A tshirt maker would be willing to supply 75 tshirts per day at a price of $18.00 each.
At a price of $20.00, the tshirt maker would be willing to supply 100 tshirts. Using the
midpoint method, the price elasticity of supply for tshirts is about
a. 0.37, and supply is elastic.
b. 0.37, and supply is inelastic.
c. 2.71, and supply is elastic.
d. 2.71, and supply is inelastic.
The production possibilities frontier illustrates
a. the tradeoff between efficiency and equality.
b. the combination of output that an economy should produce.
c. the combination of output that each member of society should consume.
d. None of the above is correct.
Figure 73
Refer to Figure 73. When the price rises from P1 to P2, which of the following
statements is not true?
a. The buyers who still buy the good are worse off because they now pay more.
b. Some buyers leave the market because they are not willing to buy the good at the
higher price.
c. Buyers place a higher value on the good after the price increase.
d. Consumer surplus in the market falls.
Figure 97. The figure applies to the nation of Wales and the good is cheese.
Refer to Figure 97. The equilibrium price and the equilibrium quantity of cheese in
Wales before trade are
a. P1 and Q2.
b. P1 and Q1.
c. P0 and Q0.
d. P0 and Q1.
Table 48
PriceFirm X’s
Quantity
SuppliedFirm Y’s
Quantity
SuppliedFirm Z’s
Quantity
Supplied
$0000
$3246
$64812
$961218
$1281624
$15102030
Refer to Table 48. If these are the only three sellers in the market, then the market
quantity supplied at a price of $6 is
a. 6 units.
b. 12 units.
c. 18 units.
d. 24 units.
For which of the following goods is the income elasticity of demand likely highest?
a. natural gas
b. doctor’s visits
c. hamburgers
d. boats
Table 46
PriceFirm A’s
Quantity
SuppliedFirm B’s
Quantity
SuppliedFirm C’s
Quantity
SuppliedFirm D’s
Quantity
Supplied
$010000
$28345
$466810
$6491215
$8212820
$10015425
Refer to Table 46. If these are the only four sellers in the market, then the market
quantity supplied at a price of $10 is
a. 3 units.
b. 11 units.
c. 25 units.
d. 44 units.
Table 337
Output of pottery in one sixhour session
VasesMugs
Sarah 8 32
Charles 10 25
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.
a. Sarah has an absolute advantage in the production of vases and Charles has an
absolute advantage in the production of mugs.
b. Sarah has an absolute advantage in the production of mugs and Charles has an
absolute advantage in the production of vases.
c. Charles has an absolute advantage of both vases and mugs.
d. Sarah has an absolute advantage in both vases and mugs.
Figure 613
This figure shows the market demand and market supply curves for good X.
Refer to Figure 613. Which of the following statements is not correct?
a. A price ceiling set at $4 would be binding, but a price ceiling set at $6 would not be
binding.
b. A price floor set at $7 would be binding, but a price floor set at $4 would not be
binding.
c. A price ceiling set at $3.50 would result in a surplus.
d. A price floor set at $6.50 would result in a surplus.
If something happens to alter the quantity supplied at any given price, then
a. we move along the supply curve.
b. the supply curve shifts.
c. the supply curve becomes steeper.
d. the supply curve becomes flatter.
Figure 918. On the diagram below, Q represents the quantity of peaches and P
represents the price of peaches. The domestic country is Isoland.
Refer to Figure 918. Suppose Isoland changes from a notrade policy to a policy that
allows international trade. If the world price of peaches is $5, then the policy change
results in a
a. $25 decrease in consumer surplus.
b. $20 increase in consumer surplus.
c. $25 decrease in producer surplus.
d. $20 increase in producer surplus.
Which of the following sets of events must cause an increase in the price of a new
house?
a. higher wages for carpenters, higher wood prices, increases in consumer incomes,
higher apartment rents, increases in population, and expectations of higher house prices
in the future
b. lower wages for carpenters, lower wood prices, increases in consumer incomes,
higher apartment rents, increases in population and expectations of higher house prices
in the future
c. lower wages for carpenters, higher wood prices, decreases in consumer incomes,
higher apartment rents, decreases in population and expectations of higher house prices
in the future
d. higher wages for carpenters, lower wood prices, decreases in consumer incomes,
lower apartment rents, decreases in population and expectations of lower house prices
in the future
Table 42
PriceAbby’s
Quantity
DemandedBrandi’s
Quantity
DemandedCarrie’s
Quantity
DemandedDeeDee’s
Quantity
Demanded
$122134
$104445
$86756
$68847
$410938
$2121029
Refer to Table 42. Suppose Abby, Brandi, Carrie, and DeeDee are the only four buyers
in the market. If the price is $8, then the market quantity demanded is
a. 4 units.
b. 6 units.
c. 24 units.
d. 32 units.
The incidence of a tax falls more heavily on
a. consumers than producers if demand is more inelastic than supply.
b. producers than consumers if supply is more inelastic than demand.
c. consumers than producers if supply is more elastic than demand.
d. All of the above are correct.
Suppose that the equilibrium price in the market for tomatoes is $3 per pound. If a law
reduced the maximum legal price for tomatoes to $2 per pound,
a. any possible increase in consumer surplus would be larger than the loss of producer
surplus.
b. any possible increase in consumer surplus would be smaller than the loss of producer
surplus.
c. the resulting increase in producer surplus would be larger than any possible loss of
consumer surplus.
d. the resulting increase in producer surplus would be smaller than any possible loss of
consumer surplus.
