The scientific method is
a. the use of modern technology to understand the way the world works.
b. the use of controlled laboratory experiments to understand the way the world works.
c. the dispassionate development and testing of theories about how the world works.
d. the search for evidence to support preconceived theories about how the world works.
Table 47
PriceDairy
Barn’s
Gallons
SuppliedDolly’s Dairy’s
Gallons
SuppliedFour Queen’s
Gallons
SuppliedMoo
Roo’s
Gallons
Supplied
$00000
$23421
$46842
$691263
$8121684
$101520105
Refer to Table 47. If these are the only four sellers in the market for ice cream, then the
market quantity supplied at a price of $8 is
a. 10 gallons.
b. 20 gallons.
c. 32 gallons.
d. 40 gallons.
Table 76
For each of three potential buyers of apples, the table displays the willingness to pay for
the first three apples of the day. Assume Xavier, Yadier, and Zavi are the only three
buyers of apples, and only three apples can be supplied per day.
First AppleSecond AppleThird Apple
Xavier$1.75$1.55$1.15
Yadier$1.50$1.25$0.75
Zavi$1.30$1.10$0.70
Refer to Table 76. If the market price of an apple is $1.40, then consumer surplus
amounts to
a. $0.60.
b. $1.20.
c. $1.40.
d. $3.40
An ordered pair is
a. the process of checking calculations twice before placing them on a graph.
b. two numbers that can be represented by a single point on a graph.
c. two numbers that are represented by two points on a graph.
d. two points on a graph that are of equal distance from the origin.
Figure 22
Refer to Figure 22. Boxes A and B of this circularflow diagram represent
a. firms and households.
b. households and government.
c. the markets for goods and services and the markets for financial assets.
d. the markets for goods and the markets for services.
A microeconomist — as opposed to a macroeconomist — might study
a. the effect of a national healthcare program on the nation’s unemployment rate.
b. the effect of new regulations on production in the pulp and paper industry.
c. the effect of changes in interest rates on gross domestic product.
d. the growth rate of production in the economy.
When demand is inelastic, the price elasticity of demand is
a. less than 1, and price and total revenue will move in the same direction.
b. less than 1, and price and total revenue will move in opposite directions.
c. greater than 1, and price and total revenue will move in the same direction.
d. greater than 1, and price and total revenue will move in opposite directions.
The federal government is concerned about obesity in the United States. Congress is
considering two plans. One will ban the production and sale of “junk food.” The other
will increase nutritioneducation programs and include substantial advertising
campaigns to encourage healthy eating habits. The junkfood ban program
a. and the education program will reduce the quantity of junk food sold and raise the
price.
b. and the education program will reduce the quantity of junk food sold and lower the
price.
c. will reduce the quantity of junk food sold and raise the price. The education program
will reduce the quantity of junk food sold and lower the price.
d. will reduce the quantity of junk food sold and lower the price. The education
program will reduce the quantity of junk food sold and raise the price.
Figure 87
The vertical distance between points A and B represents a tax in the market.
Refer to Figure 87. As a result of the tax,
a. consumer surplus decreases from $200 to $80.
b. producer surplus decreases from $200 to $145.
c. the market experiences a deadweight loss of $80.
d. All of the above are correct.
A bakery would be willing to supply 500 bagels per day at a price of $0.50 each. At a
price of $0.80, the bakery would be willing to supply 1,100 bagels. Using the midpoint
method, the price elasticity of supply for bagels is about
a. 0.62.
b. 0.77.
c. 1.24.
d. 1.63.
Donald produces nails at a cost of $200 per ton. If he sells the nails for $350 per ton, his
producer surplus per ton is
a. $150.
b. $200.
c. $350.
d. $550.
Figure 65
Refer to Figure 65. If the solid horizontal line on the graph represents a price ceiling,
then the price ceiling is
a. binding and creates a surplus of 60 units of the good.
b. binding and creates a surplus of 20 units of the good.
c. not binding but creates a surplus of 40 units of the good.
d. not binding, and there will be no surplus or shortage of the good.
Figure 66
Refer to Figure 66. If the government imposes a price floor of $6 on this market, then
there will be
a. no surplus.
b. a surplus of 20 units.
c. a surplus of 30 units.
d. a surplus of 40 units.
Figure 41
Refer to Figure 41. The movement from point A to point B on the graph shows a(n)
a. decrease in demand.
b. increase in demand.
c. decrease in quantity demanded.
d. increase in quantity demanded.
Figure 512
Refer to Figure 512. Using the midpoint method, the price elasticity of demand
between point Y and point Z is
a. 0.5.
b. 0.75.
c. 1.0.
d. 1.3.
When economists make normative statements, they are
a. speaking as scientists.
b. speaking as policy advisers.
c. making claims about how the world is.
d. revealing that they are very liberal in their views of how the world works.
Figure 323
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 323. For Bonovia, what is the opportunity cost of a pound of cheese?
a. 0.8 pounds of ham
b. 1.25 pounds of ham
c. 8 pounds of ham
d. 16 pounds of ham
An increase in demand is represented by a
a. movement downward and to the right along a demand curve.
b. movement upward and to the left along a demand curve.
c. rightward shift of a demand curve.
d. leftward shift of a demand curve.
Marcus says that he would smoke one pack of cigarettes each day regardless of the
price. If he is telling the truth, Marcus’s
a. demand for cigarettes is perfectly inelastic.
b. price elasticity of demand for cigarettes is infinite.
c. income elasticity of demand for cigarettes is 0.
d. More than one of the above is correct.
