1) Adam Smith used a famous example of what type of firm to illustrate economies of
scale?
a.Apple
b.a pin factory
c.a lumber mill
d.a British university
2) Table 14-12
Bill’s Birdhouses
What is the marginal revenue from selling the 5th unit?
a. $12
b. $68
c. $80
d. $480
3) Which of the following statements is correct?
a.A general sales tax on food is regressive when low-income taxpayers spend a larger
proportion of their income on food than high-income taxpayers.
b.A general sales tax on food is regressive when middle income taxpayers spend a
smaller proportion of their income on food than high-income taxpayers.
c.A general sales tax on food is regressive when high-income taxpayers spend a larger
proportion of their income on food than middle income taxpayers.
d.A general sales tax on food is regressive when high-income taxpayers spend a larger
proportion of their income on food than low-income taxpayers.
4) Economic mobility in the United States is
a.uncommon. Over 50 percent of poor families remain poor for 8 or more years.
b.uncommon. Over 75 percent of poor families remain poor for 8 or more years.
c.common. Fewer than 3 percent of poor families remain poor for 8 or more years.
d.common. Fewer than 1 percent of poor families remain poor for 8 or more years.
5) Assume that John and Jane can switch between producing bread and wine at a
constant rate.
Assume that John and Jane each work 24 hours. What happens to total production if
instead of each person spending 12 hours producing each good, Jane spends 21 hours
producing wine and 3 hours producing bread and John spends 3 hours producing wine
and 21 hours producing bread?
a.The total production of bread and wine each rise.
b.The total production of bread rises and the total production of wine falls.
c.The total production of bread falls and the total production of wine rises.
d.The total production of bread and wine each fall.
6) Figure 15-4
A profit-maximizing monopoly’s total revenue is equal to
a.P5 x Q3.
b.P4 x Q5.
c.(P5-P3) x Q3.
d.(P5-P4) x Q3.
7) The distinction between purchase price and rental price applies to which factor(s) of
production?
a.land only
b.capital only
c.land and capital only
d.land, capital, and labor
8)
9) Which of the following statements is correct?
a.When duopoly firms reach a Nash equilibrium, their combined level of output is the
monopoly level of output.
b.When oligopoly firms collude, they are behaving as a cartel.
c.In an oligopoly, self-interest drives the market to the competitive outcome.
d.An oligopoly is an example of monopolistic competition.
10) When a good is taxed, the deadweight loss is larger the more elastic are demand and
supply.
a.True
b.False
11) In designing a tax system, policymakers have two objectives that are often
conflicting. They are
a.maximizing revenue and minimizing costs to taxpayers.
b.efficiency and minimizing costs to taxpayers.
c.efficiency and equity.
d.maximizing revenue and reducing the national debt.
12) Empirical evidence suggests that ability, effort, and chance are not likely to be
significant contributors to wage differences.
a.True
b.False
13) Figure 10-17
How large would a corrective tax need to be to move this market from the equilibrium
outcome to the socially-optimal outcome?
a.An amount equal to P’ minus P.
b.An amount equal to P’.
c.An amount equal to P.
d.An amount equal to the external cost.
14) According to behavioral economics if people taking an exam were asked to guess
the score they would receive, it would be most likely that
a.significantly more people would score below what they guessed than above what they
guessed.
b.significantly more people would score above what they guessed than below what they
guessed.
c.about the same number of people would score more than they guessed as scored less
than they guessed.
d.people’s scores would be pretty close to what they guessed. Further, any of the above
would be equally likely.
15) Table 22-5
The citizens of Anytown will decide whether to build a new library, a recreation center,
or an arena. Exactly one of the three choices will prevail, and the choice will be made
by way of pairwise voting, with the majority determining the outcome on each vote.
The preferences of the voters are summarized in the table below.
Voter Type
Refer to Table 22-5. Which of the following statements is correct?
a.In a pairwise election, “arena” beats “library.”
b.In a pairwise election, “library” beats “recreation center.”
c.In a pairwise election, “recreation center” beats “arena.”
d.All of the above are correct.