Table 75
For each of three potential buyers of oranges, the table displays the willingness to pay
for the first three oranges of the day. Assume Allison, Bob, and Charisse are the only
three buyers of oranges, and only three oranges can be supplied per day.
First OrangeSecond OrangeThird Orange
Allison$2.00$1.50$0.75
Bob$1.50$1.00$0.60
Charisse$0.75$0.25$0
Refer to Table 75. If the market price of an orange is $0.40, then
a. 6 oranges are demanded per day, and consumer surplus amounts to $4.95.
b. 6 oranges are demanded per day, and consumer surplus amounts to $5.10.
c. 7 oranges are demanded per day, and consumer surplus amounts to $5.30.
d. 7 oranges are demanded per day, and consumer surplus amounts to $5.15.
The primary determinant of a country’s standard of living is
a. the country’s ability to prevail over foreign competition.
b. the country’s ability to produce goods and services.
c. the total supply of money in the economy.
d. the average age of the country’s labor force.
Figure 25
Refer to Figure 25. It is not possible for this economy to produce at point
a. A.
b. B.
c. C.
d. D.
Figure 89
The vertical distance between points A and C represents a tax in the market.
Refer to Figure 89. The imposition of the tax causes the price paid by buyers to
increase by
a. $20.
b. $200.
c. $300.
d. $500.
Figure 910. The figure applies to Mexico and the good is rifles.
Refer to Figure 910. The area bounded by the points (Q0, P0), (Q2, P1), and (Q1, P1)
represents
a. Mexico’s gains from trade.
b. the amount by which Mexico’s gain in consumer surplus exceeds its loss in producer
surplus due to trade.
c. Mexico’s gain in total surplus due to trade.
d. All of the above are correct.
The U.S. Congress first instituted a minimum wage in
a. 1776.
b. 1812.
c. 1938.
d. 1975.
Figure 216
Refer to Figure 216. Suppose this economy is producing at point B. Which of the
following statements would best explain this situation?
a. The economy does not have enough resources to produce more of either product.
b. The economy’s available technology prevents it from producing more of either
product.
c. There is widespread unemployment in the economy.
d. The economy is getting all it can from the scarce resources available.
For a selfsufficient producer, the production possibilities frontier
a. is the same as the consumption possibilities frontier.
b. is greater than the consumption possibilities frontier.
c. is less than the consumption possibilities frontier.
d. is always a straight line.
Figure 810
Refer to Figure 810. Suppose the government imposes a tax that reduces the quantity
sold in the market after the tax to Q2. Without the tax, the total surplus is
a. [1/2 x (P0P5) x Q5] + [1/2 x (P50) x Q5].
b. [1/2 x (P0P2) x Q2] +[(P2P8) x Q2] + [1/2 x (P80) x Q2].
c. (P2P8) x Q2.
d. 1/2 x (P2P8) x (Q5Q2).
An economy’s production possibilities frontier is also its consumption possibilities
frontier
a. under all circumstances.
b. under no circumstances.
c. when the economy is selfsufficient.
d. when the rate of tradeoff between the two goods being produced is constant.
Which of the following is not something that John Maynard Keynes used to describe an
economist?
a. He must be a mathematician, historian, statesman, and philosopher in some degree.
b. He must understand symbols and speak in words.
c. He must only contemplate in abstract and general terms.
d. He must study the present in light of the past for purposes of the future.
When a tax is placed on the sellers of a product, buyers pay
a. more, and sellers receive more than they did before the tax.
b. more, and sellers receive less than they did before the tax.
c. less, and sellers receive more than they did before the tax.
d. less, and sellers receive less than they did before the tax.
The problem with the protectionasabargainingchip argument for trade restrictions is
a. if it works consumer surplus will decline.
b. if it works producer surplus falls.
c. if it fails the country faces a choice between two bad options.
d. if it fails total surplus will increase.
The bowed shape of the production possibilities frontier can be explained by the fact
that
a. all resources are scarce.
b. economic growth is always occurring.
c. the opportunity cost of one good in terms of the other depends on how much of each
good the economy is producing.
d. the only way to get more of one good is to get less of the other.
Figure 315
Perry’s Production Possibilities FrontierJordan’s Production Possibilities Frontier
Refer to Figure 315. Jordan should specialize in the production of
a. novels.
b. poems.
c. both goods.
d. neither good.
Figure 315
Perry’s Production Possibilities FrontierJordan’s Production Possibilities Frontier
Refer to Figure 315. The opportunity cost of 1 poem for Perry is
a. 1/12 novel.
b. 1/6 novel.
c. 2 novels.
d. 6 novels.
Figure 83
The vertical distance between points A and C represents a tax in the market.
