1) Which of the following events would bring about a change in the value of the
marginal product of labor?
a.technological progress that alters the amount a worker can produce
b.a change in the marginal product of labor
c.a change in the price of the product that the firm sells
d.All of the above are correct.
2) Producer surplus equals the
a.value to buyers minus the amount paid by buyers.
b.value to buyers minus the cost to sellers.
c.amount received by sellers minus the cost to sellers.
d.amount received by sellers minus the amount paid by buyers.
3) Table 13-5
The marginal product of the fourth worker is
a.9,000 units.
b.8,000 units.
c.7,000 units.
d.5,000 units.
4) Kate is a florist. Kate can arrange 20 bouquets per day. She is considering hiring her
husband William to work for her. Together Kate and William can arrange 35 bouquets
per day. What is William’s marginal product?
a.55 bouquets
b.35 bouquets
c.22.5 bouquets
d.15 bouquets
5) People interpret evidence to confirm beliefs they already hold. This statement is an
example of which of the following systematic mistakes that people make?
a.people are overconfident
b.people give too much weight to a small number of vivid observations
c.people are reluctant to change their minds
d.All of the above are correct.
6) Ryan experiences an increase in his wages. The hours of labor that he supplies to the
market would increase if
a.the income effect is larger than the substitution effect.
b.the substitution effect is larger than the income effect.
c.neither the income effect nor the substitution effect apply to Tom’s laborleisure
tradeoff.
d.Ryan views both labor and leisure as inferior goods.
7) If a market is a duopoly and additional firms enter and do not cooperate, then
a.price and quantity fall.
b.price and quantity rise.
c.price falls and quantity rises.
d.price rises and quantity falls.
8) Table 14-1
The price and quantity relationship in the table is most likely a demand curve faced by a
firm in a
a.monopoly.
b.concentrated market.
c.competitive market.
d.strategic market.
9) Total taxes paid divided by total income is called the
a.lump-sum tax liability.
b.marginal tax rate.
c.average tax rate.
d.average consumption tax liability.
10) Hotels in New York City frequently experience an average vacancy rate of about 20
percent (i.e., on an average night, 80 percent of the hotel rooms are full). This kind of
excess capacity is indicative of what kind of market?
a.monopoly
b.perfect competition
c.monopolistic competition
d.oligopoly
11) Table 17-12
The table shows the town of Driveaway’s demand schedule for gasoline. Assume the
town’s gasoline seller(s) incurs a cost of $2 for each gallon sold, with no fixed cost.
Refer to Table 17-12. If the market for gasoline in Driveaway is a monopoly, then the
profit-maximizing monopolist will charge a price of
a.$6 and sell 100 gallons.
b.$5 and sell 150 gallons.
c.$4 and sell 200 gallons.
d.$3 and sell 250 gallons.
12) Suppose that you value a hat from your favorite university at $20. The university
bookstore has the hat on sale for $15. You purchase the hat but lose it on the way home.
What should you do? Assume that losing the hat does not alter how you value it.
a.Go back to the bookstore and purchase another hat.
b.Wait until the cost of the hat falls to $15 or less before purchasing another hat.
c.Wait until the cost of the hat falls to $5 or less before purchasing another hat.
d.Do not purchase another hat regardless of the price.
13) A market is comprised of many firms as opposed to just one firm or a few firms
a.only when it is perfectly competitive.
b.only when it is perfectly competitive or oligopolistic.
c.only when it is perfectly competitive or monopolistically competitive.
d.when it is perfectly competitive, monopolistically competitive, or oligopolistic.
14) About half of black and Hispanic children in female-headed households live in
poverty.
a.True
b.False
15) The share of federal government spending on healthcare has risen substantially over
time. This is most likely a result of
a.medical advances that provide new, better, but often more expensive medical
treatments.
b.a rising population of the elderly in the economy.
c.health insurance reform that will include government subsidies for health insurance
for many low-to- moderate income families.
d.All of the above are important factors.
16) As Bubba’s Bubble Gum Company adds workers while using the same amount of
machinery, some workers may be underutilized because they have little work to do
while waiting in line to use the machinery. When this occurs, Bubba’s Bubble Gum
Company encounters
a.economies of scale.
b.diseconomies of scale.
c.increasing marginal product.
d.diminishing marginal product.
17) The fact that different countries experience different standards of living is largely
explained by differences in those countries’
a.populations.
b.productivity levels.
c.locations.
d.None of the above is correct. Economists are puzzled by differences in standards of
living around the world.