1) A city street is
a.always a public good, whether or not it is congested.
b.a public good when it is congested, but it is a common resource when it is not
congested.
c.a common resource when it is congested, but it is a public good when it is not
congested.
d.always a common resource, whether or not it is congested.
2) Figure 21-1
The downwardsloping line on the figure represents a consumer’s budget constraint.
Refer to Figure 21-1. All of the points identified on the figure represent affordable
consumption options with the exception of
a.A.
b.E.
c.A and E.
d.None of the above are correct. All of the points identified on the figure are affordable.
3) Suppose the government imposes a tax of 10 percent on the first $40,000 of income
and 20 percent on all income above $40,000. What are the tax liability and the marginal
tax rate for a person whose income is $50,000?
a.12 percent and 20 percent, respectively
b.12 percent and $50,000, respectively
c.$6,000 and 12 percent, respectively
d.$6,000 and 20 percent, respectively
4) Figure 10-12
An alternative label for the quantity would be
a. .
b. .
c. .
d. .
5) Points inside the production possibilities frontier represent inefficient levels of
production.
a.True
b.False
6) In most societies, resources are allocated by
a.a single central planner.
b.a small number of central planners.
c.those firms that use resources to provide goods and services.
d.the combined actions of millions of households and firms.
7) Figure 7-34
Refer to Figure 7-34. Suppose there is initially a price ceiling set at $4 in this market.
How much is total producer surplus with the price ceiling in place?
8) In 2011, the U.S. federal government collected approximately what percentage of the
taxes in the economy?
a. 10%
b.40%
c.50%
d.67%
9) In the short run, an increase in the money supply is likely to lead to
a.lower unemployment and lower inflation.
b.lower unemployment and higher inflation.
c.higher unemployment and lower inflation.
d.higher unemployment and higher inflation.
10) In the United States, long-term poverty affects
a.more families than short-term poverty.
b.an equal number of families as short-term poverty.
c.slightly fewer families than short-term poverty.
d.many fewer families than short-term poverty.
11) The value of the marginal product of capital can be calculated as the market price of
the good multiplied by the marginal product of capital.
a.True
b.False
12) Table 18-8
Harold and Maude own a dance studio where they and their employees teach ballroom
dancing. Their company is a competitive, profit-maximizing firm. Harold and Maude’s
production function is detailed in the table below.
Refer to Table 18-8. If Harold and Maude pay their workers $80 per day and charge
$20 per dance lesson, what is the value of the marginal product of the second worker?
a.$400
b.$800
c.$1,600
d.$4,800
13) Recent forest fires in the western states are expected to cause the price of lumber to
rise in the next six months. As a result, we can expect the supply of lumber to
a.fall in six months but not now.
b.increase in six months when the price goes up.
c.fall now.
d.increase now to meet as much demand as possible.
14) The largest budgetary expense for a typical state or local government is
a.education.
b.Medicare.
c.highways.
d.income security.
15) The Condorcet paradox implies that the order in which items are voted on under
majority rule is unimportant.
a.True
b.False
16) A town engineer comes to the city council with a proposal to install a traffic light at
a certain intersection that currently has a stop sign. The benefit of the traffic light is
increased safety because the light will reduce the incidence of fatal traffic accidents by
50 percent per year. Which of the following statements is correct?
a.The city council should vote to install the traffic light because the benefits will
outweigh the costs.
b.The city council should carefully evaluate the benefits of reduced fatalities against
only the explicit costs of the light.
c.The city council should carefully evaluate the benefits of reduced fatalities against the
costs of the light and of the extra time that drivers will spend waiting for a green light.
d.The costs will invariably outweigh the benefits.
17) Capital, labor, and land
a.have derived demands.
b.are factors of production.
c.are inputs used in the production of goods and services.
d.All of the above are correct.