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1) Which of the following is not an example of signaling?
a.screening
b.advertising
c.getting an education
d.gift giving
2) Table 7-3
The only four consumers in a market have the following willingness to pay for a good:
If the price is $20, then consumer surplus in the market is
a.$20, and Wilbur and Ming-la purchase the good.
b.$45, and Carlos and Quilana purchase the good.
c.$45, and Quilana, Wilbur, and Ming-la purchase the good.
d.$55, and Carlos, Wilbur, and Ming-la purchase the good.
3) Figure 9-3. The domestic country is China.
With no international trade,
a.the equilibrium price is $12 and the equilibrium quantity is 300.
b.the equilibrium price is $16 and the equilibrium quantity is 200.
c.the equilibrium price is $16 and the equilibrium quantity is 300.
d.the equilibrium price is $16 and the equilibrium quantity is 450.
4) Economists and accountants usually disagree on the inclusion of implicit costs into
the cost analysis of a firm.
a.True
b.False
5) The market demand curve
a.is the sum of all individual demand curves.
b.is the demand curve for every product in an industry.
c.shows the average quantity demanded by individual demanders at each price.
d.is always flatter than an individual demand curve.
6) Which of the following is an example of a barrier to entry?
a.Crystal charges a higher price than her competitors for her hair-styling services.
b.Dan charges a lower price than his competitors for his dry-walling services.
c.Jackie offers free samples of her loose-meat sandwiches to attract new customers.
d.Roseanne obtains a copyright for a short story that she wrote and published.
7) Accountants often ignore implicit costs.
a.True
b.False
8) Bob is planning to sell his home. In preparation for the sale, he paints all of the
ceilings in his house to cover up water stains from his leaking roof so that potential
buyers will be unaware of this problem. This is an example of
a.moral hazard.
b.screening.
c.adverse selection.
d.the principal-agent problem.
9) Figure 10-13. On the graph, Q represents the quantity of plastics and P represents the
price of plastics.
If 250 units of plastics are produced and consumed, then the
a.social optimum has been reached.
b.market equilibrium has been reached.
c.negative externality associated with plastics has been eliminated.
d.positive externality associated with plastics has been eliminated.
10) When the price of a normal good increases,
a.both the income and substitution effects encourage the consumer to purchase more of
the good.
b.both the income and substitution effects encourage the consumer to purchase less of
the good.
c.the income effect encourages the consumer to purchase more of the good, and the
substitution effect encourages the consumer to purchase less of the good.
d.the income effect encourages the consumer to purchase less of the good, and the
substitution effect encourages the consumer to purchase more of the good.
11) When two variables move in opposite directions, the curve relating them is upward
sloping, and we say the variables are positively related.
a.True
b.False
