1) When buyers in a competitive market take the selling price as given, they are said to
be
a.market entrants.
b.monopolists.
c.free riders.
d.price takers.
2) Figure 16-2. The figure is drawn for a monopolistically competitive firm.
If the average total cost is $30 at the profitmaximizing quantity, then the firm’s
maximum profit is
a. $64.
b. $96.
c. $144.
d. $480.
3) Corrective taxes are unlike most other taxes because they
a.distort incentives.
b.move the allocation of resources away from the social optimum.
c.raise revenue for the government.
d.move the allocation of resources closer to the social optimum.
4) Figure 7-19
If the government imposes a price floor of $55 in this market, then total surplus will be
a. $137.50.
b. $125.00.
c. $187.50.
d. $275.00.
5) If the for a good is 2.0, then a 10 percent increase in price results in a
a.0.2 percent decrease in the quantity demanded.
b.5 percent decrease in the quantity demanded.
c.20 percent decrease in the quantity demanded.
d.40 percent decrease in the quantity demanded.
6) A country that currently does not trade with other countries could benefit by
a.restricting imports and promoting exports.
b.promoting imports and restricting exports.
c.restricting both imports and exports.
d.not restricting trade.
7) Elena loves orange juice. She reads in the newspaper that 20 percent of the Florida
orange crop was destroyed by a late spring frost. Economists predict that the price of
oranges will rise by 50 percent by the end of the year. As a result, Elena’s demand for
orange juice
a.will increase but not until the end of the year.
b.increases today.
c.decreases as she looks for a substitute good.
d.shifts left today.
8) Table 19-1
Source: US Census Bureau and Mankiw’s calculations
Refer to Table 19-1. From 1975 to 2011, the salary gap among women who graduate
from college compared to those who complete only high school
a.increased by 35% while the salary gap among men increased by 42%.
b.more than doubled while the salary gap among men rose significantly but less than
doubled.
c.increased, but the salary gap among men decreased.
d.decreased, but the salary gap among men increased.
9) The Tragedy of the Commons results when a good is
a.rival in consumption and not excludable.
b.excludable and not rival in consumption.
c.both rival in consumption and excludable.
d.neither rival in consumption nor excludable.
10) The opportunity cost of capital is an implicit cost almost every business incurs.
a.True
b.False
11) The case of perfectly elastic demand is illustrated by a demand curve that is
a.vertical.
b.horizontal.
c.downward-sloping but relatively steep.
d.downward-sloping but relatively flat.
12) Four roommates share an off-campus house and equally share the cost of rent.
Everyone says that she values a clean house, yet the house is usually dirty. To an
economist, a clean house in this case represents
a.a common resource problem.
b.a public good.
c.a natural monopoly.
d.All of the above are correct.
13) Given a consumer’s indifference map, the demand curve for a good can
a.be derived by moving a consumer’s budget constraint as her income falls.
b.be derived by moving a consumer’s budget constraint as her income rises.
c.be derived by moving a consumer’s budget constraint as the market price of one good
changes.
d.not be derived from consumer theory.
14) A manufacturer produces 400 units when the market price is $10 per unit and
produces 600 units when the market price is $12 per unit. Using the midpoint method,
for this range of prices, the price elasticity of supply is about
a. 0.45
b.2.0
c.2.2
d.200
15) Because monopoly firms do not have to compete with other firms, the outcome in a
market with a monopoly is often
a.not in the best interest of society.
b.one that fails to maximize total economic well-being.
c.inefficient.
d.All of the above are correct.
16) Ihaveathousandfriends Social Networking firm had a remarkably profitable year. As
a result, its employees expect to receive bonus checks. Which of the following insights
into human behavior do the employees exhibit?
a.People are overconfident.
b.People care about fairness.
c.People are reluctant to change their minds.
d.People are inconsistent over time.
17) The rate at which a consumer is willing to trade off one good for another is called
the.
18) “Income security” programs comprised 33 percent of the federal government’s
spending in 2011. Give a few examples of the programs included in this category.
19) Suppose in the country of Nash that the price of oranges is $8 per bushel with no
trade allowed. If the world price of oranges is $10 per bushel and if Nash allows free
trade, will Nash be an importer or an exporter of oranges?
20) On what type of income do many economists believe that people base their
consumption?
21) Table 7-18
The following table shows the willingness to pay for a good for the only four
consumers in a market.
Refer to Table 7-18. If the price of the good is $20, how much is the total consumer
surplus?
22) Describe the process by which the market for capital and the market for land reach
equilibrium. As part of your description, elaborate on the role of the stock of the
resource versus the flow of services from the resource.
23) d.