1) Suppose that an industrial accident at a factory destroys a significant number of
high-speed blenders that bartenders use to mix frozen drinks. What will happen in the
labor market for bartenders?
a.Both wages and employment will increase.
b.Both wages and employment will decrease.
c.Wages will increase, and employment will decrease.
d.Wages will decrease, and employment will increase.
2) For a long while, electricity producers were thought to be a classic example of a
natural monopoly. People held this view because
a.the average cost of producing units of electricity by one producer in a specific region
was lower than if the same quantity were produced by two or more producers in the
same region.
b.the average cost of producing units of electricity by one producer in a specific region
was higher than if the same quantity were produced by two or more produced in the
same region.
c.the marginal cost of producing units of electricity by one producer in a specific region
was higher than if the same quantity were produced by two or more producers in the
same region.
d.electricity is a special non-excludable good that could never be sold in a competitive
market.
3) A consumer consumes two normal goods, popcorn and Pepsi. The price of Pepsi
rises. The substitution effect, by itself, suggests that the consumer will consume
a.more popcorn and more Pepsi.
b.less popcorn and less Pepsi.
c.more popcorn and less Pepsi.
d.less popcorn and more Pepsi.
4) A relatively flat demand curve indicates that
a.quantity demanded will adjust only slightly to a price change.
b.quantity demanded will adjust significantly to a price change.
c.quantity demanded will not adjust to a price change.
d.the change in quantity demanded will exactly equal a change in price.
5) At the local park there is a playground that anyone may use. There is rarely anyone
using the playground, so children who use the playground receive full enjoyment from
its use. The playground is
a.rival in consumption and is excludable.
b.not rival in consumption, but is excludable.
c.rival in consumption, but is not excludable.
d.not rival in consumption nor is it excludable.
6) In the long run, each firm in a competitive industry earns
a.zero accounting profits.
b.zero economic profits.
c.positive economic profits.
d.positive, negative, or zero economic profits.
7) Bob owns 5 acres of land. Bob sells the land to a real estate developer who builds a
subdivision with 10 houses. The land is an example of a good that is
a.both rival in consumption and excludable.
b.neither rival in consumption nor excludable.
c.excludable, but not rival in consumption.
d.rival in consumption, but not excludable.
8) Scenario 19-5
Jason works part-time at a grocery store after school. Jason has worked at the store for
two years but still hasn’t received a wage increase, even though newer employees have
received raises. Jason has threatened his employer with a lawsuit if he doesn’t get a
raise in the next few weeks. Jason believes he is a victim of labor-market
discrimination.
Refer to Scenario 19-5. Which of the following statements would weaken Jason’s case
against his employer?
a.Jason only works part-time; as a result, he has fewer hours of experience even though
he has been with the company longer.
b.Jason doesn’t accomplish as much in an hour as other workers doing the same job.
c.Other workers that got raises moved to the night shift or agreed to work weekends.
d.All of the above statements would weaken Jason’s case.
9) For a competitive firm experiencing diminishing marginal productivity, the value of
the marginal product
(i)increases when the price of output decreases.
(ii)changes when marginal product changes.
(iii)diminishes as the number of workers rises.
a.(i) and (ii)
b.(i) and (iii)
c.(ii) and (iii)
d.All of the above are correct.
10) Panel (c)
Panel (c) shows which of the following?
a.an increase in demand and an increase in quantity supplied
b.an increase in demand and an increase in supply
c.an increase in quantity demanded and an increase in quantity supplied
d.an increase in quantity demanded and an increase in supply
11) The circular-flow diagram is a
a.visual model of the economy.
b.visual model of the relationships among money, prices, and businesses.
c.model that shows the effects of government on the economy.
d.mathematical model of how the economy works.
12) Figure 9-9
Consumer surplus in this market before trade is
a.A.
b.A + B.
c.A + B + D.
d.C.
13) Assume that England and Spain can switch between producing cheese and
producing bread at a constant rate.
England has an absolute advantage in the production of
a.cheese and Spain has an absolute advantage in the production of bread.
b.bread and Spain has an absolute advantage in the production of cheese.
c.both goods and Spain has an absolute advantage in the production of neither good.
d.neither good and Spain has an absolute advantage in the production of both goods.
14) A production possibilities frontier will be bowed outward if some of the economy’s
resources are better suited to producing one good than another.
a.True
b.False
15) Firms that are involved in more than one type of business could be evidence of an
attempt to
a.increase private profit at the expense of consumers.
b.internalize some forms of positive externalities.
c.reduce the impact of government regulations on their business.
d.increase the private marginal cost of production.
16) When the absence of property rights causes a market failure, the government can
potentially solve the problem
a.by clearly defining property rights.
b.through regulation.
c.by supplying the good itself.
d.All of the above are correct.
17) For a monopolist, marginal revenue is
a.positive when the demand effect is greater than the supply effect.
b.positive when the monopoly effect is greater than the competitive effect.
c.negative when the price effect is greater than the output effect.
d.negative when the output effect is greater than the price effect.