Table 54
The following table shows the demand schedule for a particular good.
PriceQuantity
$200
$163
$126
$89
$412
$015
Refer to Table 54. Using the midpoint method, when price rises from $8 to $12, the
price elasticity of demand is
a. 0.4
b. 1
c. 1.5
d. 2.33
Over the past century, the average income in the United States has risen about
a. twofold.
b. fivefold.
c. eightfold.
d. tenfold.
If the cost of producing sofas decreases, then consumer surplus in the sofa market will
a. increase.
b. decrease.
c. remain constant.
d. increase for some buyers and decrease for other buyers.
Figure 818
Refer to Figure 818. Suppose the government imposes a $1 tax in each of the four
markets represented by supply curves S1, S2, S3, and S4. The deadweight will be the
largest in the market represented by
a. S1.
b. S2.
c. S3.
d. S4.
Table 323
Assume that the farmer and the rancher can switch between producing pork and
producing tomatoes at a constant rate.
Labor Hours Needed to Make 1 Pound of Pounds Produced in 24 Hours
PorkTomatoesPorkTomatoes
Farmer6348
Rancher4466
Refer to Table 323. The opportunity cost of 1 pound of pork for the rancher is
a. 1 pound of tomatoes.
b. 1 hour of labor.
c. 1.5 pounds of tomatoes.
d. 1.5 hours of labor.
In a 2007 New York Times article Paul Krugman wrote that
a. the infantindustry argument works well as an argument in favor of protection for the
U.S. steel industry.
b. the negative effects of third world exports on U.S. wages may be increasing.
c. there are social gains to the U.S. from free trade.
d. high wage countries account for a growing share of U.S. imports of manufactured
goods.
Which of the following does not affect an individual’s demand curve?
a. expectations
b. income
c. prices of related goods
d. the number of buyers
Figure 31
Panel (a)Panel (b)
Refer to Figure 31. The rate of tradeoff between producing chairs and producing
couches is constant in
a. Panel (a).
b. Panel (b).
c. both Panel (a) and Panel (b).
d. neither Panel (a) nor Panel (b).
Which of the following is not correct?
a. Economists are generally united in their support of free trade.
b. The conclusions of Adam Smith and David Ricardo on the gains from trade have held
up well over time.
c. David Ricardo argued that Britain should not restrict imports of grain.
d. Economists’ opposition to trade restrictions is still based largely on the principle of
absolute advantage.
Figure 824. The figure represents the relationship between the size of a tax and the tax
revenue raised by that tax.
Refer to Figure 824. Tax revenue would
a. decrease if the economy began at point B and then the tax rate was decreased.
b. increase if the economy began at point F and then the tax rate was decreased.
c. decrease if the economy began at point C and then the tax rate was increased.
d. All of the above are correct.
If a consumer places a value of $15 on a particular good and if the price of the good is
$17, then the
a. consumer has consumer surplus of $2 if he or she buys the good.
b. consumer does not purchase the good.
c. market is not a competitive market.
d. price of the good will fall due to market forces.
Table 74
The numbers in Table 71 reveal the maximum willingness to pay for a ticket to a
Chicago Cubs vs. St. Louis Cardinal’s baseball game at Wrigley Field.
BuyerWillingness to Pay
Jennifer$10
Bryce$15
Dan$20
David$25
Ken$50
Lisa$60
Refer to Table 74. If tickets sell for $40 each, then what is the total consumer surplus
in the market?
a. $90.
b. $30.
c. $70.
d. $110.
Congresswoman Gaga represents a state in which several firms manufacture furniture.
She wants to impose tariffs on all imported furniture. Which of the following is the
least likely consequence of such tariffs?
a. Domestic furniture buyers will lose consumer surplus, have less variety, and will pay
higher prices.
b. Domestic furniture producers will gain producer surplus.
c. Domestic furniture producers will have a higher rate of technological advance.
d. Domestic furniture producers will have more market power.
Over time, housing shortages caused by rent control
a. increase, because the demand for and supply of housing are less elastic in the long
run.
b. increase, because the demand for and supply of housing are more elastic in the long
run.
c. decrease, because the demand for and supply of housing are less elastic in the long
run.
d. decrease, because the demand for and supply of housing are more elastic in the long
run.
Table 336
Minutes Needed
to Make 1
TowelUmbrella
Antigua1220
Barbuda1510
Refer to Table 336. What is Antigua’s opportunity cost of one towel?
a. 3/5 umbrellas
b. 2/3 umbrellas
c. 3/2 umbrellas
d. 5/3 umbrellas
Table 327
Assume that Huang and Min can switch between producing parasols and producing
porcelain plates at a constant rate.
Labor Hours Needed to Make 1Quantity Produced in 36 Hours
ParasolPlateParasolPlate
Huang26186
Min24189
Refer to Table 327. The opportunity cost of 1 plate for Min is
a. 1/3 parasol.
b. 1/2 parasol.
c. 2 parasols.
d. 3 parasols.
When an economist points out that you and millions of other people are interdependent,
he or she is referring to the fact that we all
a. rely upon the government to provide us with the basic necessities of life.
b. rely upon one another for the goods and services we consume.
c. have similar tastes and abilities.
d. are concerned about one another’s wellbeing.
