1) Figure 7-16
Suppose the price of the good is $450. Then, on the first unit of the good that is sold,
producer surplus is
a.$250, and on the second unit of the good that is sold, producer surplus is $100.
b.$250, and on the second unit of the good that is sold, producer surplus is $150.
c.$350, and on the second unit of the good that is sold, producer surplus is $100.
d.$350, and on the second unit of the good that is sold, producer surplus is $150.
2) Scenario 8-2
Roland mows Karla’s lawn for $25. Roland’s opportunity cost of mowing Karla’s lawn
is $20, and Karla’s willingness to pay Roland to mow her lawn is $28.
Assume Roland is required to pay a tax of $3 each time he mows a lawn. Which of the
following results is most likely?
a.Karla now will decide to mow her own lawn, and Roland will decide it is no longer in
his interest to mow Karla’s lawn.
b.Karla is willing to pay Roland to mow her lawn, but Roland will decline her offer.
c.Roland is willing to mow Karla’s lawn, but Karla will decide to mow her own lawn.
d.Roland and Karla still can engage in a mutually-agreeable trade.
3) Table 18-8
Harold and Maude own a dance studio where they and their employees teach ballroom
dancing. Their company is a competitive, profit-maximizing firm. Harold and Maude’s
production function is detailed in the table below.
Refer to Table 18-8. What is the marginal product of the third worker?
a.220 students
b.73.33 students
c.50 students
d.30 students
4) The Coase theorem states that
a.under certain circumstances government intervention is not needed to reach efficient
outcomes when an externality is present.
b.government intervention is always required to reach an efficient outcome when an
externality is present.
c.government intervention cannot lead to an efficient outcome when an externality is
present.
d.only negative externalities can be resolved using government intervention.
5) Refer to Figure 9-15. For the saddle market, area B represents
a.government’s revenue from the tariff.
b.the deadweight loss of the tariff.
c.the increase in producer surplus, relative to the free-trade situation, as a result of the
tariff.
d.None of the above is correct.
6) Producer surplus is the amount a seller is paid minus the cost of production.
a.True
b.False
7) Figure 8-7
The vertical distance between points A and B represents a tax in the market.
As a result of the tax, buyers effectively pay
a.$32 for each unit of the good, and sellers effectively receive $24 for each unit of the
good.
b.$32 for each unit of the good, and sellers effectively receive $16 for each unit of the
good.
c.$24 for each unit of the good, and sellers effectively receive $16 for each unit of the
good.
d.$28 for each unit of the good, and sellers effectively receive $20 for each unit of the
good.
8) Energy drinks and granola bars are normal goods. When the price of energy drinks
decreases, the income effect causes
a.the consumer to feel richer, so the consumer buys more granola bars.
b.the consumer to feel richer, so the consumer buys fewer granola bars.
c.granola bars to be relatively more expensive, so the consumer buys more granola bars.
d.granola bars to be relatively less expensive, so the consumer buys fewer granola bars.
9) Table 14-5
The table represents a demand curve faced by a firm in a competitive market.
For this firm, the marginal revenue of the 12th unit is
a. $9.
b. $10.
c. $11
d. The marginal revenue cannot be determined without knowing the total revenue when
11 units are sold.
10) Labor-market discrimination is evident when
a.wages of individuals differ on the basis of some recognizable attribute that is
unrelated to productivity.
b.wage rates differ for similar jobs.
c.consumers prefer to shop at some stores, and not at others.
d.wages reflect workers’ human capital.
11) In his 1951 book Social Choice and Individual Values, Arrow’s perfect voting
system satisfies all of the following properties except
a.unanimity.
b.transitivity.
c.reflexivity.
d.independence of irrelevant alternatives.
12)
Using the midpoint method, the between point C and point D is about
a. 0.29
b. 0.54
c. 1.86
d. 2.0
13) Consider a good to which a per-unit tax applies. The size of the deadweight that
results from the tax is smaller, the
a.larger is the price elasticity of demand.
b.smaller is the price elasticity of supply.
c.larger is the amount of the tax.
d.All of the above are correct.
14) Diminishing marginal utility suggests that
a.more is always preferred to less.
b.the well-being of society is maximized when the distribution of income is equal.
c.the poor are less efficient at spending money than the rich.
d.the poor receive more satisfaction from the last dollar spent than the rich.
15) Which of the following industries is most likely to exhibit the characteristic of free
entry?
a.nuclear power
b.municipal water and sewer
c.dairy farming
d.airport security
16) Chile’s Production Possibilities FrontierColombia’s Production Possibilities
Frontier
If
the production possibilities frontiers shown are each for one day of production, then
which of the following combinations of pounds of coffee and pounds of soybeans could
Chile and Colombia together not make in a given day?
a.4 pounds of coffee and 17 pounds of soybeans
b.8 pounds of coffee and 14 pounds of soybeans
c.16 pounds of coffee and 9 pounds of soybeans
d.24 pounds of coffee and 3 pounds of soybeans
17) The relatively low inflation experienced in the United States in the 1990s is
attributable to
a.slow growth of U.S. productivity during the 1990s.
b.slow growth of the quantity of money in the U.S. in the 1990s.
c.low levels of government spending in the U.S. in the 1980s and 1990s.
d.the eight-year presidency of William Jefferson Clinton during the 1990s.
18) Suppose the demand schedule in a market can be represented by the equation
QD=500-10P, where QD is the quantity demanded and is the price. Also, suppose the
supply schedule can be
represented by the equation QS=200+10P, where QS is the quantity supplied.
What is the equilibrium quantity in this market?
19) Figure 7-32
Refer to Figure 7-32. How much are consumer surplus, producer surplus, and total
surplus at the market equilibrium price?
20) Figure 9-29
The following diagram shows the domestic demand and domestic supply curves in a
market. Assume that the world price in this market is $1 per unit.
If the country allows free trade, how many units will domestic consumers demand and
how many units will domestic producers supply?
21) Workers who work the night shift at factories are paid more than similar workers
who work the day shift due to a
22) Scenario 8-3
Suppose the market demand and market supply curves are given by the equations:
Suppose that a tax of T is placed on buyers so that the demand curve becomes:
What quantity will be bought and sold after the tax is imposed?
23) Jen’s wage decreased, and she responded by enjoying more hours of leisure per day.
Is Jen’s behavior consistent with an upward-sloping labor-supply curve?
24) The following table shows the supply and demand schedules in a market.
What is the equilibrium quantity in this market?
25) Figure 15-24
Use the letters in the figure to identify the profit area for the single price monopolist.
26) Between which two quantities listed is demand unit elastic?