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1) Chris and Tony's Production Opportunities
Chris and Tony both produce tomatoes and pasta sauce. The table shows their possible
production per month if both work the same number of 8 hour days. If Chris and Tony
both decide to specialize and produce only the good in which they have a comparative
advantage, then
a.Chris will produce only sauce and Tony will produce only tomatoes.
b.Chris will produce only tomatoes and Tony will produce only sauce.
c.Both Chris and Tony will produce only sauce.
d.Both Chris and Tony will produce only tomatoes.
2) If Antigua and Barbuda decide to trade with each other, Antigua should specialize in
the production of
a.towels and Barbuda should specialize in the production of umbrellas.
b.umbrellas and Barbuda should specialize in the production of towels.
c.both goods and Barbuda should specialize in the production of neither good.
d.neither good and Barbuda should specialize in the production of both goods.
3) Figure 15-18
If the monopoly firm perfectly price discriminates, then consumer surplus amounts to
a. $0.
b. $1,000.
c. $2,000.
d. $4,000.
4)
If the supply curves that are drawn represent supply curves for single-family residential
houses, then the movement from S to S' could be caused by a(n)
a.increase in the price of apartments which are a substitute for single-family houses for
many people looking for a place to live.
b.newly-formed expectation by house-builders that prices of houses will increase
significantly in the next six months.
c.decrease in the price of lumber.
d.All of the above are correct.
5) Communist countries worked under the premise that
a.markets were the best way to organize economic activity.
b.central planners were in the best position to determine the allocation of scarce
resources in the economy.
c.households and firms, guided by an invisible hand, could achieve the most efficient
allocation of scarce resources.
d.allowing the market forces of supply and demand to operate with no government
intervention would achieve the most efficient allocation of scarce resources.
6) If the government regulates the price that a natural monopolist can charge to be equal
to the firm's marginal cost, the firm will
a.earn zero profits.
b.earn positive profits, causing other firms to enter the industry.
c.earn negative profits, causing the firm to exit the industry.
d.minimize costs in order to lower the price that it charges.
7) Table 17-11
Only two firms, ABC and XYZ, sell a particular product. The table below shows the
demand curve for their product. Each firm has the same constant marginal cost of $8
and zero fixed cost.
Refer to Table 17-11. If this market were perfectly competitive instead of oligopolistic,
what would the price be?
a. $18
b.$14
c.$8
d.$0
8) Changes in the output of a perfectly competitive firm, without any change in the
price of the product, will change the firm's
a.total revenue.
b.marginal revenue.
c.average revenue.
d.All of the above are correct.
9) Firms in a monopolistically competitive market
a.are price takers.
b.produce an output level that minimizes average total cost in the long run.
c.maximize profits by producing where price equals marginal cost.
d.cannot earn economic profits in the long run.
10) Arrow's impossibility theorem shows that no voting system can satisfy which of the
following properties?
a.unanimity and transitivity only
b.transitivity and independence of irrelevant alternatives only
c.no dictators and transitivity only
d.unanimity, transitivity, independence of irrelevant alternatives, and no dictators
11) Consider a public road that anyone is allowed to drive on. If the road is often
congested, the road would be considered a
a.private good.
b.club good.
c.common resource.
d.public good.
12) Fire protection is a
a.club good, because it is excludable but not rival in consumption.
b.club good, because it is rival in consumption but not excludable.
c.a public good, because it is excludable but not rival in consumption.
d.a public good, because it is rival in consumption but not excludable.
13) Research into new technologies
a.provides positive externalities because it creates knowledge others can use.
b.results in negative externalities because government funding for research causes less
government spending in other areas.
c.is protected by patent laws, which eliminates the need for government intervention.
d.should only be funded by the corporations that will receive the profits from the
research.
14) Necessities such as food and clothing tend to have
a.high price elasticities of demand and high income elasticities of demand.
b.high price elasticities of demand and low income elasticities of demand.
c.low price elasticities of demand and high income elasticities of demand.
d.low price elasticities of demand and low income elasticities of demand.
15) If textbooks and study guides are complements, then an increase in the price of
textbooks will result in
a.more textbooks being sold.
b.more study guides being sold.
c.fewer study guides being sold.
d.no difference in the quantity sold of either good.
16) The first number in any ordered pair is
a.the x-coordinate.
b.the y-coordinate.
c.the vertical location of the point.
d.the slope.
17) Table 7-5
For each of three potential buyers of oranges, the table displays the willingness to pay
for the first three oranges of the day. Assume Allison, Bob, and Charisse are the only
three buyers of oranges, and only three oranges can be supplied per day.
Which of the following statements is correct?
a.Neither Bob's consumer surplus nor Charisse's consumer surplus can exceed Allison's
consumer surplus, for any price of an orange.
b.All three individuals will buy at least one orange only if the price of an orange is less
than $0.25.
c.If the price of an orange is $0.60, then consumer surplus is $4.90.
d.All of the above are correct.
18) As a result of a labeling mistake at the chemical factory, a farmer accidentally
sprays weedkiller rather than fertilizer on half her land. As a result, she loses half of her
productive farmland. If the property of diminishing returns applies to all factors of
production, she should expect to see
a.an increase in the marginal productivity of her remaining land and an increase in the
marginal productivity of her labor.
b.an increase in the marginal productivity of her remaining land and a decrease in the
marginal productivity of her labor.
c.a decrease in the marginal productivity of her remaining land and an increase in the
marginal productivity of her labor.
d.a decrease in the marginal productivity of her remaining land and a decrease in the
marginal productivity of her labor.
