The historical rise in living standards of American workers is primarily a result of
a. the influence of labor unions in America.
b. tariff protection imposed by the American government.
c. the enactment of minimumwage laws in America.
d. the rise in American productivity.
Table 46
PriceFirm A’s
Quantity
SuppliedFirm B’s
Quantity
SuppliedFirm C’s
Quantity
SuppliedFirm D’s
Quantity
Supplied
$010000
$28345
$466810
$6491215
$8212820
$10015425
Refer to Table 46. Which supply schedules obey the law of supply?
a. Firm A’s only
b. Firm B’s, Firm C’s, and Firm D’s only
c. Firm A’s and Firm C’s only
d. Firm B’s and Firm D’s only
Figure 83
The vertical distance between points A and C represents a tax in the market.
Refer to Figure 83. The amount of the tax on each unit of the good is
a. P3 P1.
b. P3 P2.
c. P2 P1.
d. P4 P3.
The U.S. president who referred to inflation as “public enemy number one” was
a. Richard Nixon.
b. Gerald Ford.
c. Jimmy Carter.
d. Ronald Reagan.
If the United States decides to trade with Yemen, we know that
a. Yemen will benefit, but trade with a less developed country could not benefit the
United States.
b. it will not benefit Yemen because workers in the United States are more productive.
c. Yemen and the United States can both benefit.
d. it will not benefit either country because their cultural differences are too vast.
Figure 25
Refer to Figure 25. This economy cannot currently produce 70 washers and 70 dryers
because
a. it is not using all of its resources.
b. it is not using the most efficient production process.
c. it does not have the resources and technology to produce that level of output.
d. All of the above are correct.
Table 340
Hours Needed to Make 1Quantity Produced in 2400 Hours
BoatCarBoatCar
Germany40306080
Italy40506048
Refer to Table 340. Germany should specialize in the production of
a. boats and import cars.
b. cars and import boats.
c. both goods and import neither good.
d. neither good and import both goods.
Figure 99
Refer to Figure 99. Consumer surplus in this market before trade is
a. A.
b. A + B.
c. A + B + D.
d. C.
If the minimum wage exceeds the equilibrium wage, then
a. the quantity demanded of labor will exceed the quantity supplied.
b. the quantity supplied of labor will exceed the quantity demanded.
c. the minimum wage will not be binding.
d. there will be no unemployment.
How is the burden of a tax divided?
(i)When the tax is levied on the sellers, the sellers bear a higher proportion of the tax
burden.
(ii)When the tax is levied on the buyers, the buyers bear a higher proportion of the tax
burden.
(iii)Regardless of whether the tax is levied on the buyers or the sellers, the buyers and
sellers bear an equal proportion of the tax burden.
(iv)Regardless of whether the tax is levied on the buyers or the sellers, the buyers and
sellers bear some proportion of the tax burden.
a. (i) and (ii) only
b. (iv) only
c. (i), (ii), and (iii) only
d. (i), (ii), and (iv) only
Scenario 54
Milk has an inelastic demand, and beef has an elastic demand. Suppose that a
mysterious increase in bovine infertility decreases both the population of dairy cows
and the population of beef cattle by 50 percent.
Refer to Scenario 54. The equilibrium quantity will
a. increase in both the milk and beef markets.
b. increase in the milk market and decrease in the beef market.
c. decrease in the milk market and increase in the beef market.
d. decrease in both the milk and beef markets.
The demand for grapeflavored Hubba Bubba bubble gum is likely
a. inelastic because there are many close substitutes for grapeflavored Hubba Bubba .
b. elastic because there are many close substitutes for grapeflavored Hubba Bubba.
c. inelastic because the market is broadly defined.
d. elastic because the market is broadly defined.
Figure 311
The graph below represents the various combinations of ham and cheese (in pounds)
that the nation of Bonovia could produce in a given month.
Refer to Figure 311. If the production possibilities frontier shown is for 240 hours of
production, then which of the following combinations of ham and cheese could
Bonovia not produce in 240 hours?
a. 250 pounds of ham and 120 pounds of cheese
b. 200 pounds of ham and 160 pounds of cheese
c. 160 pounds of ham and 200 pounds of cheese
d. 100 pounds of ham and 240 pounds of cheese
An economy’s production of two goods is efficient if
a. all members of society consume equal portions of the goods.
b. the goods are produced using only some of society’s available resources.
c. it is impossible to produce more of one good without producing less of the other.
d. the opportunity cost of producing more of one good is zero.
Figure 86
The vertical distance between points A and B represents a tax in the market.
Refer to Figure 86. What happens to total surplus in this market when the tax is
imposed?
a. Total surplus increases by $1,500.
b. Total surplus increases by $3,000.
c. Total surplus decreases by $1,500.
d. Total surplus decreases by $,3000.
