Table 9-1
Linda and Sandy own The Preppy Puppy, a dog grooming business. Table 9-1 lists the
number of dogs Linda and Sandy can each bathe and groom in one week.
Refer to Table 9-1. Select the statement that accurately interprets the data in the table.
A) Sandy has a greater opportunity cost than Linda for dog grooming.
B) Sandy’s opportunity cost for dog grooming is less than Linda’s.
C) Linda has a greater opportunity cost than Sandy for dog bathing.
D) Sandy’s opportunity cost for dog grooming and dog bathing are both greater than
Linda’s.
Which of the following is not an example of a monopolistically competitive market?
A) automobile producers
B) supermarkets
C) gas stations
D) makers of women’s clothing
Table 17-5
Refer to Table 17-5. Oil Can Harry’s, a new automobile service shop, is ready to start
hiring. The table above shows the relationship between the number of mechanics the
firm hires and the quantity of oil changes it produces.
a. Suppose the price of an oil change is $20. Complete the table by filling in the values
for marginal product and marginal revenue product.
b. Oil Can Harry’s is an input price-taker. Suppose the wage paid to mechanics is $80
per day. What is the profit-maximizing number of mechanics?
c. Suppose the wage rate rises to $100 per day.
(i) What happens to the firm’s demand curve for mechanics?
(ii) What happens to the profit-maximizing quantity of mechanics?
d. Suppose the wage rate is $60 per day and the price of an oil change is now $15.
(i) What happens to the firm’s demand curve for mechanics?
(ii) What happens to the profit-maximizing quantity of mechanics?
At a recent faculty meeting, Lorraine Waverly, president of Skywalker College,
announced that enrollment is up by 12 percent over the previous semester. If enrollment
the previous semester was 3,250 students, what is the student enrollment this semester?
A) 390
B) 2,860
C) 3,640
D) 4,030
Behavioral economics helps explain why customers ________ at J.C. Penney.
A) favored the policy of everyday low prices and not sales and coupons
B) favored sales and coupons and not the policy of everyday low prices
C) were equally happy with sales and coupons and the policy of everyday low prices
D) responded negatively to both sales and coupons and the policy of everyday low
prices
In a competitive market equilibrium
A) total consumer surplus equals total producer surplus.
B) marginal benefit and marginal cost are maximized.
C) consumers and producers benefit equally.
D) the marginal benefit equals the marginal cost of the last unit sold.
What happens in the primary market?
A) primary inputs like electricity are sold
B) a corporate financial manager will resell previously issued shares of stock
C) newly issued claims are sold by the borrowing firm to the initial buyer
D) already issued claims are sold from one investor to another
If the marginal utility Ida Mae receives from eating chicken wings is negative then
A) her total utility from eating chicken wings has fallen.
B) her total utility from eating chicken wings is negative as well.
C) Ida Mae definitely does not like chicken wings.
D) her total utility has risen, but by less from the last chicken wing than from the next
to last chicken wing.
Average fixed costs of production
A) remain constant.
B) will rise at a fixed rate as more is produced.
C) graph as a U-shaped curve.
D) fall as long as output is increased.
Which of the following has occurred as the millennial generation has come of age?
A) The demand for “fast casual” food has decreased in the U.S. market.
B) The demand for golf equipment has decreased in the U.S. market.
C) The demand for traditional fast food has increased in the U.S. market.
D) all of the above
If the marginal tax rate is equal to the average tax rate as taxable income increases, the
tax structure is
A) regressive.
B) proportional.
C) progressive.
D) unfair.
Suppose two countries use different combinations of inputs, such as labor and capital,
to produce the same product. This implies all of the following except that
A) the two countries use different technologies to produce the product.
B) the inputs are not equally productive in the two countries.
C) the prices of the inputs are not the same in the countries.
D) one country is more efficient in the production of the good than the other.
Figure 12-14
Refer to Figure 12-14. Consider a typical firm in a perfectly competitive industry
which is incurring short-run losses. Which of the diagrams in the figure shows the effect
on the industry as it transitions to a long-run equilibrium?
A) Panel A
B) Panel B
C) Panel C
D) Panel D
Monopolistically competitive firms have downward-sloping demand curves. In the long
run, monopolistically competitive firms earn zero economic profits. These two
characteristics imply that in the long run
A) monopolistically competitive markets achieve productive efficiency.
B) monopolistically competitive markets achieve allocative efficiency.
C) monopolistically competitive firms earn economic profits.
D) monopolistically competitive firms have excess capacity.
Imposing tariffs in cases of dumping
A) is allowed under the WTO agreement.
B) is not allowed under the WTO agreement.
C) is not addressed by the WTO agreement.
D) has never occurred, even though it is allowed under the WTO agreement.
Consider a downward-sloping demand curve. When the price of an inferior good
decreases, the income and substitution effects
A) work in the same direction to increase quantity demanded.
B) work in the same direction to decrease quantity demanded.
C) work in opposite directions and quantity demanded increases.
D) work in opposite directions and quantity demanded decreases.
Firms in perfect competition are price takers because
A) one firm determines the price that all other firms in the industry will charge.
B) consumers have enough market power to set prices.
C) firms accept the price determined by the government.
D) each firm is too small relative to the market to be able to influence price.
Tomas increased his consumption of potato chips when the price of pistachios
increased. For Tomas, potato chips and pistachios are
A) substitutes in consumption.
B) both inferior goods.
C) complements in consumption.
