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1) Suppose that a country that has a high level of output per person agrees to trade with
a country that has a low level of output per person. Which country can benefit?
a.only the one with a low level of output per person.
b.only the one with a high level of output per person.
c.both
d.neither
2) If
Producer A and Producer B are the only producers in the market, then the market
quantity supplied when the price is $4 is
a.4 units.
b.8 units.
c.12 units.
d.16 units.
3) Table 22-14
Amy, Beth, and Connie are on a hiring committee. They have interviewed 3 candidates
identified by their last names and are going to vote on which one is hired.
Refer to Table 22-14. Below are lists of results for two separate elections between two
candidates. In which case are both results correct?
a.Adams wins over Brown and Brown wins over Campbell
b.Adams wins over Brown and Campbell wins over Brown
c.Brown wins over Adams and Brown wins over Campbell
d.Brown wins over Adams and Campbell wins over Brown
4) When income increases the slope of an individual's demand curve, the demand curve
a.turns positive.
b.becomes undefined.
c.remains negative.
d.becomes infinite.
5) A free-rider is someone who receives the benefit of a good but avoids paying for it.
a.True
b.False
6) Scenario 9-1
The before-trade domestic price of peaches in the United States is $40 per bushel. The
world price of peaches is
$52 per bushel. The U.S. is a price-taker in the market for peaches.
If trade in peaches is allowed, the price of peaches in the United States
a.will increase, and this will cause consumer surplus to decrease.
b.will decrease, and this will cause consumer surplus to increase.
c.will be unaffected, and consumer surplus will be unaffected as well.
d.could increase or decrease or be unaffected; this cannot be determined.
7) Efficiency wages may decrease employee turnover.
a.True
b.False
8) Table 20-5
Distribution of Income in Umakastan
Refer to Table 20-5. Approximately what percentage of families in Umakastan have
income levels below $74,000?
a.27%
b.28%
c.52%
d.79%
9) An economics professor, upset about the rising cost of textbooks, proposed that his
department purchase 50 copies of a statistics book so the students in the statistics class
would not have to purchase their own books but rather could borrow a book for the
semester and then return it for the next class to use. Which of the following strategies
would not prevent a common resource problem with the textbooks?
a.Students will be required to pay a deposit for the textbook, which is refundable at the
end of the semester when the book is returned in good condition.
b.The textbooks are placed in a common area of the department so students can borrow
and return them as needed.
c.Students must sign a form agreeing to return the book or pay a fine equal to the
replacement cost of the book.
d.The textbooks are placed in the professor's office and will only be given to students
who are registered members of the class. These students will not receive their final
course grades until the books are returned.
10) A firm's demand for labor is derived from its decision to supply a good in another
market.
a.True
b.False
11) Which of the following is an advantage of tradable pollution permits?
a.Each firm is allowed to pollute exactly the same amount.
b.Revenue from the sale of permits is greater than revenue from a corrective tax.
c.The initial allocation of permits to firms does not affect the efficiency of the market.
d.Firms will engage in joint research efforts to reduce pollution.
12) Which of the following strategies is not an effective strategy to reduce monopoly
inefficiency?
a.antitrust laws
b.price discrimination
c.doing nothing
d.breaking up a natural monopoly into more than one firm
13) Total surplus in a market is consumer surplus minus producer surplus.
a.True
b.False
14) Figure 7-15
When the price rises from P1 to P2, which area represents the increase in producer
surplus to existing producers?
a.A
b.A+B
c.A+B+C
d.G
