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Figure 24
Refer to Figure 24. This economy has the ability to produce at which point(s)?
a. Q, R, T, U
b. R, T, U
c. R, U
d. T
Suppose the government imposes a 50cent tax on the sellers of packets of chewing
gum. The tax would
a. shift the supply curve upward by less than 50 cents.
b. raise the equilibrium price by 50 cents.
c. create a 50cent tax burden each for buyers and sellers.
d. discourage market activity.
Figure 416
Refer to Figure 416. The shift from S to S’ could be caused by an
a. increase in the price of the good.
b. improvement in production technology.
c. increase in income.
d. increase in input prices.
Table 311
Assume that Max and Min can switch between producing mittens and producing hats at
a constant rate.
Labor Hours Needed to Make 1Quantity Produced in 36 Hours
MittensHatsMittensHats
Max26186
Min24189
Refer to Table 311. Assume that Max and Min each has 36 labor hours available. If
each person divides his/her time equally between the production of mittens and hats,
then total production is
a. 18 mittens and 6 hats.
b. 18 mittens and 7.5 hats.
c. 16 mittens and 12 hats.
d. 36 mittens and 15 hats.
At a price of $1.20, a local coffee shop is willing to supply 100 cinnamon rolls per day.
At a price of $1.40, the coffee shop would be willing to supply 150 cinnamon rolls per
day. Using the midpoint method, the price elasticity of supply is about
a. 0.15
b. 0.375
c. 2.5
d. 2.60
Which types of models are built with assumptions?
a. economic models, but not models in other disciplines such as physics and biology
b. economic models as well as models in other disciplines such as physics and biology
c. models that are built for teaching purposes but not for research purposes
d. bad models
Senator Bright, who understands economic principles, is trying to convince workers in
her district that trade with other countries is beneficial. Senator Bright should argue that
trade can be beneficial
a. only if it allows us to obtain things that we couldn't make for ourselves.
b. because it allows specialization, which increases total output.
c. to us if we can gain and the others involved in the trade lose.
d. in only a limited number of circumstances because others are typically selfinterested.
Frequently, in the short run, the quantity supplied of a good is
a. impossible, or nearly impossible, to measure.
b. not very responsive to price changes.
c. determined by the quantity demanded of the good.
d. determined by psychological forces and other noneconomic forces.
Approximately what percentage of the world's economies experience scarcity?
a. 10%
b. 40%
c. 85%
d. 100%
Figure 424
The diagram below pertains to the demand for turkey in the United States.
Refer to Figure 424. All else equal, a large number of people becoming vegetarians
would cause a move from
a. DA to DB.
b. DB to DA.
c. x to y.
d. y to x.
Figure 83
The vertical distance between points A and C represents a tax in the market.
Refer to Figure 83. The loss in producer surplus caused by the tax is measured by the
area
a. ABC.
b. P1P3ABC.
c. P1P2BC.
d. P1C0.
David tunes pianos in his spare time for extra income. Buyers of his service are willing
to pay $135 per tuning. One particular week, David is willing to tune the first piano for
$115, the second piano for $125, the third piano for $140, and the fourth piano for
$175. Assume David is rational in deciding how many pianos to tune. His producer
surplus is
a. $15.
b. $20.
c. $30.
d. $75.
The field of economics is traditionally divided into two broad subfields,
a. national economics and international economics.
b. consumer economics and producer economics.
c. private sector economics and public sector economics.
d. microeconomics and macroeconomics.
When government policies are enacted,
a. equality can usually be enhanced without an efficiency loss, but efficiency can never
be enhanced without a reduction in equality.
b. efficiency can usually be enhanced without a reduction in equality, but equality can
never be enhanced without an efficiency loss.
c. it is always the case that either efficiency and equality are both enhanced, or
efficiency and equality are both diminished.
d. None of the above are correct.
Why was OPEC unable to maintain high oil prices in the long run?
a. Demand and supply are both elastic in the long run compared to the short run.
b. Demand and supply are both inelastic in the long run compared to the short run.
c. Demand is elastic and supply is inelastic in the long run compared to the short run.
d. Demand is inelastic and supply is elastic in the long run compared to the short run.
Figure 920
The figure illustrates the market for rice in Vietnam.
Refer to Figure 920. From the figure it is apparent that
a. Vietnam has a comparative advantage in producing rice, relative to the rest of the
world.
b. foreign countries have a comparative advantage in producing rice, relative to
Vietnam.
c. Vietnam has an absolute advantage in producing rice, relative to the rest of the world.
d. foreign countries have an absolute advantage in producing rice, relative to Vietnam.
Table 716
PriceQuantity
DemandedQuantity
Supplied
$12.00036
$10.00330
$ 8.00624
$ 6.00918
$ 4.001212
$ 2.00156
$ 0.00180
Refer to Table 716. At a price of $2.00, total surplus is
a. larger than it would be at the equilibrium price.
b. smaller than it would be at the equilibrium price.
c. the same as it would be at the equilibrium price.
d. There is insufficient information to make this determination.
Figure 715
Refer to Figure 715. When the price falls from P2 to P1, which of the following would
not be true?
a. The sellers who still sell the good are worse off because they now receive less.
b. Some sellers leave the market because they are not willing to sell the good at the
lower price.
c. The total cost of what is now sold by sellers is actually higher than it was before the
decrease in the price.
d. Producer surplus would fall by area A + B.
