Congresswoman Johnson both consider themselves
advocates for the national parks and are introducing different bills designed to benefit
the parks. Congressman Smith’s bill calls for an increase in the entrance fees.
Congresswoman Johnson’s bill calls for a decrease in the entrance fees. Which of the
bills would be more effective at ensuring the quality of the national parks?
a.Congressman Smith’s bill because it will reduce the overuse of the parks
b.Congresswoman Johnson’s bill because more visitors means more citizens will value
and care for the parks
c.Both bills would be equally effective.
d.Neither bill would be effective.
11) If the price of bread is zero and the price of cheese is positive, then the budget
constraint between bread (on the horizontal axis) and cheese (on the vertical axis)
would
a.be vertical.
b.coincide with the vertical axis.
c.coincide with the horizontal axis.
d.be horizontal.
12) Which of these statements about economic models is correct?
a.For economists, economic models provide insights about the world.
b.Economic models are built with assumptions.
c.Economic models are often composed of equations and diagrams.
d.All of the above are correct.
13) Figure 16-9
The figure is drawn for a monopolistically-competitive firm.
In response to the situation represented by the figure, we would expect
a.new firms to enter the market.
b.some of the firms that are currently in the market to exit.
c.this firm’s profit to move from its current value toward a positive value.
d.None of the above are correct.
14) Deadweight loss measures the loss
a.in a market to buyers and sellers that is not offset by an increase in government
revenue.
b.in revenue to the government when buyers choose to buy less of the product because
of the tax.
c.of equality in a market due to government intervention.
d.of total revenue to business firms due to the price wedge caused by the tax.
15) If the government imposes a binding price floor in a market, then the consumer
surplus in that market will decrease.
a.True
b.False
16) Which of the following statements is correct?
a.Both tax avoidance and tax evasion are legal.
b.Both tax avoidance and tax evasion are illegal.
c.Tax avoidance is legal, whereas tax evasion is illegal.
d.Tax avoidance is illegal, whereas tax evasion is legal.
17) As the price elasticities of supply and demand increase, the deadweight loss from a
tax increases.
a.True
b.False
18) Figure 14-3
Suppose a firm operating in a competitive market has the following cost curves:
If the market price is $6, what is the firm‘s shortrun economic profit?
a.$0
b.$12
c.$15
d.$18
19) Economists feel that national security concerns never provide a legitimate rationale
for trade restrictions.
a.True
b.False