Figure 16.3
Refer to Figure 16.3. When Bill plays his saxophone he imposes costs on his wife. If
Bill does not take these costs into consideration he will play his saxophone for
________ hours per day.
A) zero
B) three
C) four
D) seven
When a monopolist incurs a loss in the short run, it will produce as long as
A) demand is greater than marginal revenue.
B) marginal cost equals marginal revenue.
C) total revenue is sufficient to cover variable costs.
D) total revenue is sufficient to cover fixed costs.
The Smiling Lizard Company has a monopoly in the sale of iguanas in Florida. When
the Smiling Lizard Company sells ten iguanas, its marginal revenue is $50. When the
Smiling lizard Company sells eleven iguanas, its marginal revenue will be
A) less than $50.
B) greater than $50.
C) equal to $50.
D) greater than $50 if demand is elastic and less than $50 if demand is inelastic.
The condition P = MC implies that ________ consumer surplus.
A) consumers will get no
B) an individual who values the product at more than P will receive positive
C) an individual who values the product at less than P will receive positive
D) there is an infinite amount of
Figure 6.11
Refer to Figure 6.11. The opportunity cost for each individual hour of leisure is
A) $10.
B) $24.
C) $240.
D) indeterminate from this information.
You have been hired by a data processing firm to provide economic advice. The owner
of the firm tells you that the firm’s only variable input is the number of data-entry
operators. The hourly wage for data-entry operators is $10.00. The marginal revenue
product curve for data-entry operators reaches its maximum at three workers with a
marginal revenue product of $12.00. What advice would you give this firm?
A) Hire three data-entry operators so as to maximize profits.
B) Shut down immediately, as the firm is not able to cover all of its variable costs.
C) Decrease the wage rate paid to data-entry operators so that their marginal revenue
product will decrease.
D) Hire data-entry operators until the marginal revenue product is equal to the
wagewhich will occur when more than three operators are employed.
Figure 17.1
Refer to Figure 17.1. John has two job offers when he graduates from college. John
views the offers as identical, except for the salary terms. The first offer is at a fixed
annual salary of $50,000. The second offer is at a fixed salary of $20,000 plus a
possible bonus of $60,000. John believes that he has a 50-50 chance of earning the
bonus. What is John’s expected utility for each job offer?
A) expected utility of 200 for the first offer and expected utility of 218 for the second
offer
B) expected utility of 200 for the first offer and expected utility of 110 for the second
offer
C) expected utility of 200 for the first offer and expected utility of 164 for the second
offer
D) expected utility of 100 for the first offer and expected utility of 164 for the second
offer
Table 7.1
Inputs Required to Produce a Product Using Alternative Technologies
Refer to Table 7.1 above. Which technology is the most labor intensive?
A) A
B) B
C) C
D) D
The Wax Works sells 500 candles at a price of $10 per candle. The Wax Works’ total
economic costs for producing 500 candles are $2,000. The Wax Works’ economic profit
is
A) $2,000.
B) $3,000.
C) $5,000.
D) indeterminate from this information.
For private goods, market demand is the ________ summation of individual demand
curves and for public goods, market demand is the ________ summation of individual
demand curves.
A) horizontal; vertical
B) vertical; horizontal
C) horizontal; horizontal
D) vertical; vertical
The MEI (marginal efficiency investment) curve is the demand for investment.
Figure 11.1
Refer to Figure 11.1. If the market rate of interest is < 5%, this firm’s investment will
total
A) $0.
B) < $5,000.
C) $7,000.
D) > $15,000.
Figure 6.5
Refer to Figure 6.5. Molly’s budget constraint is EF. If her income decreases while the
price of the goods are unchanged, her new budget constraint is
A) AD.
B) BD.
C) CD.
D) It is not shown on this graph.
In the summer of 2009, the United States federal minimum wage was raised to $7.25.
According to theory, what will likely be the result of the increase?
A) Some workers will leave the labor market.
B) Firms will hire more workers.
C) All workers prior to the wage increase will now earn at least $7.25 per hour.
D) Unemployment will increase as firms lay off workers.
In longrun equilibrium for a monopolistically competitive industry, ________ firms
earn ________ economic profits.
A) some; positive
B) some; negative
C) no; zero
D) no; positive or negative
Below are drawn cost curves for Clips Ahoy Barber Shop, a monopolistically
competitive firm.
Figure 15.1
Refer to Figure 15.1. In this industry, in the long run,
A) firms will continue to earn economic profits.
B) firms will enter until all firms earn a normal profit.
