1) Table 18-12
The table displays data for a small, competitive, profit-maximizing firm that produces
and sells envelopes. The time frame is one week.
Refer to Table 18-12. Let Q represent the number of boxes of envelopes produced per
week. One point on this firm’s production function is
a.(L = 1, Q = 106).
b.(L = 2, Q = 92).
c.(L = 2, Q = 106).
d.(L = 2, Q = 240).
2) A city wants to raise revenues to build a new municipal swimming pool next year.
The mayor suggests that the city raise the price of admission to the current municipal
pools this year to raise revenues. The city manager suggests that the city lower the price
of admission to raise revenues. Who is correct?
a.the mayor
b.the city manager
c.The answer depends on the .
d.The answer depends on the costs of construction of the new municipal swimming
pool.
3) Two families who live in Plains, GA have identical incomes. The Smiths deduct
$5,000 from their taxable income for mortgage interest paid during the year. The Jones
family lives in an apartment and is not eligible for a mortgage- interest deduction. This
situation exemplifies
a.an application of the benefits principle of taxation.
b.a violation of horizontal equity.
c.a violation of vertical equity.
d.an application of egalitarian tax rules.
4) The sum of all the individual demand curves for a product is called
a.income demand.
b.equilibrium demand.
c.complementary demand.
d.market demand.
5) Table 15-18
A monopolist faces the following demand curve:
Suppose marginal cost is constant at $8 per unit.
The monopolist’s marginal revenue is
a.always more than the price of its good.
b.always equal to the price of its good.
c.always less than the price of its good.
d.sometimes more and sometimes less than the price of its good.
6) Figure 8-24. The figure represents the relationship between the size of a tax and the
tax revenue raised by that tax.
For an economy that is currently at point D on the curve, a decrease in the tax rate
would
a.decrease consumer surplus.
b.decrease producer surplus.
c.increase tax revenue.
d.increase the deadweight loss of the tax.
7) Figure 14-9
In the figure below, panel (a) depicts the linear marginal cost of a firm in a competitive
market, and panel (b) depicts the linear market supply curve for a market with a fixed
number of identical firms.
If there are 300 identical firms in this market, what level of output will be supplied to
the market when price is $2.00?
a.300
b. 6,000
c. 30,000
d. 60,000
8) If a 20% increase in price for a good results in a 15% decrease in quantity demanded,
the is
a. 0.75
b. 1.25
c. 1.33
d. 1.60
9) Refer to Figure 9-25. With free trade and a $5 per unit tariff, the country
a.exports 20 units of the good.
b.imports 20 units of the good.
c.exports 40 units of the good.
d.imports 40 units of the good.
10) The goal of President Obama’s stimulus package and increased government
spending following the deep economic downturn in 2008 and 2009 was to reduce
inflation.
a.True
b.False
11) Figure 9-12
Producer surplus before trade is
a. $14,400.
b. $16,800.
c. $21,600.
d. $24,800.
12) Suppose that the government collected taxes in the following fashion: people who
earn less than $50,000 pay 25 percent in taxes, people who earn between $50,000 and
$100,000 pay 35 percent in taxes, people who earn between $100,000 and $200,000 pay
30 percent in taxes, and people who earn more than $200,000 pay 28 percent in taxes.
Which of the following statements is correct?
a.The tax system is proportional for income levels less than $50,000 and regressive for
income levels above
$50,000.
b.The tax system is regressive for income levels less than $100,000 and progressive for
income levels above
$100,000.
c.The tax system is progressive for income levels less than $100,000 and regressive for
income levels above
$100,000.
d.The tax system is progressive for income levels less than $50,000 and proportional for
income levels above
$100,000.
13) Which of the following would cause
the demand curve to shift from Demand B to Demand A in the market for oranges in the
United States?
a.a freeze in Florida
b.a technological advance that allows oranges to ripen faster
c.a decrease in the price of apples
d.an announcement by the FDA that oranges prevent heart disease
14) A law that encourages market competition by prohibiting firms from gaining or
exercising excessive market power is
a.a patent.
b.impossible to enforce.
c.an antitrust law.
d.an externality law.
15) In a particular country in 1998, the average worker needed to work 40 hours to
produce 100 units of output. In that same country in 2008, the average worker needed to
work 36 hours to produce 72 units of output. In that country, the productivity of the
average worker
a.decreased between 1998 and 2008, so we would expect the standard of living to have
decreased accordingly.
b.increased between 1998 and 2008, so we would expect the standard of living to have
increased accordingly.
c.decreased between 1998 and 2008, so we would expect inflation to have decreased
accordingly.
d.increased between 1998 and 2008, so we would expect inflation to have increased
accordingly.
16) The maximin criterion is attributed to which political philosophy?
a.utilitarianism
b.liberalism
c.libertarianism
d.repubicanism
17) Who receives income from capital in the United States?
a.bank depositors
b.bondholders
c.stockholders
d.All of the above are correct.
18) Figure 18-12. The figure shows the relationship between the number of mechanics
hired and the number of car repairs performed per day at a car-repair shop.
Refer to Figure 18-12. If the shop charges $120 per repair and pays each of its
mechanics a wage of $400 per day, then what is the marginal profit of the third
mechanic?
19) John has been in the habit of mowing Willa’s lawn each week for $20. John’s
opportunity cost is $15, and Willa would be willing to pay $25 to have her lawn
mowed. What is the maximum tax the government can impose on lawn mowing without
discouraging John and Willa from continuing their mutually beneficial arrangement?
20) Table 13-19
What is the shape of the average-fixed-cost curve?
21) The fundamental cause of monopoly is __________.
22) How did the Clayton Act of 1914 differ from the Sherman Antitrust Act of 1890?