1) Economists argue that we can calculate the value of a human life by observing
voluntary risks that people take every day.
a.True
b.False
2) Assume Leo buys coffee beans in a competitive market. It follows that
a.Leo has a limited number of sellers from which to buy coffee beans.
b.Leo will negotiate with sellers whenever he buys coffee beans.
c.Leo can influence the price of coffee beans if he buys a large quantity of them.
d.None of the above is correct.
3) Pat calculates that for every extra dollar she earns, she owes the government 40
cents. Her total income now is $44,000, on which she pays taxes of $11,000. Determine
her average tax rate and her marginal tax rate.
a.Her average tax rate is 40 percent and her marginal tax rate is 25 percent.
b.Her average tax rate is 40 percent and her marginal tax rate is 40 percent.
c.Her average tax rate is 25 percent and her marginal tax rate is 25 percent.
d.Her average tax rate is 25 percent and her marginal tax rate is 40 percent.
4) The irregular and largely unpredictable fluctuations in economic activity are called
a.market failure.
b.business cycle.
c.inflation.
d.unemployment.
5) measures how the quantity demanded of one good changes as the price of another
good changes.
a.True
b.False
6) An implication of the median voter theorem is that
a.minority views and majority views are given equal weight.
b.platforms of the major political parties will not differ greatly.
c.the logic of democracy is fundamentally flawed.
d.behavioral economics plays a significant role in voting outcomes.
7) Table 18-11
Consider the following daily production data for MadeFromScratch, Inc.
MadeFromScratch sells cupcakes for $2 each and pays the workers a wage of $325 per
day.
Refer to Table 18-11. What is the sixth worker’s marginal product of labor?
a.100 cupcakes
b.120 cupcakes
c.140 cupcakes
d.160 cupcakes
8) A business-stealing externality is
a.an externality that is likely to be punished under antitrust laws.
b.the negative externality that occurs when one firm attempts to duplicate exactly the
product of a different firm.
c.an externality that is considered to be an explicit cost of business in monopolistically
competitive markets.
d.the negative externality associated with entry of new firms in a monopolistically
competitive market.
9) Based on data from 2011, the top fifth of all families received approximately what
percent of all income in the United States?
a.83 percent
b.49 percent
c.41 percent
d.21 percent
10) When a good is taxed, the burden of the tax
a.falls more heavily on the side of the market that is more elastic.
b.falls more heavily on the side of the market that is more inelastic.
c.falls more heavily on the side of the market that is closer to unit elastic.
d.is distributed independently of relative elasticities of supply and demand.
11) Figure 8-8
Suppose the government imposes a $10 per unit tax on a good.
The decrease in consumer and producer surpluses that is not offset by tax revenue is the
area
a.C.
b.F.
c.G.
d.C+F.
12) Consider the labor market for computer programmers. Because of the dot.com
boom in the late 1990s, a lot of workers went to school to learn how to write computer
code for one of thousands of new dot.com companies. However, when these computer
programming students graduated, the dot.com bust took place. The dot.com bust
decreased the value of the marginal product of computer programmers. Holding all else
equal, what effect did these two circumstances have on the equilibrium wage in the
labor market for computer programmers?
a.The equilibrium wage increased.
b.The equilibrium wage decreased.
c.The equilibrium wage did not change.
d.It is not possible to determine what happens to the equilibrium wage.
13) A seller in a competitive market
a.can sell all he wants at the going price, so he has little reason to charge less.
b.will lose all his customers to other sellers if he raises his price.
c.considers the market price to be a €take it or leave it€ price.
d.All of the above are correct.
14) A rise in the interest rate will generally result in people consuming more when they
are old if the substitution effect outweighs the income effect.
a.True
b.False
15) Figure 14-6
Suppose a firm operating in a competitive market has the following cost curves:
When market price is P3, a profit-maximizing firm‘s total costs
a.can be represented by the area P2 x Q2.
b.can be represented by the area P3 x Q2.
c.can be represented by the area (P3-P2) x Q3.
d.are zero.
16) Suppose a consumer has preferences over two goods, X and Y, which are perfect
substitutes. In particular, two units of X is equivalent to one unit of Y. If the price of X
is $1, the price of Y is $3, and the consumer has $30 of income to allocate to these two
goods, how much of each good should the consumer purchase to maximize satisfaction?
a.30 units of X and 0 units of Y
b.0 units of X and 10 units of Y
c.15 units of X and 5 units of Y
d.15 units of X and 0 units of Y
17) Consumer surplus is
a.the amount a buyer is willing to pay for a good minus the amount the buyer actually
pays for it.
b.the amount a buyer is willing to pay for a good minus the cost of producing the good.
c.the amount by which the quantity supplied of a good exceeds the quantity demanded
of the good.
d.a buyer’s willingness to pay for a good plus the price of the good.
18) When economists speak of a firm’s costs, they are usually excluding the opportunity
costs.
a.True
b.False
19) Table 17-10
The table shows the demand schedule for a particular product.
Refer to Table 17-10. If this market is perfectly competitive and the marginal cost is
constant at $40 per unit, then how much output will be produced?
a.900
b. 1,200
c. 1,500
d. 1,800
20) Table 12-5
What is the average tax rate for a person who makes $120,000?
a. 25%
b.35%
c.45%
d.60%