1) In the long run, a competitive market with 1,000 identical firms will experience an
equilibrium price equal to the minimum of each firm‘s average total cost.
a.True
b.False
2) What must be given up to obtain an item is called
a.out-of-pocket cost.
b.comparative worth.
c.opportunity cost.
d.absolute value.
3) Figure 7-23
Refer to Figure 7-23. At equilibrium, total surplus is represented by the area
a.A+B+C.
b.A+B+D+F.
c.A+B+C+D+H+F.
d.A+B+C+D+H+F+G+I.
4) The measures the
a.magnitude of the response in quantity demanded to a change in price.
b.direction of the shift in the demand curve in response to a market event.
c.size of the shortage created by the increase in demand.
d.responsiveness of quantity demanded to a change in income.
5) Table 18-2
Refer to Table 18-2. The table shows the number of bracelets that can be assembled
per week by various numbers of workers. If the price per bracelet in a perfectly
competitive product market is $8, how many workers would the firm employ if the
weekly wage rate is $800?
a.1
b.2
c.3
d.4
6) A monopolistically competitive firm has the following cost structure:
The firm faces the following demand curve:
To maximize profit (or minimize losses), the firm will produce
a.20 units.
b.30 units.
c.40 units.
d.50 units.
7) Workers displaced by trade eventually find jobs in
a.another country.
b.the government sector.
c.the industries in which the country has a comparative advantage.
d.a different company in the same industry.
8) The graph below represents the various combinations of ham and cheese (in pounds)
that the nation of Bonovia could produce in a given month.
The nation of Cropitia has a comparative advantage over Bonovia in producing ham if
a.Cropitia can produce more than 400 pounds of ham per month.
b.Cropitia can produce more than 320 pounds of cheese per month.
c.Cropitia’s opportunity cost of producing a pound of ham is less than 0.8 pounds of
cheese.
d.Cropitia’s opportunity cost of producing a pound of ham is greater than 0.8 pounds of
cheese.
9) Which of the following products would be considered scarce?
a.bread
b.baseballs autographed by Babe Ruth
c.motorcycles
d.All of the above are correct.
10) Sellers of a product will bear the larger part of the tax burden, and buyers will bear
a smaller part of the tax burden, when the
a.tax is placed on the sellers of the product.
b.tax is placed on the buyers of the product.
c.supply of the product is more elastic than the demand for the product.
d.demand for the product is more elastic than the supply of the product.
11) A disadvantage of the Earned Income Tax Credit (EITC) program is that it does not
help alleviate poverty due to unemployment, sickness, or other inability to work.
a.True
b.False
12) If we observe that William’s budget constraint has moved inward, then we know for
certain that
a.his income must have decreased.
b.he will be indifferent between goods X and Y.
c.the price of one or both of the goods must have increased.
d.his utility will decrease.
13) Scenario 12-5
Senator Filch argues that a tax must be paid by people who benefit from government
services. Senator Fudge argues that a tax must be paid in accordance with a person’s
ability to bear the tax burden. Senator Malfoy argues that people with a greater ability
to pay a tax should pay a larger amount. Senator Moody argues that taxpayers with
similar abilities to pay should contribute the same amount.
Which Senator is advocating for taxes based on horizontal equity?
a.Senator Filch
b.Senator Fudge
c.Senator Malfoy
d.Senator Moody
14) Suppose an economy produces two goods, food and machines. This economy
always operates on its production possibilities frontier. Last year, it produced 1000 units
of food and 47 machines. This year, it is producing 1050 units of food and 52 machines.
Which of the following events could not explain the increase in output?
a.a reduction in unemployment
b.an increase in available labor
c.an improvement in technology
d.Any of these events could explain the increase in output.