1) Based on U.S. income data from 2011, the bottom fifth of all families received
approximately what percent of all income?
a.48.9 percent
b.21.3 percent
c.8.6 percent
d.3.8 percent
2) For a monopolist, marginal revenue is
a.equal to price, as it is for a perfectly competitive firm.
b.less than price, as it is for a perfectly competitive firm.
c.equal to price, whereas marginal revenue is less than price for a perfectly competitive
firm.
d.less than price, whereas marginal revenue is equal to price for a perfectly competitive
firm.
3)
For prices below $8, demand is price
a.elastic, and total revenue will rise as price rises.
b.inelastic, and total revenue will rise as price rises.
c.elastic, and total revenue will fall as price rises.
d.inelastic, and total revenue will fall as price rises.
4) Table 17-28
Suppose that two firms determine that each could lower its costs and increase its profits
if both reduced their advertising budgets. But in order for the plan to work, each firm
must agree to refrain from advertising. Each firm believes that advertising works by
increasing the demand for the firm’s product, but each firm also believes that if neither
firm advertises, the cost savings will outweigh the lost sales. The table below lists each
firm’s individual profits:
Firm A
Breaks agreement Maintains agreement
and advertises and does not advertise
Refer to Table 17-28. Which of the following statement(s) correctly characterizes the
outcome of this game?
a.Both Firm A and Firm B have a dominant strategy to advertise.
b.There is a Nash equilibrium when both firms advertise.
c.Although both firms collectively would earn higher profits by maintaining the
agreement not to advertise, self- interest will cause each firm to break the agreement.
d.All of the above are correct.
5) Suppose that young people often borrow and then repay the loans when they are
older. These actions relate to which problem in measuring inequality?
a.in-kind transfers
b.the economic life cycle
c.a negative income tax
d.economic mobility
6) Figure 10-7
Which quantity represents the social optimum for this market?
a.Q1.
b.Q2.
c.Q3.
d.Q4.
7) If the price of milk rises, when is the likely to be the lowest?
a.immediately after the price increase
b.one month after the price increase
c.three months after the price increase
d.one year after the price increase
8) The slope of a steep upward-sloping line will be a
a.small positive number.
b.large positive number.
c.small negative number.
d.large negative number.
9) Producer surplus is
a.represented on a graph by the area below the demand curve and above the supply
curve.
b.the amount a seller is paid minus the cost of production.
c.also referred to as excess supply.
d.All of the above are correct.
10) The current value of the marginal product of land influences the
a.demand for land.
b.equilibrium rental price of land.
c.equilibrium purchase price of land.
d.all of the above.
11) You and your friends watch a movie in your bedroom. For you and your friends, the
enjoyment that you get from watching the movie is not rival in consumption.
a.True
b.False
12) Figure 21-17
Refer to Figure 21-17. When the price of X is $6, the price of Y is $24, and income is
$48, Paul’s optimal choice is point C. Then the price of Y decreases to $6. Paul’s new
optimal choice is point
a.A.
b.B.
c.D.
d.E.
13) Table 17-1
Imagine a small town in which only two residents, Rochelle and Alec, own wells that
produce safe drinking water. Each week Rochelle and Alec work together to decide how
many gallons of water to pump. They bring the water to town and sell it at whatever
price the market will bear. To keep things simple, suppose that Rochelle and Alec can
pump as much water as they want without cost so that the marginal cost of water equals
zero. The weekly town demand schedule and total revenue schedule for water is shown
in the table below:
Refer to Table 17-1. Suppose the town enacts new antitrust laws that prohibit Rochelle
and Alec from operating as a monopoly. How many gallons of water will be produced
and sold once Rochelle and Alec reach a Nash equilibrium?
a.600
b.700
c.800
d.900
14) The fact that wage differentials continue to exist across different groups of workers
leads economists to believe that
a.discrimination by customers is the most common type of economic discrimination.
b.differences in human capital and job characteristics must be important in explaining
the differences in wages.
c.firms apparently are not profit maximizers.
d.the market has failed to properly allocate wages to different workers.
15) Suppose the Federal Reserve announces that it will be making a change to a key
interest rate to decrease the money supply. This is likely because the Federal Reserve is
a.worried about inflation.
b.worried about unemployment.
c.hoping to increase the demand for goods and services.
d.worried that the economy is growing too slowly.
16) The nation’s antitrust laws are enforced by economists at the Department of
a.Labor.
b.Health and Human Services.
c.Justice.
d.Treasury.