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1) Which of the following problems can not be alleviated by a gasoline tax?
a.traffic congestion
b.traffic accidents
c.the undersupply of goods that produce positive externalities
d.air pollution
2) The argument that consumers will not be willing to pay any more for two items sold
as one than they would for the two items sold separately is used to justify the legality of
which of the following?
a.resale price maintenance
b.tying
c.predatory pricing
d.free-riding
3) When quality cannot be easily judged in advance, what provides consumers with
information about the quality of a product?
a.a brand name
b.a tie-in
c.the quantity available for sale
d.the amount of deadweight loss
4) If a 6% decrease in price for a good results in a 2% increase in quantity demanded,
the is a. 0.02
b. 0.33
c.3
d.4
5) Figure 8-9
The vertical distance between points A and C represents a tax in the market.
The amount of the tax on each unit of the good is
a. $20.
b. $200.
c. $300.
d. $500.
6) Table 22-8
The citizens of Mayville are having a severe budget shortage and are faced with
eliminating athletics from the town high school. The town administrator has determined
that the town can afford to maintain one sport. 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 22-8. If a Borda count is used, what will be the outcome of the voting?
a.Basketball will win.
b.Football will win.
c.Hockey will win.
d.Football and basketball will tie.
7)
Raymond buys a refrigerator for his new home. To which of the arrows does this
transaction directly contribute?
a.A only
b.A and B
c.C only
d.C and D
8) Figure 10-1
This graph represents the tobacco industry. Without any government intervention, the
equilibrium price and quantity are
a.$1.90 and 38 units, respectively.
b.$1.80 and 35 units, respectively.
c.$1.60 and 42 units, respectively.
d.$1.35 and 58 units, respectively.
9) Figure 9-9
Producer surplus in this market after trade is
a.A.
b.A + B.
c.B + C + D.
d.C.
10) Monopolists can achieve any level of profit they desire because they have unlimited
market power.
a.True
b.False
11) Refer to Figure 9-22. Suppose the government imposes a tariff of $20 per unit. The
amount of revenue collected by the government from the tariff is
a. $6,000.
b. $9,000.
c. $12,000.
d. $15,000.
12) Refer to Figure 9-17. The deadweight loss caused by the tariff is
a. $24.
b.$72.
c.$96.
d.$144.
13) When good X is produced, some people benefit. A free-rider problem arises when
a.the number of people who benefit is small and it is impossible to prevent anyone from
benefiting.
b.the number of beneficiaries is small and it is possible to prevent some people from
benefiting.
c.the number of beneficiaries is large and it is impossible to prevent anyone from
benefiting.
d.the number of beneficiaries is large and it is possible to prevent some people from
benefiting.
14) Suppose that Firms A and B each produce high-resolution computer monitors, but
Firm A can do so at a lower cost.
Cassie and David each want to purchase a high-resolution computer monitor, but David
is willing to pay more than Cassie. Which of the following market outcomes is
efficient?
a.Firm A produces a monitor that Cassie buys. David does not purchase a monitor.
b.Firm A produces a monitor that David buys.
c.Firm B produces a monitor that Cassie buys. David does not purchase a monitor.
d.Firm B produces a monitor that David buys.
15) Table 17-22
Brian and Matt own the only two bicycle repair shops in town. Each must choose
between a low price for repair work and a high price. The annual economic profit from
each strategy is indicated in the table. The profits are shown as (Matt, Brian) in each
cell.
Refer to Table 17-22. Which of the following statements is correct?
a.Matt's dominant strategy is to charge a low price.
b.Brian's dominant strategy is to charge a high price.
c.The dominant strategy for both Brian and Matt is to charge a low price.
d.Matt's dominant strategy is to charge a high price.
16) Table 15-18
A monopolist faces the following demand curve:
Suppose marginal cost is constant at $8 per unit.
The monopolist's total revenue from selling 4 units of output is
a.$4.
b.$16.
c.$32.
d.$48.
17) If muffins and bagels are substitutes, a higher price for bagels would result in a(n)
a.increase in the demand for bagels.
b.decrease in the demand for bagels.
c.increase in the demand for muffins.
d.decrease in the demand for muffins.
18) Of the following groups, which group is most likely to live in poverty - children,
elderly, married-couple families, female household with no spouse present?
19) Outline the possible work disincentives created by anti-poverty programs. Is there a
way to solve this problem without causing other forms of inefficiency to arise? Explain
your answer.
20) In both perfectly competitive and monopoly markets, the price per unit of a good is
equal to the _________.
21) Table 22-24
The citizens of Mayville are having a severe budget shortage and are faced with
eliminating athletics from the town high school. The town administrator has determined
that the town can afford to maintain one sport. 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 22-24. If the town administrator asks voters to choose first between
hockey and basketball and then between the winner of the first vote and football, which
sport will win the final vote?
22) In a typical 10-year period, about one in four families falls below the poverty line in
at least one year. What percentage of families are poor for eight or more years?
23) Figure 9-27
The following diagram shows the domestic demand and supply curves in a market.
Assume that the world price in this market is $20 per unit.
If the country allows free trade, will the country import or export this good, and how
many units will be imported/exported?
