1) Table 13-3
The marginal product of the second worker is
a.90 units.
b.85 units.
c.80 units.
d.20 units.
2) Scenario 14-4
The information below applies to a competitive firm that sells its output for $40 per
unit.
– When the firm produces and sells 150 units of output, its average total cost is $24.50.
– When the firm produces and sells 151 units of output, its average total cost is $24.55.
When the firm produces 150 units of output, its total cost is
a. $3,450.00.
b. $3,525.75.
c. $3,675.00.
d. $3,850.25.
3) A Giffen good is a good for which
a.a decrease in the price decreases the quantity demanded.
b.the income effect outweighs the substitution effect.
c.an increase in the price decreases the quantity demanded.
d.Both a) and b) are correct.
4) Giffen goods have positively-sloped demand curves because they are
a.inferior goods with no substitution effect.
b.normal goods with no substitution effect.
c.inferior goods for which the substitution effect outweighs the income effect.
d.inferior goods for which the income effect outweighs the substitution effect.
5)
Which arrow represents the flow of spending by households?
a.A
b.B
c.C
d.D
6) Stick Storage manufactures and sells computer flash drives. Last year it sold 2
million flash drives at a price of $10 each. For last year, the firm’s
a.accounting profit was $20 million.
b.economic profit was $20 million.
c.total revenue was $20 million.
d.explicit costs was $20 million.
7) The income distribution in the United States shows that the income share of the top
fifth of all families is
a.over 60 percent.
b.around 21 percent.
c.more than 12 times the income of the bottom fifth.
d.less than 10 times the income of the bottom fifth.
8) Pat calculates that for every extra dollar she earns, she owes the government 33
cents. Her total income now is $35,000, on which she pays taxes of $7,000. Determine
her average tax rate and her marginal tax rate.
a.Her average tax rate is 33 percent and her marginal tax rate is 20 percent.
b.Her average tax rate is 20 percent and her marginal tax rate is 33 percent.
c.Her average tax rate is 20 percent and her marginal tax rate is 20 percent.
d.Her average tax rate is 33 percent and her marginal tax rate is 33 percent.
9) A firm that is a natural monopoly
a.is not likely to be concerned about new entrants eroding its monopoly power.
b.is taking advantage of economies of scale.
c.would experience a higher average total cost if more firms entered the market.
d.All of the above are correct.
10) Historical episodes are
a.valuable to economists because they allow economists to see how the science of
economics has evolved.
b.valuable to economists because they allow economists to evaluate economic theories.
c.not of concern to economists because economics is about predicting the future, not
dwelling on the past.
d.not of concern to economists because the exact circumstances of historical episodes
are unlikely to be observed again.
11) A tariff is a tax placed on
a.an exported good and it lowers the domestic price of the good below the world price.
b.an exported good and it ensures that the domestic price of the good stays the same as
the world price.
c.an imported good and it lowers the domestic price of the good below the world price.
d.an imported good and it raises the domestic price of the good above the world price.
12) Which of the following characteristics is required for a perfectly competitive
market?
a.The goods offered for sale are exactly the same.
b.There are so many buyers and sellers that no single buyer or seller has any influence
over the market price.
c.It is difficult for new sellers to enter the market.
d.Both a and b are correct.
13) Figure 8-5
Suppose that the government imposes a tax of P3 – P1.
The equilibrium price before the tax is
imposed is
a.P1.
b.P2.
c.P3.
d.P4.
14) The movement from Db to Da could be
caused by
a.a decrease in price.
b.an increase in the price of a complement.
c.a technological advance.
d.an increase in the price of a substitute.
15) If a seller in a competitive market chooses to charge more than the going price, then
a.the sellers’ profits must increase.
b.the owners of the raw materials used in production would raise the prices for the raw
materials.
c.other sellers would also raise their prices.
d.buyers will make purchases from other sellers.
16) Which of the following is likely to have the most price inelastic demand?
a.white chocolate chip with macadamia nut cookies
b.hardback novels
c.salt
d.box seats at a major league baseball game
17) Monopolistic competition and monopoly are examples of a market structure called
imperfect competition.
a.True
b.False
18) Figure 8-23. The figure represents the relationship between the size of a tax and the
tax revenue raised by that tax.
If the economy is at point A
on the curve, then a small increase in the tax rate will
a.increase the deadweight loss of the tax and increase tax revenue.
b.increase the deadweight loss of the tax and decrease tax revenue.
c.decrease the deadweight loss of the tax and increase tax revenue.
d.decrease the deadweight loss of the tax and decrease tax revenue.
19) The deadweight loss that is associated with a monopolistically competitive market
is a result of
a.price falling short of marginal cost in order to increase market share.
b.price exceeding marginal cost.
c.the firm operating in a regulated industry.
d.excessive advertising costs.