In the market for widgets, the supply curve is the typical upwardsloping straight line,
and the demand curve is the typical downwardsloping straight line. The equilibrium
quantity in the market for widgets is 200 per month when there is no tax. Then a tax of
$5 per widget is imposed. As a result, the government is able to raise $800 per month in
tax revenue. We can conclude that the equilibrium quantity of widgets has fallen by
a. 40 per month.
b. 50 per month.
c. 75 per month.
d. 100 per month.
Economists view normative statements as
a. prescriptive, making a claim about how the world ought to be.
b. descriptive, making a claim about how the world is.
c. statements about the normal condition of the world.
d. pessimistic, putting the worst possible interpretation on things.
At price of $1.30 per pound, a local apple orchard is willing to supply 150 pounds of
apples per day. At a price of $1.50 per pound, the orchard is willing to supply 170
pounds of apples per day. Using the midpoint method, the price elasticity of supply is
about
a. 1.14.
b. 1.00.
c. 0.875.
d. 0.50.
Figure 52
Refer to Figure 52. As price falls from Pa to Pb, which demand curve represents the
most elastic demand?
a. D1
b. D2
c. D3
d. All of the above are equally elastic.
Figure 632
Refer to Figure 632. Which of the following statements is NOT accurate regarding the
situation reflected by this diagram?
a. the price will reflect the scarcity of the good when a price floor is imposed at a price
of $8.
b. the price will reflect the scarcity of the good when a price ceiling is imposed at a
price of $10.
c. the price will reflect the scarcity of the good when a price ceiling is imposed at a
price of $12.
d. the price will reflect the scarcity of the good when a price floor is imposed at a price
of $14.
Table 337
Output of pottery in one sixhour session
VasesMugs
Sarah 8 32
Charles 10 25
Refer to Table 337. Sarah and Charles are both potters and each can switch between
the production of vases and mugs at a constant rate. The table shows the total number of
vases or decorative mugs that each person can produce in a sixhour session of
producing pottery. Suppose that Sarah and Charles produce for two 6hour sessions and
they split this time equally between the production of vases and mugs. If they then
produce for two 6hour sessions and produce only the good that each person has the
comparative advantage for, then total production of
a. vases would rise by 20 and total production of mugs would rise by 32.
b. vases would rise by 2 and total production of mugs would rise by 27.
c. vases would rise by 2 and total production of mugs would rise by 7.
d. vases would rise by 18 and total production of mugs would rise by 25.
Table 38
Assume that England and Spain can switch between producing cheese and producing
bread at a constant rate.
Labor Hours Needed to Make 1 Unit ofNumber of Units Produced in 24 Hours
CheeseBreadCheeseBread
England23128
Spain3684
Refer to Table 38. Which of the following combinations of cheese and bread could
Spain produce in 24 hours?
a. 4 units of cheese and 3 units of bread.
b. 6 units of cheese and 1 units of bread.
c. 7 units of cheese and 1.5 units of bread.
d. 3 units of cheese and 3 units of bread.
If a country allows trade and, for a certain good, the domestic price without trade is
lower than the world price,
a. the country will be an exporter of the good.
b. the country will be an importer of the good.
c. the country will be neither an exporter nor an importer of the good.
d. Additional information is needed about demand to determine whether the country
will be an exporter of the good, an importer of the good, or neither.
Table 312
Barb and Jim run a business that sets up and tests computers. Assume that Barb and Jim
can switch between setting up and testing computers at a constant rate. The following
table applies.
Minutes Needed toNumber of Computers Set Up or Tested in a 40Hour Week
Set Up 1 Computer Test 1 Computer Computers Set UpComputers Tested
Barb48?5040
Jim30408060
Refer to Table 312. Which of the following points would not be on Jim’s production
possibilities frontier, based on a 40hour week?
a. (0 computers set up, 60 computers tested)
b. (40 computers set up, 30 computers tested)
c. (60 computers set up, 12 computers tested)
d. (72 computers set up, 6 computers tested)
The demand for Godiva mint chocolates is likely quite elastic because
a. there are many close substitutes.
b. this particular type of chocolate is viewed as a luxury by many chocolate lovers.
c. the market is narrowly defined.
d. All of the above are correct.
In the early 1980s, which of the following countries had a marginal tax rate of about 80
percent?
a. United States
b. Canada
c. Japan
d. Sweden
Suppose that a country that has a high level of output per person agrees to trade with a
country that has a low level of output per person. Which country can benefit?
a. only the one with a low level of output per person.
b. only the one with a high level of output per person.
c. both
d. neither
Suppose the price elasticity of supply for minivans is 0.3 in the short run and 1.2 in the
long run. If an increase in the demand for minivans causes the price of minivans to
increase by 5%, then the quantity supplied of minivans will increase by about
a. 1.5% in the short run and 6% in the long run.
b. 6% in the short run and 1.5% in the long run.
c. 16.7% in the short run and 4.2% in the long run.
d. 4.2% in the short run and 16.7% in the long run.
Figure 427
Panel (a)Panel (b)
Panel (c)Panel (d)
Refer to Figure 427. Which of the four panels represents the market for cars as a result
of the adoption of new technology on assembly lines?
a. Panel (a)
b. Panel (b)
c. Panel (c)
d. Panel (d)