Refer to Figure 83. Which of the following equations is valid for the tax revenue that
the tax provides to the government?
a. Tax revenue = (P2 P1)xQ1
b. Tax revenue = (P3 P1)xQ1
c. Tax revenue = (P3 P2)xQ1
d. Tax revenue = (P3 P1)x(Q2 Q1)
Figure 415
Refer to Figure 415. Which of the following would cause the supply curve to shift
from Supply B to Supply A in the market for butter?
a. a decrease in the price of butter
b. an increase in the price of margarine
c. an increase in the price of milk
d. an improvement in technology that allows firms to use less labor in the production of
butter
Which of the following quantities decrease in response to a tax on a good?
a. the equilibrium quantity in the market for the good, the effective price of the good
paid by buyers, and consumer surplus
b. the equilibrium quantity in the market for the good, producer surplus, and the
wellbeing of buyers of the good
c. the effective price received by sellers of the good, the wedge between the effective
price paid by buyers and the effective price received by sellers, and consumer surplus
d. None of the above is necessarily correct unless we know whether the tax is levied on
buyers or on sellers.
Economists who are primarily responsible for advising Congress on economic matters
work in which agency?
a. the Federal Reserve
b. the Congressional Budget Office
c. the Department of the Treasury
d. the Department of Commerce
Figure 811
Refer to Figure 811. The deadweight loss of the tax is represented by the
a. length of the line segment connecting points A and B.
b. length of the line segment connecting points A and C.
c. length of the line segment connecting points B and C.
d. area of the triangle bounded by the points A, B, and C.
Figure 77
Refer to Figure 77. What is the consumer surplus if the price is $100?
a. $2,500
b. $5,000
c. $10,000
d. $20,000
In the circularflow diagram, which of the following items flows from firms to
households through the markets for goods and services?
a. goods and services
b. dollars paid to land, labor, and capital
c. dollars spent on goods and services
d. wages, rent, and profit
Figure 29
Panel (a) Panel (b)
Refer to Figure 29, Panel (a). Production at point K is
a. possible and efficient.
b. possible but inefficient.
c. impossible but efficient.
d. impossible and inefficient.
The price elasticity of supply along a typical supply curve is
a. constant.
b. equal to zero.
c. higher at low levels of quantity supplied and lower at high levels of quantity
supplied.
d. lower at low levels of quantity supplied and higher at high levels of quantity
supplied.
Table 58
IncomeQuantity of Good X
PurchasedQuantity of Good Y
Purchased
$30,000220
$40,000610
Refer to Table 58. Using the midpoint method, what is the income elasticity of demand
for good X?
a. 3.5
b. 0.29
c. 0.29
d. 3.5
Buyers are able to buy all they want to buy and sellers are able to sell all they want to
sell at
a. prices at and above the equilibrium price.
b. prices at and below the equilibrium price.
c. prices above and below the equilibrium price, but not at the equilibrium price.
d. the equilibrium price but not above or below the equilibrium price.
Table 44
PriceQuantity Demanded
by AdamQuantity Demanded
by BarbQuantity Demanded
by Carl
$1010822
$8121226
$6141630
$4162034
$2182438
$0202842
Refer to Table 44. Suppose the market consists of Adam, Barb, and Carl. If the price
falls by $2, the quantity demanded in the market increases by
a. 4 units.
b. 6 units.
c. 8 units.
d. 10 units.
Tom walks Bethany’s dog once a day for $50 per week. Bethany values this service at
$60 per week, while the opportunity cost of Tom’s time is $30 per week. The
government places a tax of $35 per week on dog walkers. After the tax, what is the total
surplus?
a. $50
b. $30
c. $25
d. $0
Which of the following observations would be consistent with the imposition of a
binding price ceiling on a market? After the price ceiling becomes effective,
a. a smaller quantity of the good is bought and sold.
b. a smaller quantity of the good is demanded.
c. a larger quantity of the good is supplied.
d. the price rises above the previous equilibrium.
HTMLENTITY#8203HTMLENTITY Table 337
Output of pottery in one sixhour session
VasesMugs
Sarah 8 32
Charles 10 25
HTMLENTITY#8203HTMLENTITY
Refer to Table 337. Sarah and Charles are both potters and each can switch between
the production of vases and mugs at a constant rate. The table shows the total number of
vases or decorative mugs that each person can produce in a sixhour session of
producing pottery. Sarah should specialize in the production of
a. HTMLENTITY#8203HTMLENTITYmugs and Charles should specialize in the
production of vases.
b. HTMLENTITY#8203HTMLENTITYvases and Charles should specialize in the
production of mugs.
c. HTMLENTITY#8203HTMLENTITYboth goods and Charles should specialize in
the production of neither good.
d. HTMLENTITY#8203HTMLENTITYneither good and Charles should specialize in
the production of both good.