Table 11-1
Table 11-1 shows the technology of production at the Matsuko’s Mushroom Farm for
the month of May. Diminishing marginal returns sets in when the ________ worker is
hired.
A) 2nd
B) 3rd
C) 4th
D) None of the above; the production function displays increasing marginal returns.
Figure 9-4
Suppose the U.S. government imposes a
$0.50 per pound tariff on sugar imports. Figure 9-4 shows the demand and supply
curves for sugar and the impact of this tariff.
Answer questions a-i.
a. Following the imposition of the tariff, what is the price that domestic consumers must
now pay and what is the quantity purchased?
b. Calculate the value of consumer surplus with the tariff in place.
c. What is the quantity supplied by domestic sugar producers with the tariff in place?
d. Calculate the value of producer surplus received by U.S. sugar producers with the
tariff in place.
e. What is the quantity of sugar imported with the tariff in place?
f. What is the amount of tariff revenue collected by the government?
g. The tariff has reduced consumer surplus. Calculate the loss in consumer surplus due
to the tariff.
h. What portion of the consumer surplus loss is redistributed to domestic producers? To
the government?
i. Calculate the deadweight loss due to the tariff.
A marginal tax rate is
A) the fraction of income that must be paid in taxes.
B) the fraction of each additional dollar of income that must be paid in taxes.
C) the incremental income one must earn to offset each additional dollar of tax.
D) the ratio of a change in income to a change in taxes paid.
U.S. taxpayers spend many hours during the year maintaining records for tax purposes
and preparing their income tax returns. This administrative cost
A) is part of the deadweight loss of taxation.
B) is equal to the value of consumer surplus associated with the income tax system.
C) can be claimed as a deduction on income tax returns.
D) is larger for individuals in the lowest income quintile than for individuals in the
highest income quintile.
Joss is a marketing consultant. Iris and Daphne are potential customers interested in
commissioning Joss to undertake a market survey and compile the findings in a report.
Iris is willing to pay $500 for the service while Daphne is willing to pay $800. Suppose
that the opportunity cost of Joss’s time is $1,200. Assume that Iris and Daphne do not
know each other. If Joss charges the same price per copy to both Iris and Daphne
A) the report will not get written.
B) only Daphne will commission the job and the report will be written.
C) both Iris and Daphne will commission the job and the report will be written.
D) no conclusion can be drawn without information on the price.
All of the following are critical functions of the government in facilitating the operation
of a market economy except
A) protecting private property.
B) enforcing property rights.
C) ensuring an equal distribution of income to all citizens.
D) enforcing contracts.
Figure 13-1
Ceteris paribus, an increase in firms’ expectations of the future profitability of
investment spending would be represented by a movement from
A) AD1 to AD2.
B) AD2 to AD1.
C) point A to point B.
D) point B to point A.
Figure 2-10
If the economy is currently producing at point E, what is the opportunity cost of moving
to point B?
A) 26 thousand forks
B) 20 thousand forks
C) 60 thousand spoons
D) 0 spoons
Table 11-1
Table 11-1 shows the technology of production at the Matsuko’s Mushroom Farm for
the month of May. What is the average product of labor when the farm hires 5 workers?
A) 4 pounds
B) 10.8 bushels
C) 38.2 pounds
D) 54 pounds
All of the following are reasons why China is unlikely to maintain high enough rates of
productivity growth to catch-up with the standard of living in the United States except
A) the United States invests more in research and development. than does China.
B) much of China’s growth is likely due to the transition from a centrally-planned
economy to a market economy.
C) because of the low birth rate in China, the labor force will soon decline.
D) the Chinese migration of rural workers to more productive urban jobs.
Marco goes to the pet store to buy a dozen Koi fish for his new Koi pond. He is willing
to pay $200 for the dozen fish, but buys them for a total of $140. Marco’s consumer
surplus from the purchase is
A) $5.
B) $60.
C) $140.
D) $200.
When a central bank works makes joint decisions with the government’s Treasury
department,
A) the central bank risks losing credibility.
B) the central bank is asserting its independence.
C) the government enhances its credibility.
D) the government loses its ability to conduct fiscal policy.
Dollar bills in the modern economy serve as money because
A) they are backed by the gold stored in Fort Knox.
B) they can be redeemed for gold by the central bank.
C) they have value as a commodity independent of their use as money.
D) people have confidence that others will accept them as money.
Suppose when the price of laptops fall, college students buy more laptops. This implies
that
A) there is a positive relationship between laptop prices and quantities purchased by
college students.
B) there is a negative relationship between laptop prices and quantities purchased by
college students.
C) there is a direct relationship between laptop prices and quantities purchased by
college students.
D) there is a one-to-one relationship between laptop prices and quantities purchased by
college students.