1) The debate over the efficiency of markets in which products with brand names are
sold
a.is framed by the role of regulation in advertising.
b.is likely to be resolved by reference to anecdotal evidence.
c.hinges on whether consumers are rational in their choices.
d.hinges on the effectiveness of advertising that identifies price differences.
2) The income of a typical worker in a country is most closely linked to which of the
following?
a.population
b.productivity
c.market power
d.government policies
3) When computing the opportunity cost of attending a basketball game you should
include
a.the price you pay for the ticket and the value of your time.
b.the price you pay for the ticket, but not the value of your time.
c.the value of your time, but not the price you pay for the ticket.
d.neither the price of the ticket nor the value of your time.
4) When a monopolist increases the amount of output that it produces and sells, the
price of its output
a.stays the same.
b.increases.
c.decreases.
d.may increase or decrease depending on the price elasticity of demand.
5) Scenario 18-7
Suppose the following events occur in the market for university economics professors.
Event 1: A recession in the U.S. economy lowers the opportunity cost of going to
graduate school in economics to become a university economics professor.
Event 2: An increasing number of students in U.S. primary and secondary schools
increases the number of students entering college, increasing the output price of
university economics professors’ services.
Refer to Scenario 18-7. As a result of these two events, holding all else constant, the
equilibrium wages of university economics professors will
a.increase.
b.decrease.
c.not change.
d.It is not possible to determine what will happen to the equilibrium wages.
6) NAFTA is an example of a multilateral approach to achieving free trade.
a.True
b.False
7) Suppose that the labor market for life guards is initially in equilibrium. Then the
marginal productivity of life guards increases. What happens to the equilibrium wage
and quantity of life guards?
a.Both the equilibrium wage and quantity increase.
b.Both the equilibrium wage and quantity decrease.
c.The equilibrium wage increases, and the equilibrium quantity decreases.
d.The equilibrium wage decreases, and the equilibrium quantity increases.
8) Evidence from studies of workers’ choices on whether to participate in 401(k) plans
suggests that the workers’ behavior appears to exhibit
a.indifference.
b.ignorance.
c.inertia.
d.indecision.
9) Suppose the government has enacted policies to influence the amount of good x that
is supplied. These policies are most likely to improve the allocation of resources if good
x is
a.basic research.
b.a congested toll road.
c.spinach.
d.clothing.
10) The most efficient tax possible is a
a.marginal income tax.
b.lump-sum tax.
c.consumption tax.
d.corporate profit tax.
11) Narrative 22-1
Katie owns a boutique that sells highend women’s clothing and accessories. Shana
works part-time at the boutique and frequently is the only employee in this small store.
Katie pays Shana a wage that is higher than the market wage for this type of job. When
the store is not full of customers, Shana diligently works on displays and cleans to keep
the store looking its best. Magda is a customer in the store who asks Shana’s opinion on
the quality of some jeans she is considering purchasing. Even though she’s had several
other customers return them due to flaws, Shana tells Magda the quality is great.
Belinda is another customer who is returning a necklace without revealing that she lost
a gem from it while wearing it.
Refer to Narrative 22-1. Which of the ladies is causing a moral hazard problem?
a.Shana
b.Katie
c.Belinda
d.Magda
12) If Max experiences a decrease in his income, then we would expect Max’s demand
for
a.each good he purchases to remain unchanged.
b.normal goods to decrease.
c.luxury goods to increase.
d.inferior goods to decrease.
13) Table 15-14
The following table gives information on the price, quantity, and total cost of
production for a monopolist.
At what price does marginal revenue equal marginal cost?
a.$5
b.$4
c.$3
d.$2
14) Hosne’s Production Possibilities FrontierMerve’s Production Possibilities
Frontier
At which of the following prices would both Hosne and Merve gain from trade with
each other?
a.5 wallets for 1.25 purses
b.5 wallets for 2.5 purses
c.5 wallets for 3.75 purses
d.Hosne and Merve could not both gain from trade with each other at any price.
15) The poverty line in the country of Abbyville is $15,000. The distribution of income
for Abbyville is as follows:
The poverty rate in Abbyville is
a.12 percent.
b.32 percent.
c.50 percent.
d.68 percent.
16) Last year, Jim bought 8 tickets to sporting events when his income was $30,000.
This year, his income is $33,000, and he purchased 10 tickets to sporting events.
Holding other factors constant and using the midpoint method, it follows that Jim’s
income elasticity of demand is about
a.0.43, and Jim regards tickets to sporting events as inferior goods.
b.0.43, and Jim regards tickets to sporting events as normal goods.
c.2.33, and Jim regards tickets to sporting events as inferior goods.
d.2.33, and Jim regards tickets to sporting events as normal goods.
17) Figure 8-25
Suppose the government places a $4 tax per unit on this good. How much tax revenue is
collected after the tax is imposed?
18) Table 15-22
The marginal revenue, when the quantity changes from 30 to 40 units, is
19) Over time, there have been technological advances in the production of radios. At
the same time, it has become less popular to listen to radio. Taking these two events into
account, what would be the likely effect on the wages of workers who manufacture
radios?
20) Figure 16-12
Does this monopolistically competitive market produce the welfare-maximizing level of
output?
21) Assume that Jamaica and Norway can switch between producing coolers and
producing radios at a constant rate. The following table shows the number of coolers or
number of radios each country can produce in one day.