In a December 2007 New York Times column Paul Krugman argued in favor of
a. protectionism based on the nationalsecurity argument.
b. protectionism based on the infantindustry argument.
c. protectionism based on the unfaircompetition argument.
d. keeping world markets relatively open.
Which of the following is likely to have the most price inelastic demand?
a. athletic shoes
b. running shoes
c. Nike running shoes
d. Nike Shox running shoes
Figure 318
Bintu’s Production Possibilities FrontierJuba’s Production Possibilities Frontier
Refer to Figure 318. Suppose Juba is willing to trade one bowl to Bintu for every two
cups that Bintu makes and sends to Juba. Which of the following combinations of
bowls and cups could Bintu then consume, assuming Bintu specializes in making cups
and Juba specializes in making bowls?
a. 1 bowl and 7 cups
b. 2 bowls and 4 cups
c. 3 bowls and 3 cups
d. 4 bowls and 1 cup
Table 320
Assume that Brad and Theresa can switch between producing wheat and producing beef
at a constant rate.
Minutes Needed to Make 1
Bushel of Wheat
Pound of Beef
Brad1012
Theresa610
Refer to Table 320. What is Theresa’s opportunity cost of producing one bushel of
wheat?
a. 5/6 pound of beef
b. 6/5 pound of beef
c. 3/5 pound of beef
d. 5/3 pounds of beef
Turkey is an importer of wheat. The world price of a bushel of wheat is $7. Turkey
imposes a $3perbushel tariff on wheat. Turkey is a pricetaker in the wheat market. As a
result of the tariff,
a. Turkish consumers of wheat become worse off and Turkish producers of wheat
become worse off.
b. Turkish consumers of wheat become worse off and Turkish producers of wheat
become better off.
c. Turkish consumers of wheat become better off and Turkish producers of wheat
become worse off.
d. Turkish consumers of wheat become better off and Turkish producers of wheat
become better off.
If the demand for textbooks is inelastic, then an increase in the price of textbooks will
a. increase total revenue of textbook sellers.
b. decrease total revenue of textbook sellers.
c. not change total revenue of textbook sellers.
d. There is not enough information to answer this question.
Figure 727
Refer to Figure 727. Sellers whose costs are less than the equilibrium price are
represented by which line segment?
a. AC.
b. CK.
c. BC.
d. CH.
Which of the following is likely to have the most price elastic demand?
a. scissors
b. fruit
c. music downloads
d. toothpaste
Figure 311
The graph below represents the various combinations of ham and cheese (in pounds)
that the nation of Bonovia could produce in a given month.
Refer to Figure 311. If the production possibilities frontier shown is for 240 hours of
production, then which of the following combinations of ham and cheese could
Bonovia produce in 240 hours?
a. 225 pounds of ham and 140 pounds of cheese
b. 280 pounds of ham and 100 pounds of cheese
c. 355 pounds of ham and 80 pounds of cheese
d. 330 pounds of ham and 60 pounds of cheese
As the price elasticity of supply approaches infinity, very small changes in price lead to
a. very large changes in quantity supplied.
b. very small changes in quantity supplied.
c. no change in quantity supplied.
d. None of the above is correct.
Figure 85
Suppose that the government imposes a tax of P3 P1.
Refer to Figure 85. The loss in total welfare that results from the tax is represented by
area
a. A+B+D+F.
b. A+B+C.
c. D+H+F.
d. C+H.
Assume, for Vietnam, that the domestic price of textiles without international trade is
lower than the world price of textiles. This suggests that, in the production of textiles,
a. Vietnam has a comparative advantage over other countries and Vietnam will import
textiles.
b. Vietnam has a comparative advantage over other countries and Vietnam will export
textiles.
c. other countries have a comparative advantage over Vietnam and Vietnam will import
textiles.
d. other countries have a comparative advantage over Vietnam and Vietnam will export
textiles.
Figure 621
Refer to Figure 621. How is the burden of the tax shared between buyers and sellers?
Buyers bear
a. threefourths of the burden, and sellers bear onefourth of the burden.
b. twothirds of the burden, and sellers bear onethird of the burden.
c. onehalf of the burden, and sellers bear onehalf of the burden.
d. onefourth of the burden, and sellers bear threefourths of the burden.
With which of the Ten Principles of Economics is the study of international trade most
closely connected?
a. People face tradeoffs.
b. Trade can make everyone better off.
c. Governments can sometimes improve market outcomes.
d. Prices rise when the government prints too much money.
Figure 35
Hosne’s Production Possibilities FrontierMerve’s Production Possibilities Frontier
Refer to Figure 35. If Hosne and Merve each divides her time equally between making
purses and making wallets, then total production is
a. 4 purses and 8 wallets.
b. 7 purses and 7 wallets.
c. 10 purses and 6 wallets.
d. 14 purses and 14 wallets.
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.
Total surplus in a market will increase when the government
a. imposes a binding price floor or a binding price ceiling on that market.
b. imposes a tax on that market.
c. Both a and b are correct.
d. Neither a nor b is correct.