Suppose that a country that has a high average wage level agrees to trade with a country
that has a low average wage level. Which country can benefit?
a. only the one with a low level of output per person.
b. only the one with a high level of output per person.
c. both
d. neither
The dictionary defines equilibrium as a situation in which forces
a. are in balance.
b. are the same.
c. clash.
d. remain constant.
Table 48
PriceFirm X’s
Quantity
SuppliedFirm Y’s
Quantity
SuppliedFirm Z’s
Quantity
Supplied
$0000
$3246
$64812
$961218
$1281624
$15102030
Refer to Table 48. If these are the only three sellers in the market, then an increase in
the market price from $6 to $12 will increase quantity supplied by
a. 12 units.
b. 24 units.
c. 36 units.
d. 48 units.
When studying how some event or policy affects a market, elasticity provides
information on the
a. equity effects on the market by identifying the winners and losers.
b. magnitude of the effect on the market.
c. speed of adjustment of the market in response to the event or policy.
d. number of market participants who are directly affected by the event or policy.
Figure 813
Refer to Figure 813. Suppose the government places a $5 perunit tax on this good. The
loss of producer surplus resulting from this tax is
a. $60.
b. $45.
c. $30.
d. $15.
It costs a furniture company $8,750 to produce 25 tables. The company’s total cost will
be $9,125 if it produces a 26th table. If the company produces 26 tables, then
a. its average cost is greater than its marginal cost.
b. its average cost and its marginal cost are equal.
c. its average cost is less than its marginal cost.
d. This cannot be determined from the information given.
Figure 83
The vertical distance between points A and C represents a tax in the market.
Refer to Figure 83. The per unit burden of the tax on buyers is
a. P3 P1.
b. P3 P2.
c. P2 P1.
d. P4 P3.
When studying the effects of changes in public policy, economists believe that
a. it is important to distinguish between the short run and the long run.
b. the assumptions used in studying those effects should be the same for the short run as
for the long run.
c. the shortrun effects of those changes are always more beneficial to society than are
the longrun effects.
d. the longrun effects of those changes are always more beneficial to society than are
the shortrun effects.
Suppose that the demand for picture frames is highly inelastic, and the supply of picture
frames is highly elastic. A tax of $1 per frame levied on picture frames will decrease the
effective price received by sellers of picture frames by
a. less than $0.50.
b. $0.50.
c. between $0.50 and $1.
d. $1.
Table 39
Assume that Maya and Miguel can switch between producing mixers and producing
toasters at a constant rate.
Hours Needed to Make 1Amount Produced in 60 Hours
MixerToasterMixerToaster
Maya 631020
Miguel105612
Refer to Table 39. Which of the following combinations of mixers and toasters could
Maya produce in 60 hours?
a. 5 mixers and 12 toasters.
b. 6 mixers and 4 toasters.
c. 7 mixers and 7 toasters.
d. 8 mixers and 5 toasters.
When a country allows international trade and becomes an importer of a good,
a. domestic producers of the good become better off.
b. domestic consumers of the good become worse off.
c. the gains of the winners exceed the losses of the losers.
d. All of the above are correct.
Travis can mow a lawn in two hours or he can trim a tree in one hour. Ricardo can mow
a lawn in three hours or he can trim a tree in two hours.
a. Travis has an absolute advantage over Ricardo in trimming trees.
b. Travis has a comparative advantage over Ricardo in mowing lawns.
c. Ricardo has a comparative advantage over Travis in trimming trees.
d. All of the above are correct.
The difference between a supply schedule and a supply curve is that a supply schedule
a. incorporates demand and a supply curve does not.
b. incorporates profit and a supply curve does not.
c. can shift, but a supply curve cannot shift.
d. is a table, and a supply curve is drawn on a graph.
Economists make assumptions to
a. provide issues for political discussion.
b. make a complex world easier to understand.
c. make it easier to teach economic concepts and analysis.
d. create policy alternatives that are incomplete or subject to criticism.
The loss in total surplus resulting from a tax is called
a. a deficit.
b. economic loss.
c. deadweight loss.
d. inefficiency.
Which of the following statements about comparative advantage is not true?
a. Comparative advantage is determined by which person or group of persons can
produce a given quantity of a good using the fewest resources.
b. The principle of comparative advantage applies to countries as well as to individuals.
c. Economists use the principle of comparative advantage to emphasize the potential
benefits of free trade.
d. A country may have a comparative advantage in producing a good, even though it
lacks an absolute advantage in producing that good.
Table 56
PriceTotal
Revenue
$10$5,000
$15$6,000
$20$6,000
$25$5,000
$30$3,000
Refer to Table 56. As price rises from $10 to $15, the price elasticity of demand using
the midpoint method is approximately
a. 0.40.
b. 0.56.
c. 1.80.
d. 2.50.
Which of the following expressions represents a crossprice elasticity of demand?
a. percentage change in quantity demanded of bread divided by percentage change in
quantity supplied of bread
b. percentage change in quantity demanded of bread divided by percentage change in
price of butter
c. percentage change in price of bread divided by percentage change in quantity
demanded of bread
d. percentage change in quantity demanded of bread divided by percentage change in
income
The smaller the price elasticity of demand, the
a. more likely the product is a luxury.
b. smaller the responsiveness of quantity demanded to a change in price.
c. more substitutes the product has.
d. greater the responsiveness of quantity demanded to a change in price.