1) A firm’s opportunity costs of production are equal to its
a.explicit costs only.
b.implicit costs only.
c.explicit costs + implicit costs.
d.explicit costs + implicit costs + total revenue.
2) Caroline earns more than John. Under a new tax system, some of the taxes paid by
Caroline would go to John. A libertarian would
a.support the system because an extra dollar earned by Caroline would be worth less to
her than an extra dollar given to John.
b.oppose the system if it redistributed income in the presence of equal opportunity.
c.oppose the system because an extra dollar earned by Caroline would be worth more to
her than an extra dollar given to John.
d.support the system if it maximized the well-being of the poorest member of society.
3) Figure 9-2
The figure illustrates the market for calculators in a country.
As a result of trade, total surplus increases by
a. $50.
b. $100.
c. $250.
d. $500.
4) Table 17-13
Two home-improvement stores (Lopes and HomeMax) in a growing urban area are
interested in expanding their market share. Both are interested in expanding the size of
their store and parking lot to accommodate potential growth in their customer base. The
following game depicts the strategic outcomes that result from the game. Increases in
annual profits of the two home-improvement stores are shown in the table below.
Refer to Table 17-13. If both stores follow a dominant strategy, Lopes’s annual profit
will grow by
a.$0.4 million.
b.$1.0 million.
c.$2.0 million.
d.$3.2 million.
5) Economic profit is equal to total revenue minus the
a.explicit cost of producing goods and services.
b.opportunity cost of producing goods and services.
c.accounting cost of producing goods and services.
d.implicit cost of producing goods and services.
6) Suppose buyers of coffee and sugar regard the two goods as complements. Then an
increase in the price of coffee will cause a(n)
a.decrease in the demand for sugar and a decrease in the quantity supplied of sugar.
b.decrease in the supply of sugar and a decrease in the quantity demanded of sugar.
c.decrease in the equilibrium price of sugar and an increase in the equilibrium quantity
of sugar.
d.increase in the equilibrium price of sugar and a decrease in the equilibrium quantity of
sugar.
7) Chile’s Production Possibilities Frontier Colombia’s Production Possibilities
Frontier
Chi
le has an absolute advantage in the production of
a.coffee and Colombia has an absolute advantage in the production of soybeans.
b.soybeans and Colombia has an absolute advantage in the production of coffee.
c.both goods and Colombia has an absolute advantage in the production of neither
good.
d.neither good and Colombia has an absolute advantage in the production of both
goods.
8) Table 17-9
The table shows the demand schedule for a particular product.
Refer to Table 17-9. Suppose the market for this product is served by two firms that
have formed a cartel. What price will the cartel charge in this market if the marginal
cost of production is $0?
a.$6
b.$8
c.$10
d.$12
9) Relationship between Price and Restaurant Meals
Which of the following could result in a movement from point B to point Z?
a.a change in the price of a restaurant meal
b.a change in the number of restaurant meals demanded
c.a change in income
d.Both a and b are correct.
10) Immigration is an important
a.explanation for the failure of firms to operate on their labor-demand curves.
b.explanation for the failure of firms to operate on their output-supply curves.
c.source of shifts in labor demand.
d.source of shifts in labor supply.
11) Table 14-12
Bill’s Birdhouses
What is the marginal revenue from selling the 1st unit?
a. $30
b. $50
c. $80
d. $160
12) If the price elasticity of supply is 1.5, and a price increase led to a 3% increase in
quantity supplied, then the price increase is about
a. 0.2%.
b. 0.5%.
c. 2.0%.
d. 4.5%.
13) A firm‘s incentive to compare marginal revenue and marginal cost is an application
of the principle that rational people think at the margin.
a.True
b.False
14) James earns income of $90,000 per year. His average tax rate is 40percent. James
paid $5,500 in taxes on the first $40,000 he earned. What was the marginal tax rate on
the rest of his income?
a.6.1 percent
b.44 percent
c.55 percent
d.61 percent
15) In which of the following instances would the deadweight loss of the tax on airline
tickets increase by a factor of 9?
a.The tax on airline tickets increases from $20 per ticket to $60 per ticket.
b.The tax on airline tickets increases from $20 per ticket to $90 per ticket.
c.The tax on airline tickets increases from $15 per ticket to $60 per ticket.
d.The tax on airline tickets increases from $15 per ticket to $135 per ticket.
16) If this economy uses all its resources in the dishwasher
industry, it produces 35 dishwashers and no doghouses.
a.True
b.False
17) When two variables have a negative correlation,
a.they tend to move in opposite directions.
b.they tend to move in the same direction.
c.one variable will move while the other remains constant.
d.the variables’ values are never positive.
18) Table 14-14
The following table presents cost and revenue information for Bob‘s bakery production
and sales.
Suppose that due to a decrease in the market demand for bread the market price of
bread drops to $2.75 per loaf. At this new price, what is Bob‘s profitmaximizing
quantity?
a.5 units
b.6 units
c.7 units
d.8 units
19) National defense is provided by the government because
a.it is impossible for private markets to produce public goods.
b.products provided by the government are produced more efficiently.
c.free-riders make it difficult for private markets to supply the socially optimal quantity.
d.public goods increase government revenues.
20) The small-economy assumption is necessary to analyze the gains and losses from
international trade.
a.True
b.False
21) Consider the following demand schedule.
Using the midpoint method, demand is unit elastic when price changes from
22) The equilibrium purchase price of an acre of land depends upon the current value of
the marginal product of land and upon the __________.
23) Table 19-2
Source: US Census Bureau and Mankiw’s calculations
Refer to Table 19-2. In 2011, on average how much more income would a man with a
college degree earn than a man with a high school degree?
24) Give an example of government intervention that is intended to improve equality.
25) It takes Heather 1 hour to change the oil in the car and 20 minutes to do the dishes.
It takes Zach 1.5 hours to change the oil in the car. For Zach to have a comparative
advantage changing the oil it must take him more than minutes to do the dishes.
26) What is the main difference between a centrally planned economy and a market
economy?
27) Table 13-19
What is the shape of the average-total-cost curve?
28) In what sense is it meaningful to say that fighting poverty is a public good?
29) Give an example of a famous cartel.
30) People can borrow and lend money to smooth out short term variations in income
known as what kind of changes?