1) The lack of progress in reducing the poverty rate since the early 1970s is most
closely related with which of the following factors?
a.increasing income inequality
b.a reduction in the poverty line
c.rapid economic growth
d.a reduction in international trade
2) The demand for bread is less elastic than the demand for donuts; hence, a tax on
bread will create a larger deadweight loss than will the same tax on donuts, other things
equal.
a.True
b.False
3) Table 16-4
This table shows the demand schedule, marginal cost, and average total cost for a
monopolistically competitive firm.
What price will this firm charge to maximize profit?
a. $25
b. $30
c. $35
d. $40
4) Table 17-17
This table shows a game played between two firms, Firm A and Firm B. In this game
each firm must decide how much output (Q) to produce: 2 units or 3 units. The profit
for each firm is given in the table as (Profit for Firm A, Profit for Firm B).
Refer to Table 17-17. In this game,
a.neither player has a dominant strategy.
b.both players have a dominant strategy.
c.Firm A has a dominant strategy, but Firm B does not have a dominant strategy.
d.Firm B has a dominant strategy, but Firm A does not have a dominant strategy.
5) Table 20-11
Poverty Thresholds in 2011, by Size of Family and Number of Related Children
Under 18 Years [Dollars]
Source: U. S. Bureau of the Census, Current Population Survey.
Refer to Table 20-11. What is the poverty line for a 75-year-old individual?
a.$10,788
b.$11,702
c.$13,596
d.$15,446
6) Suppose the government designates certain areas within a community to be
“wetlands,” making it illegal to build on the land. What happens to land not classified as
“wetlands” within the community?
(i)The price of non-wetland land will rise.
(ii)The marginal product of non-wetland land will fall.
(iii)The marginal product of non-wetland land will rise.
a.(i) and (ii) only
b.(ii) only
c.(i) and (iii) only
d.(iii) only
7) A worker in Vietnam can earn $6 per day making cotton cloth on a hand loom. A
worker in the United States can earn $85 per day making cotton cloth with a mechanical
loom. What is the likely explanation for the difference in wages?
a.U.S. textile workers belong to a union, whereas Vietnamese textile workers do not
belong to a union.
b.There is little demand for cotton cloth in Vietnam and great demand in the U.S.
c.Labor is more productive making cotton cloth with a mechanical loom than with a
hand loom.
d.Vietnam has a low-wage policy to make its textile industry more competitive in world
markets.
8) Which group would be the least upset by wide variation in the income distribution?
a.utilitarians
b.liberals
c.libertarians
d.Each group would be equally upset.
9) Table 14-12
Bill’s Birdhouses
What is the marginal cost of the 8th unit?
a.$0
b. $72.75
c. $120
d. $502
10) Laurel and Janet are competitors in a local market and each is trying to decide if it
is worthwhile to advertise. If both of them advertise, each will earn a profit of $5,000. If
neither of them advertise, each will earn a profit of $10,000. If one advertises and the
other doesn’t, then the one who advertises will earn a profit of $12,000 and the other
will earn $2,000. In this version of the prisoners’ dilemma, if the game is played only
once, Laurel should
a.advertise, but if the game is to be repeated many times she should probably not
advertise.
b.advertise, and if the game is to be repeated many times she should still probably
advertise.
c.not advertise, but if the game is to be repeated many times she should probably
advertise.
d.not advertise, and if the game is to be repeated many times she should still not
advertise.
11) Perry’s Production Possibilities FrontierJordan’s Production Possibilities
Frontier