1) Figure 10-15
Which of the following is not necessary in order for the corrective tax and pollution
permit to have equivalent effects?
a.PB must be equivalent to the corrective tax.
b.QA must be equivalent to the amount of pollution allowed to the pollution permit
holders.
c.The equilibrium price and quantity of pollution must be the same in both graphs.
d.The amount of pollution emitted by each firm must be the same.
2) The most common data for testing economic theories come from
a.carefully controlled and conducted laboratory experiments.
b.computer models of economies.
c.historical episodes of economic change.
d.centrally planned economies.
3) Figure 8-23. The figure represents the relationship between the size of a tax and the
tax revenue raised by that tax.
If the economy is at point A
on the curve, then a decrease in the tax rate will
a.increase the deadweight loss of the tax and increase tax revenue.
b.increase the deadweight loss of the tax and decrease tax revenue.
c.decrease the deadweight loss of the tax and increase tax revenue.
d.decrease the deadweight loss of the tax and decrease tax revenue.
4) The Pennsylvania Turnpike is a tolled freeway running through the state of
Pennsylvania. Motorists must pay tolls at various points along the Turnpike based on
the distance they traveled on the freeway. Suppose that despite the tolls, many motorists
in the urban areas use the Turnpike causing traffic to slow during peak times. What type
of good would the Turnpike be classified as in this case?
a.private good
b.club good
c.common resource
d.public good
5) According to the doctrine of liberalism, principles of justice are the result of
a.fair agreement and bargain.
b.command-and-control policies.
c.domination of the powerful by the weak.
d.workers owning the factors of production.
6) Figure 18-4
The graph below illustrates the market for nurses who work in doctors’ offices.
Refer to Figure 18-4. If doctors’ offices adopt new laboraugmenting technologies, what
happens in the market for nurses?
a.Demand increases from D1 to D2.
b.Demand decreases from D2 to D1.
c.Supply increases from S1 to S2.
d.Supply decreases from S2 to S1.
7) Private goods are both
a.excludable and nonrival in consumption.
b.nonexcludable and rival in consumption.
c.excludable and rival in consumption.
d.nonexcludable and nonrival consumption.
8)
If this economy devotes one-half of its available resources to the production of blankets
and the other half to the production of pillows, it could produce
a.120 pillows and 320 blankets.
b.180 pillows and 180 blankets.
c.240 pillows and 200 blankets.
d.We would have to know the details of this economy’s technology in order to
determine this.
9) Which of the following is not correct?
a.An increase in income shifts a consumer’s budget constraint outward.
b.An increase in the price of good X causes a consumer’s budget constraint to rotate
inward along the X axis.
c.A decrease in the price of good Y causes a consumer’s budget constraint to rotate
outward along the Y axis.
d.Changes in income affect the slope of the budget constraint as well as its location on a
graph.
10) The table below shows the quantities demanded of cases of Mt. Dew per month by
four families at various prices.
If the four families listed in the table are the only demanders of Mt. Dew in the market,
which of the following is a correct graph of the market demand?
a.
b.
c.
d.
11) Dan owns one of the many bakeries in New York City. Which of the following
events will lead to an increase in Dan’s demand for the services of bakers?
(i)The price of muffins increases. (Muffins are Dan’s specialty.)
(ii)Dan adds three new ovens to the kitchen area to help the bakers work faster.
(iii)Local bakers form a union to protect themselves from low wages.
a.(i) and (ii) only
b.(ii) and (iii) only
c.(i) and (iii) only
d.(i), (ii), and (iii)
12) Figure 8-10
Suppose the government imposes a tax that reduces the quantity sold in the market after
the tax to Q2. The size of the tax is
a.P0-P2.
b.P2-P8.
c.P2-P5.
d.P5-P8.
13) Constant returns to scale occur when the firm’s longrun
a.total costs are constant as output increases.
b.average total costs are constant as output increases.
c.average cost curve is falling as output increases.
d.average cost curve is rising as output increases.
14) Higher levels of human capital are correlated with higher earnings because firms
are willing to pay more for better- educated workers who have higher marginal
productivities.
a.True
b.False
15) Studies of human decision making reveal several systematic mistakes people make.
Which of the following is not an example of one of these mistakes?
a.Tom tells everyone he’s sure he can run a 5K in twentyfive minutes, but then tries a
couple of times and takes over thirty minutes.
b.Kate hears a news report about five people dying from a tornado in Kansas and
decides to cancel her plans to visit her aunt there.
c.Randi is a strong proponent of raising the minimum wage. She reads a research report
on the effects of increasing the minimum wage and begins to doubt her previous
thinking.
d.Jenny is shopping for a new car and has found that Hondota cars consistently get high
quality ratings. Her friend had trouble with her Hondota, so Jenny decides not to
purchase a Hondota.