1) Figure 10-10
Taking into account private and external costs, the maximum total surplus that can be
achieved in this market is
a. $760.
b. $1,080.
c. $1,440.
d. $1,920.
2) Demand is inelastic if the is greater than 1.
a.True
b.False
3) Figure 16-13
Which letter represents the profit-maximizing quantity?
4) Suppose the government imposes a tax on cheese. The deadweight loss from this tax
will likely be greater in the
a.first year after it is imposed than in the eighth year after it is imposed because demand
and supply will be more elastic in the first year than in the eighth year.
b.first year after it is imposed than in the eighth year after it is imposed because demand
and supply will be less elastic in the first year than in the eighth year.
c.eighth year after it is imposed than in the first year after it is imposed because demand
and supply will be more elastic in the first year than in the eighth year.
d.eighth year after it is imposed than in the first year after it is imposed because demand
and supply will be less elastic in the first year than in the eighth year.
5) When a seller expects the price of its product to decrease in the future, the seller’s
supply curve shifts left now.
a.True
b.False
6) The belief that education makes a person more productive and thereby raises his or
her wage is referred to as the
a.signaling view of education.
b.natural-ability view of education.
c.unmeasured-variables view of education.
d.human-capital view of education.
7) In less than two years in the early 1920s, the cost of a German newspaper rose from
0.30 marks to 70,000,000 marks. This is a spectacular example of
a.market power caused by a change in the country’s standard of living.
b.market power caused by a single firm controlling the newspaper production.
c.inflation caused by increased productivity in the economy.
d.inflation caused by an increase in the quantity of money in the economy.
8) Figure 21-2
The downwardsloping line on the figure represents a consumer’s budget constraint.
Refer to Figure 21-2. Which of the following statements is correct?
a.Points W, X, and Y all cost the consumer the same amount of money.
b.Point V is unaffordable for the consumer given his budget constraint.
c.Point Z costs less than point V.
d.Points W, X, and Y give the consumer the same level of satisfaction.
9) A tax of $0.25 is imposed on each bag of potato chips that is sold. The tax decreases
producer surplus by $600 per day, generates tax revenue of $1,220 per day, and
decreases the equilibrium quantity of potato chips by 120 bags per day. The tax
a.decreases consumer surplus by $645 per day.
b.decreases the equilibrium quantity from 6,000 bags per day to 5,880 bags per day.
c.decreases total surplus from $3,000 to $1,800 per day.
d.creates a deadweight loss of $15 per day.
10) Most economists believe that the higher average salaries earned by men in
comparison to women arise from
a.discrimination.
b.a variety of factors, including differences in human capital and compensating
differentials; few economists believe that gender discrimination in earnings exists.
c.differences in human capital as the primary reason.
d.a variety of factors, including differences in human capital, compensating
differentials, and discrimination.
11) Figure 20-1 Number of Poor
Refer to Figure 20-1. Between 1965 and 2011, during recessions (the shaded bars) the
number of individuals in poverty has
a.increased.
b.decreased.
c.not changed.
d.decreased and then increased.
12) Table 22-25
Sophie, Huan, and Santiago are lost with no map or GPS available. They come to an
intersection at which they can turn left, turn right, or continue going straight. Their
preferences are summarized in the table.
Refer to Table 22-25. If the travelers decide to use a Borda count, what is the result?
13) A consumer’s budget constraint is drawn on a graph with the number of sandwiches
measured along the horizontal axis and the number of bowls of soup measured along
the vertical axis. Hold the consumer’s income and the price of a sandwich fixed, and
increase the price of a bowl of soup. Describe the effect on the budget constraint.
14) Figure 9-29
The following diagram shows the domestic demand and domestic supply curves in a
market. Assume that the world price in this market is $1 per unit.
Suppose the country imposes a $1 per unit tariff. If the country allows trade with a
tariff, how much is the deadweight loss caused by the tariff?
15) Using the graph shown, construct a demand curve for M&M’s given an income of
$10.
16) Most people in the United States believe that our tax system should be bothand.
17) A firm hires some number of custodians to clean a large warehouse. When only a
few custodians are hired, they can quickly find and remove a lot of dust and debris. As
the number of custodians increases, additional custodians have to go to greater lengths
and spend more time to find and remove additional dust and debris. What property of
production functions is relevant to the custodians’ situation?