Lawmakers designed the burden of the FICA payroll tax to be split evenly between
workers and firms. Labor economists believe that
a. lawmakers may have actually achieved their goal because statistics show that the tax
burden is currently equally divided.
b. the tax raises too little revenue for the government, so it should be eliminated.
c. firms bear most of the burden of the tax.
d. workers bear most of the burden of the tax.
Figure 615
Refer to Figure 615. For a price floor to be binding in this market, it would have to be
set at
a. any price below $3.
b. a price between $2 and $3.
c. a price between $3 and $4.
d. any price above $3.
Table 412
A country club usually only allows members to purchase tickets for its celebrity golf
tournament, but the club is considering allowing nonmembers to purchase tickets this
year. The demand and supply schedules are as follows:
PriceQuantity Demanded
by MembersQuantity Demanded
by NonmembersQuantity Supplied
$101000500600
$15800400600
$20600300600
$25400200600
$30200100600
Refer to Table 412. If both members and nonmembers are allowed to purchase tickets
to this year’s celebrity golf tournament and the country club sets the ticket price at $30,
then there will be
a. a shortage of 300 tickets.
b. a surplus of 300 tickets.
c. 600 tickets sold.
d. 600 tickets unsold.
Table 43
PriceBert’s
Quantity
DemandedErnie’s
Quantity
DemandedGrover’s
Quantity
DemandedOscar’s
Quantity
Demanded
$0.00201648
$0.50181266
$1.00141025
$1.5012804
$2.006602
$2.500400
Refer to Table 43. For whom is the good a normal good?
a. Bert only
b. Grover only
c. Bert, Ernie, Grover, and Oscar
d. This cannot be determined from the table.
In a market economy,
a. households decide which firms to work for and what to buy with their incomes.
b. firms decide whom to hire and what to make.
c. a central planner makes decisions about production and consumption.
d. Both a and b are correct.
Table 331
Labor Hours Needed to Make 1 Pound of:
Amount Produced in 40 hours
Meat PotatoesMeatPotatoes
Farmer8 hours/pound5 hours/pound5 pounds8 pounds
Rancher4 hours/pound10 hours/pound10 pounds4 pounds
Refer to Table 331. In 10 hours,
a. the rancher could produce 2.5 pounds of meat and 1.0 pound of potatoes.
b. the rancher could produce 1.0 pound of meat and 1.0 pound of potatoes.
c. the farmer could produce 0.25 pounds of meat and 1.6 pounds of potatoes.
d. the farmer could produce 0.75 pounds of meat and 1.25 pounds of potatoes.
Suppose you are in charge of setting prices at a local ice cream shop. The business
needs to increase its total revenue, and your job is on the line. You evaluate the data and
determine that the price elasticity of demand for ice cream at your shop is 1.8. You
should
a. increase the price of ice cream.
b. decrease the price of ice cream.
c. decrease the cost of operating the ice cream shop.
d. increase the price of bottled water also sold at the ice cream shop because its price
elasticity of demand is 1.2.
Figure 56
Refer to Figure 56. For prices above $8, demand is price
a. elastic, and total revenue will rise as price rises.
b. inelastic, and total revenue will rise as price rises.
c. elastic, and total revenue will fall as price rises.
d. inelastic, and total revenue will fall as price rises.
Figure 914. On the diagram below, Q represents the quantity of crude oil and P
represents the price of crude oil.
Refer to Figure 914. A result of this country allowing international trade in crude oil is
as follows:
a. The wellbeing of domestic crudeoil producers is now higher in that they now sell
more crude oil at a higher price per barrel.
b. The effect on the wellbeing of domestic crudeoil consumers is unclear in that they
now buy more crude oil, but at a higher price per barrel.
c. The effect on the wellbeing of the country is unclear in that domestic producer
surplus increases, while the effect on domestic consumer surplus is unclear.
d. All of the above are correct.
Both Dave and Caroline produce sweaters and socks. If Dave’s opportunity cost of 1
sweater is 3 socks and Caroline’s opportunity cost of 1 sweater is 5 socks, then
a. Dave has a comparative advantage in the production of sweaters.
b. Caroline has a comparative advantage in the production of sweaters.
c. Dave has a comparative advantage in the production of socks.
d. Dave has a comparative advantage in the production of both sweaters and socks.
Figure 28
Refer to Figure 28. To reach point L, the economy would have to
a. acquire more resources or experience a technological advance.
b. begin using its available resources more efficiently than it is currently using them.
c. shift resources away from the production of nails and toward the production of
hammers.
d. None of the above are correct; the economy will never be able to reach point L.
You are in charge of the local cityowned aquatic center. You need to increase the
revenue generated by the aquatic center to meet expenses. The mayor advises you to
increase the price of a day pass. The city manager recommends reducing the price of a
day pass. You realize that
a. the mayor thinks demand is elastic, and the city manager thinks demand is inelastic.
b. both the mayor and the city manager think that demand is elastic.
c. both the mayor and the city manager think that demand is inelastic.
d. the mayor thinks demand is inelastic, and the city manager thinks demand is elastic.
Figure 718
Refer to Figure 718. Total surplus amounts to $500 if consumer surplus amounts to
a. $290 and if the price of the good is $150.
b. $300 and if the price of the good is $130.
c. $275 and if the price of the good is $160.
d. $400 and if the price of the good is $100.
Which of the following statements correctly describes the relationship between the size
of the deadweight loss and the amount of tax revenue as the size of a tax increases from
a small tax to a medium tax and finally to a large tax?
a. Both the size of the deadweight loss and tax revenue increase.
b. The size of the deadweight loss increases, but the tax revenue decreases.
c. The size of the deadweight loss increases, but the tax revenue first increases, then
decreases.
d. Both the size of the deadweight loss and tax revenue decrease.