1) In 2011, the poverty line for a family of four in the U.S. was
a.$60,974.
b.$23,021.
c.$20,988.
d.$17,642.
2) Suppose a monopolist charges a price of $27 for its product and sells 10 units at that
price. At 10 units of production the firm has average fixed cost equal to $10 and
average variable cost equal to $12. How much total profit is the firm earning at this
price?
a. $5
b. $25
c. $50
d. $140
3) In an economy consisting of two people producing two goods, it is possible for one
person to have the absolute advantage and the comparative advantage in both goods.
a.True
b.False
4) Table 22-18
The following table shows the preferences of four types of voters over four possible
alternatives as well as the percentage of the electorate with the given preferences.
Refer to Table 22-18. In a majority vote between alternatives X and Y, what percentage
of the votes would X receive?
a.35%
b.45%
c.55%
d.65%
5) It costs a meat-processing company $50,000 to produce 5,000 pounds of steak. The
company’s cost will be $50,009 if it produces an additional pound of steak. If the
company produces 5,001 pounds of steak then
a.its average cost is greater than its marginal cost.
b.its average cost and its marginal cost are equal.
c.its average cost is less than its marginal cost.
d.there is insufficient information to compute average and marginal costs.
6) Table 16-7
A monopolistically competitive firm faces the following demand schedule for its
product. In addition, the firm has total fixed costs equal to 20.
If the firm has a constant marginal cost of $7 per unit, how much profit will the firm
earn at the profit-maximizing level of output?
a.$24
b.$25
c.$41
d.$66
7) When price is below average variable cost, a firm in a competitive market will
a.shut down and incur fixed costs.
b.shut down and incur both variable and fixed costs.
c.continue to operate as long as average revenue exceeds marginal cost.
d.continue to operate as long as average revenue exceeds average fixed cost.
8) Monopolistic competition is an
a.efficient market structure because long-run profits are zero.
b.efficient market structure because each firm produces at its efficient scale.
c.inefficient market structure because there is deadweight loss.
d.Both a and b are correct.
9) Because a monopolist is the sole producer in its market, it can necessarily alter the
price of its good
(i)without affecting the quantity sold.
(ii)without affecting its average total cost.
(iii)by adjusting the quantity it supplies to the market.
a.(ii) only
b.(iii) only
c.(i) and (ii) only
d.(ii) and (iii) only
10) Monopolies are socially inefficient because the price they charge is
a.equal to marginal revenue.
b.above marginal cost.
c.equal to demand.
d.above demand.
11) A firm operating in a perfectly competitive industry will continue to operate in the
short run but earn losses if the market price is less than that firm‘s average total cost but
greater than the firm‘s average variable cost.
a.True
b.False
12) 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.
13) Figure 10-16
This graph shows the market for pollution when permits are issued to firms and traded
in the marketplace. The equilibrium number of permits is
a.50
b.100
c. 1,000
d. 2,000
14) An increase in the price of ink will shift the supply curve for pens to the left.
a.True
b.False
15) According to the signaling theory of advertising, consumers
a.pay little or no attention to which firms advertise and which firms do not advertise.
b.are often more impressed by a firm’s willingness to spend money on advertising than
they are by the content of the advertisement.
c.are often more impressed by low-cost advertisements than they are by high-cost
advertisements.
d.gain little or no information about product quality from advertisements.
16) A improvement in production technology will shift the
a.supply curve to the right.
b.supply curve to the left.
c.demand curve to the right.
d.demand curve to the left.
17) Figure 18-9
Refer to Figure 18-9. If the price of apples increases, the equilibrium wage will
a.increase, and more apple pickers will be hired.
b.decrease, and more apple pickers will be hired.
c.increase, and fewer apple pickers will be hired.
d.decrease, and fewer apple pickers will be hired.
18) If Belgium exports chocolate to the rest of the world, then Belgian chocolate
producers benefit from higher producer surplus, Belgian chocolate consumers are worse
off because of lower consumer surplus, and total surplus in Belgium increases because
of the exports of chocolate.
a.True
b.False
19) The moral-hazard problem and the desire of firms to lessen that problem serve as a
plausible explanation for a firm paying above-equilibrium wages to its workers.
a.True
b.False