D) both luxury goods.
Figure 2-4
Figure 2-4 shows various points on three different production possibilities frontiers for
a nation.
Refer to Figure 2-4. A movement from X to Y
A) could be due to a change in consumers’ tastes and preferences.
B) could occur because of an influx of immigrant labor.
C) is the result of advancements in food production technology only, with no change in
the technology for plastic production.
D) is the result of advancements in plastic production technology only, with no change
in food production technology.
Figure 13-13
Refer to Figure 13-13. What is the output price?
A) P4
B) P3
C) P2
D) P1
A firm has successfully adopted a positive technological change when
A) it can produce more output using the same inputs.
B) it produces less pollution in its production process.
C) it can pay its workers less yet increase its output.
D) it sees an increase in worker productivity.
Figure 6-1
Refer to Figure 6-1. The demand curve on which elasticity changes at every point is
given in
A) Panel A.
B) Panel B.
C) Panel C.
D) none of the above graphs.
Figure 18-2
Figure 18-2 shows a demand curve and two sets of supply curves, one set more elastic
than the other.
Refer to Figure 18-2. If the government imposes an excise tax of $1.00 on every unit
sold, the consumer’s burden of the tax
A) is Pa– Pcunder either supply curve.
B) is Pb– Pcunder either supply curve.
C) is Pa– Pcif the supply curve is S0 and Pb– Pc if the supply curve is S1.
D) is Pa– Pdif the supply curve is S0 and Pb– Pe if the supply curve is S1.
Table 4-4
Table 4-4 shows the demand and supply schedules for the labor market in the city of
Pixley.
Refer to Table 4-4. Suppose that the quantity of labor supplied increases by 40,000 at
each wage level. What are the new free market equilibrium hourly wage and the new
equilibrium quantity of labor?
A) W = $8.50; Q = 550,000
B) W = $12.50; Q = 630,000
C) W = $9.50; Q = 610,000
D) W = $11.50; Q = 610,000
Tax laws affect
A) economic efficiency but not equity.
B) equity but not economic efficiency.
C) consumption and production, not efficiency and equity.
D) both efficiency and equity.
Which of the following best explains why unemployment rates are higher in the
European economies than in the United States?
A) More Europeans go to school full time and are therefore not able to participate in the
labor market.
B) Unemployment benefits are more generous in Europe than in the United States.
C) Workers in Europe are less productive than workers in the United States.
D) European industries pay a lower wage rate than industries in the United States.
Article Summary
Addressing his Conservative party in October 2015, British Prime Minister David
Cameron called for a major overhaul of the country’s public school system by endorsing
a nationwide conversion to charter-type public schools called academies while also
urging current and would-be educators across the country to create small, new
academies known as free schools. In a nationally televised broadcast, Cameron stated
“So my next ambition is this five hundred new free schools. Every school an
academyand yes local authorities running schools a thing of the past.” Cameron
believes that the current system denies opportunities to British children, and the country
will not continue to thrive unless it greatly improves the talent and experience of its
younger generation.
Source: Campbell Brown, ” Education Reform: Why America Needs a David
Cameron,” thedailybeast.com, October 16, 2015.
Refer to the Article Summary above. The article addresses proposed British education
reform by way of a completely revised public school system to improve the talent and
experience of students. Education reform could lead to a more skilled and better trained
public. A more skilled and better trained public would
A) cause the market supply curve for labor to shift to the right.
B) cause the market demand curve for labor to shift to the right.
C) not shift the market demand curve for labor.
D) cause both the market demand curve for labor and the market supply curve for labor
to shift to the left.
Table 15-2
The government of a small developing country has granted exclusive rights to Linden
Enterprises for the production of plastic syringes. Table 15-2 shows the cost and
demand data for this government-protected monopolist.
Refer to Table 15-2. What is the amount of profit that the firm earns?
A) $34.50
B) $42
C) $47
D) $49
Figure 5-1
Figure 5-1 shows a market with an externality. The current market equilibrium output of
Q1 is not the economically efficient output. The economically efficient output is Q2.
Refer to Figure 5-1. If, because of an externality, the economically efficient output is
Q2 and not the current equilibrium output of Q1, what does S2 represent?
A) the market supply curve reflecting private cost
B) the market supply curve reflecting social cost
C) the market supply curve reflecting external cost
D) the market supply curve reflecting implicit cost
________ marginal opportunity cost implies that the more resources already devoted to
any activity, the payoff from allocating yet more resources to that activity increases by
progressively smaller amounts.
A) Increasing
B) Decreasing
C) Constant
D) Negative
The market demand for a public good can be determined by
A) adding up the total private benefits and external benefits that each quantity provides
the citizens of a country.
B) adding up how much each citizen expects to consume at each possible price.
C) adding up how much each consumer is willing to pay for each unit of the public
good.
D) estimating the value of the benefit that each unit provides and multiplying that by
the number of consumers.
Which of the following statements is true?
A) Exports benefit trading countries because exports create jobs. Imports do not benefit
trading countries because they result in a loss of jobs.
B) Each year China exports about 50 percent of its wheat crop and 40 percent of its rice
crop.
C) Most of the leading exporting countries are large, high-income countries.
D) All sectors of the U.S. economy are affected equally by international trade.
Figure 5-2
Figure 5-2 shows a market with a negative externality.
Refer to Figure 5-2. The private profit-maximizing quantity for the firm is
A) Qa.
B) Qb.
C) Qb– Qd.
D) Qd.