If the price elasticity of demand is 1.5, regardless of which two points on the demand
curve are used to compute the elasticity, then demand is
a. perfectly inelastic, and the demand curve is vertical.
b. elastic, and the demand curve is a straight, downwardsloping line.
c. perfectly elastic, and the demand curve is horizontal.
d. elastic, and the demand curve is something other than a straight, downwardsloping
line.
Which of the following statements is true?
a. Free trade benefits a country when it exports but harms it when it imports.
b. “Voluntary” limits on Canadian exports of hogs are better for the United States than
U.S. tariffs placed on Canadian hog exports.
c. Tariffs and quotas differ in that tariffs work like a tax and therefore impose
deadweight losses, whereas quotas do not impose deadweight losses.
d. Free trade benefits a country both when it exports and when it imports.
The shortrun tradeoff between inflation and unemployment implies that, in the short
run,
a. a decrease in the growth rate of the quantity of money will be accompanied by an
increase in the unemployment rate.
b. an increase in the growth rate of the quantity of money will be accompanied by an
increase in the unemployment rate.
c. policymakers are able to reduce the inflation rate and, at the same time, reduce the
unemployment rate.
d. policymakers can influence the inflation rate, but not the unemployment rate.
The supply of a good will be more elastic, the
a. more the good is considered a luxury.
b. broader is the definition of the market for the good.
c. larger the number of close substitutes for the good.
d. longer the time period being considered.
The price elasticity of demand for mobile phones
a. will be higher if there is an improvement in the production technology.
b. will be lower if consumers perceive mobile phones to be a necessity.
c. is computed as the percentage change in the price of mobile phones divided by the
percentage change in quantity of mobile phones.
d. All of the above are correct.
When a country allows trade and becomes an importer of bottled water, which of the
following is not a consequence?
a. The gains of domestic consumers of bottled water exceed the losses of domestic
producers of bottled water.
b. The losses of domestic producers of bottled water exceed the gains of domestic
consumers of bottled water.
c. The price paid by domestic consumers of bottled water decreases.
d. The price received by domestic producers of bottled water decreases.
In the United States, incomes have historically grown
a. about 0.5 percent per year.
b. about 2 percent per year.
c. about 4 percent per year.
d. about 6 percent per year.
Which of the following is not a result of rent control?
a. fewer new apartments offered for rent
b. less maintenance provided by landlords
c. bribery
d. higher quality housing
Figure 511
Refer to Figure 511. A decrease in price from $20 to $10 leads to a
a. decrease in total revenue of $200, so the price elasticity of demand is greater than 1
in this price range.
b. decrease in total revenue of $200, so the price elasticity of demand is less than 1 in
this price range.
c. decrease in total revenue of $120, so the price elasticity of demand is less than 1 in
this price range.
d. decrease in total revenue of $120, so demand is elastic in this price range.
The producer that requires a smaller quantity of inputs to produce a certain amount of a
good, relative to the quantities of inputs required by other producers to produce the
same amount of that good,
a. has a low opportunity cost of producing that good, relative to the opportunity costs of
other producers.
b. has a comparative advantage in the production of that good.
c. has an absolute advantage in the production of that good.
d. should be the only producer of that good.
If the tax on a good is tripled, the deadweight loss of the tax
a. remains constant.
b. triples.
c. increases by a factor of 9.
d. increases by a factor of 12.
Years ago, thousands of country music fans risked their lives by rushing to buy tickets
for a Willie Nelson concert at Carnegie Hall. This behavior indicates
a. the ticket price was above the equilibrium price.
b. the ticket price was below the equilibrium price.
c. the ticket price was at the equilibrium price.
d. nothing about the equilibrium price.
Table 330
Assume that Falda and Varick can switch between producing wheat and producing cloth
at a constant rate.
Quantity Produced in 1 Hour
Bushels of WheatYards of Cloth
Falda812
Varick615
Refer to Table 330. Falda has a comparative advantage in the production of
a. wheat.
b. cloth.
c. both goods.
d. neither good.
The ordered pair that represents the origin on a graph is
a. (1, 1).
b. (0, 0).
c. (1, 1).
d. ( ).
Trade can make everybody better off because it
a. increases cooperation among nations.
b. allows people to specialize according to comparative advantage.
c. requires some workers in an economy to be retrained.
d. reduces competition among domestic companies.
If the United States changed its laws to allow for the legal sale of a kidney, which of the
following is likely to occur?
a. The price of kidneys would rise to balance supply and demand.
b. The gains from trade would make both buyers and sellers better off.
c. Thousands of lives would be saved.
d. All of the above are correct.