C) product demand will decrease so that profits are decreased.
D) the government will impose price controls to eliminate any economic profits.
Los Angeles International Airport (LAX) is located next to Playa Del Rey. The noise
from air traffic negatively affects individuals living in Playa Del Rey, however, this cost
is not considered by airlines or air travelers. The airlines feel they have a right to use the
airspace while the individuals living in Playa Del Rey feel they have the right to quiet.
The following diagram depicts the marginal costs and marginal benefits associated with
air travel.
Figure 5
Refer to Figure 16.5. The marginal damage cost associated with the efficient level of air
travel is ________.
A) $0
B) $100
C) $225
D) $265
Which of the following statements is false?
A) Income is more equally distributed in developing countries compared to developed
countries.
B) A smaller percentage of the labor force live in urban areas in developing countries
compared to developed countries.
C) Labor productivity in the agricultural sector is low in developing countries compared
to developed countries.
D) Life expectancy is generally higher in developed countries than in developing
countries.
Figure 17.1
Refer to Figure 17.1. Dmitri has two job offers when he graduates from college. Dmitri
views the offers as identical, except for the salary terms. The first offer is at a fixed
annual salary of $40,000. The second offer is at a fixed salary of $20,000 plus a
possible bonus of $40,000. Dmitri believes that he has a 50-50 chance of earning the
bonus. Dmitri’s expected utility from the first job offer is ________ and it is ________
from the second job offer.
A) 180; 210
B) 180; 110
C) 180; 160
D) 90; 160
Microeconomics is best described as the study of
A) the choices made by individual households, firms, and governments.
B) inflation, unemployment, gross national product, and the nation’s economy as a
whole.
C) how markets interact in the aggregate economy.
D) marginal changes in the economy.
Industry A has four firms that each control 25 percent of the market. Industry B has six
firms, where one firm controls 50 percent of the market and the other five firms control
10 percent of the market each. According to the HHI, which industry is more
concentrated?
A) Industry A
B) Industry B
C) Both industries are equally concentrated.
D) indeterminate from the given information.
A capital asset will depreciate because
A) it wears out physically.
B) a similar product becomes available.
C) of an increase in the tax on profits.
D) All of the above are correct.
Refer to Figure 16.5. Suppose the government assigns property rights to the residents of
San Bruno, and then the airlines and the residents engage in negotiations. The
________ of air travel is 100 units.
A) minimum allowable level
B) resulting efficient level
C) government-regulated level
D) maximum allowable level
Figure 2.4
According to Figure 2.4, as the economy moves from Point A to Point E, the
opportunity cost of motorcycles, measured in terms of hybrid cars,
A) decreases.
B) increases.
C) remains constant.
D) initially increases, then decreases.
Figure 2.4
According to Figure 2.4, Point F
A) is efficient and attainable.
B) represents underallocation of resources.
C) represents what the people want.
D) cannot be produced with the current state of technology.
In the United States, in 2006, the most evenly distributed income source was
A) property income.
B) total income.
C) labor income.
D) transfer income.
Which of the following is an example of an external benefit?
A) More people start to install solar panels on their roofs, and as a result, electricity use
goes down, as does the pollution created by the generation of electricity.
B) Firms are able to reduce their costs of production by using a more efficient
technology.
C) The city spends $500,000 to upgrade the local jail.
D) A company opens a slaughterhouse at the end of your street.
Figure 13.7
Refer to Figure 13.7. The profit-maximizing level of output for the Memory Company
is ________ high school yearbooks.
A) 0
B) 200
C) 300
D) 350
Average variable and average total costs get farther apart as output decreases because
________ as output decreases.
A) diminishing returns set in
B) average fixed costs increase
C) marginal costs increase
D) total and total variable costs get farther apart
Figure 3.15
Refer to Figure 3.15. An increase in supply is represented by the movement from
A) S2 toS3.
B) S2 to S1.
C) Point B to Point A along supply curve S2.
D) Point B to Point C along supply curve S2.
Which statement is true? Fixed costs
A) do NOT exist in the long run.
B) depend on the firm’s level of output.
C) are zero if the firm is producing nothing.
D) are the difference between total costs and average variable costs.
A decrease in the stock of capital will cause the
A) production possibility frontier to shift outward.
B) production possibility frontier to shift inward.
C) economy to move down the production possibility frontier.
D) economy to move closer to its production possibility frontier.
Assume the current interest rate is 25%. The present value of $2,000 to be received in
one year would be
A) $1,000.
B) $1,200.
C) $1,600.
D) $1,800.