1) Of the following countries, which country’s government collects the largest amount
of tax revenue as a percentage of that country’s total income?
a.Denmark
b.United States
c.Canada
d.Greece
2) Table 12-7
The following table shows the marginal tax rates for unmarried individuals for two
years.
For an individual who earned $80,000 of taxable income in 2009, what was the
individual’s average tax rate in 2009?
a. 12.7%
b. 15.0%
c. 16.1%
d. 16.9%
3) Bubba is a shrimp fisherman who could earn $5,000 as a fishing tour guide. Instead,
he is a full-time shrimp fisherman. In calculating the economic profit of his shrimp
business, the $5,000 that Bubba gave up is counted as part of the shrimp business’s
a.total revenue.
b.explicit costs.
c.implicit costs.
d.marginal costs.
4)
This economy has the ability to produce at which point(s)?
a.N, O, P
b.L, M
c.L, M, N, O, P
d.L, M, Q
5) Suppose that a worker in Agland can produce either 10 units of organic grain or 2
units of incense per year, and a worker in Zenland can produce either 5 units of organic
grain or 15 units of incense per year. There are 20 workers in Agland and 10 workers in
Zenland. Currently the two countries do not trade. Agland produces and consumes 100
units of grain and 20 units of incense per year. Zenland produces and consumes 50 units
of grain and no incense per year. If each country made the decision to specialize in
producing the good in which it has a comparative advantage, then the combined yearly
output of the two countries would increase by
a.30 units of grain and 100 units of incense.
b.30 units of grain and 150 units of incense.
c.50 units of grain and 90 units of incense.
d.50 units of grain and 130 units of incense.
6) For a monopolist,
a.average revenue is always greater than the price of the good.
b.marginal revenue is always less than the price of the good.
c.marginal cost is always greater than average total cost.
d.marginal revenue equals marginal cost at the point where total revenue is maximized.
7) Figure 8-5
Suppose that the government imposes a tax of P3 – P1.
The tax is levied on
a.buyers only.
b.sellers only.
c.both buyers and sellers.
d.This is impossible to determine from the figure.
8) Adverse selection is
a.the tendency of a person who is imperfectly monitored to engage in dishonest or
otherwise undesirable behavior.
b.an action taken by an uninformed party to induce an informed party to reveal
information.
c.the failure of majority voting to produce transitive preferences for society.
d.the tendency for the mix of unobserved attributes to become undesirable from the
standpoint of an uninformed party.
9) Consider the following demand schedule.
Using the midpoint method, what is the between $0 and $3?
a. 0.11
b.0.22
c.0.40
d.2.00
10) In the long run, a firm in a perfectly competitive market operates
a.at its efficient scale, and a monopolistically competitive firm operates at its efficient
scale.
b.at its efficient scale, and a monopolistically competitive firm operates with excess
capacity.
c.with excess capacity, and a monopolistically competitive firm operates with excess
capacity.
d.with excess capacity, and a monopolistically competitive firm operates at its efficient
scale.
11) A decrease in supply is represented by a
a.movement downward and to the left along a supply curve.
b.movement upward and to the right along a supply curve.
c.rightward shift of a supply curve.
d.leftward shift of a supply curve.
12) A monopolist
a.has a supply curve that is upward-sloping, just like a competitive firm.
b.does not have a supply curve because the monopolist sets its price at the same time it
chooses the quantity to supply.
c.has a horizontal supply curve, just like a competitive firm.
d.does not have a supply curve because marginal revenue exceeds the price it charges
for its products.
13) For a monopolistically competitive firm,
a.marginal revenue and price are the same.
b.average revenue and price are the same.
c.at the profit-maximizing quantity of output, price equals marginal cost.
d.at the profit-maximizing quantity of output, price equals the minimum of average
total cost.
14) For a monopoly firm,
a.price always equals marginal revenue.
b.price always exceeds average revenue.
c.any price-quantity combination will maximize profits.
d.None of the above is correct.
15) Tsintah weaves traditional Navaho rugs. She weaves and sells 50 rugs. Her average
cost of production per rug is $50. She sells each rug for a price of $65. Tsintah’s total
revenues are
a. $750.
b. $2,500.
c. $3,250.
d. $5,750.
16) 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 there are exactly five sellers of gasoline in Driveaway and if
they collude, then which of the following outcomes is most likely?
a.Each seller will sell 50 gallons and charge a price of $3.
b.Each seller will sell 40 gallons and charge a price of $4.
c.Each seller will sell 30 gallons and charge a price of $4.
d.Each seller will sell 30 gallons and charge a price of $5.
17) An advantage of a consumption tax over the present tax system is that a
consumption tax
a.raises more revenues.
b.would save the government millions in administrative costs.
c.places more of the tax burden on the wealthy.
d.does not discourage saving.
18) When a country moves away from a free trade position and imposes a tariff on
imports, it causes
a.a decrease in total surplus in the market.
b.a decrease in producer surplus in the market.
c.an increase in consumer surplus in the market.
d.a decrease in revenue to the government.
19) Demand is said to be unit elastic if quantity demanded
a.changes by the same percent as the price.
b.changes by a larger percent than the price.
c.changes by a smaller percent than the price.
d.does not respond to a change in price.