1) George and Brad are waiters at a local restaurant. The female customers prefer to be
seated at the tables that George waits on because they think George is better looking
than Brad. If George earns more than Brad because of his better looks, this is an
example of
a.effort playing a key role in wage differences.
b.differences in human capital.
c.a beauty premium.
d.a compensating differential.
2) Scenario 13-5
Suppose that Emily opens a restaurant. She receives a loan from a bank for $200,000.
She withdraws $100,000 from her personal savings account. The interest rate on the
loan is 6%, and the interest rate on her savings account is 2%.
Emily’s total opportunity cost of capital is
a. $2,000.
b. $4,000.
c. $12,000.
d. $14,000.
3) Charles purchases 20 basketball tickets per year when his annual income is $50,000
and 25 basketball tickets when his annual income is $60,000. Charles’s income
elasticity of demand for basketball ticket is
a.0.82, and basketball tickets are a normal good.
b.0.82, and basketball tickets are an inferior good.
c.1.22, and basketball tickets are a normal good.
d.1.22, and basketball tickets are an inferior good.
4) Figure 9-11
Consumer surplus in this market before trade is
a.A.
b.B + C.
c.A + B + D.
d.C.
5) The U.S. tax burden is high compared to many European countries..
a.True
b.False
6) Producer surplus directly measures
a.the well-being of society as a whole.
b.the well-being of buyers and sellers.
c.the well-being of sellers.
d.sellers’ willingness to sell.
7) Suppose the Ivory Coast, a small country, imports wheat at the world price of $4 per
bushel. If the Ivory Coast imposes a tariff of $1 per bushel on imported wheat, then,
other things equal, the price of wheat in Ivory Coast will increase, but by less than $1.
a.True
b.False
8) For any country, if the world price of copper is higher than the domestic price of
copper without trade, that country should
a.export copper, since that country has a comparative advantage in copper.
b.import copper, since that country has a comparative advantage in copper.
c.neither export nor import copper, since that country cannot gain from trade.
d.neither export nor import copper, since that country already produces copper at a low
cost compared to other countries.
9) Figure 15-16
Which triangle represents the monopoly deadweight loss?
a.the triangle with vertical lines that is bordered by ACT
b.the triangle with vertical lines and light grey shading that is bordered by ABH
c.the triangle with vertical lines and dark grey shading that is bordered by HIT
d.the triangle with dark grey shading that is bordered by HKT
10) Producer surplus is the
a.area under the supply curve to the left of the amount sold.
b.amount a seller is paid minus the cost of production.
c.area between the supply and demand curves, above the equilibrium price.
d.cost to sellers of participating in a market.