1) A normative economic statement such as The minimum wage should be abolished
a.would likely be made by an economist acting as a scientist.
b.would require values and data to be evaluated.
c.would require data but not values to be evaluated.
d.could not be evaluated by economists acting as policy advisers.
2) Streetcar owners in the early 20th century were against segregation for profit
maximizing reasons.
a.True
b.False
3) Depending on congestion, national parks can be either a common resource or a
public good.
a.True
b.False
4) All firms maximize profits by producing an output level where marginal revenue
equals marginal cost; for firms operating in perfectly competitive industries,
maximizing profits also means producing an output level where price equals marginal
cost.
a.True
b.False
5) Figure 9-5
The figure illustrates the market for tricycles in a country.
Bearing in mind that this country is ‘small,” which of the following events conceivably
could cause the country to switch from being an importer of tricycles to an exporter of
tricycles?
a.Incomes of domestic citizens increase, and tricycles are a normal good.
b.Within this country, the price of a substitute for tricycles decreases.
c.Within this country, the price of a complement to tricycles decreases.
d.Wages increase for domestic workers who produce tricycles.
6) The US government sets the poverty line equal to approximately
a.three times the cost of providing subsidized housing.
b.three times the cost of providing an adequate diet.
c.the minimum wage for a single person working 40 hours per week and 50 weeks per
year.
d.the cost of providing food, shelter, and health care expenses for a family of four.
7) Which of the following is not a reason that the findings of cost-benefit analyses on
public goods are only rough approximations?
a.Without prices, it is difficult to be sure how much people really value a good.
b.Analysts can’t be sure that the respondents to surveys are telling the truth.
c.Analysis must include not only the cost of building the project but also the cost of
maintenance, if any.
d.People value goods differently if they are publicly provided rather than privately
provided.
8) A monopoly market
a.always maximizes total economic well-being.
b.always minimizes consumer surplus.
c.generally fails to maximize total economic well-being.
d.generally fails to maximize producer surplus.
9) 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.
10) Which of the following is an example of a normative, as opposed to positive,
statement?
a.Universal health care would be good for U.S. citizens.
b.An increase in the cigarette tax would cause a decrease in the number of smokers.
c.A decrease in the minimum wage would decrease unemployment.
d.A law requiring the federal government to balance its budget would increase
economic growth.
11) For a firm, the relationship between the quantity of inputs and quantity of output is
called the
a.profit function.
b.production function.
c.total-cost function.
d.quantity function.
12) Table 15-20
A monopolist faces the following demand curve:
If a monopolist faces a constant marginal cost of $5, how much output should the firm
produce in order to maximize profit?
a.2 units
b.3 units
c.4 units
d.5 units
13) The production decisions of perfectly competitive firms follow one of the Ten
Principles of Economics, which states that rational people
a.consider sunk costs.
b.equate prices to the average costs of production.
c.prefer to purchase products from smaller rather than larger firms.
d.think at the margin.
14) Relationship between Price and Restaurant Meals
The slope of the line containing points Y and Z is a. -0.5.
b.-1.
c.-2.
d.-4.
15) Suppose that electricity producers create a negative externality equal to $5 per unit.
Further suppose that the government imposes a $5 per-unit tax on the producers. What
is the relationship between the after-tax equilibrium quantity and the socially optimal
quantity of electricity to be produced?
a.They are equal.
b.The after-tax equilibrium quantity is greater than the socially optimal quantity.
c.The after-tax equilibrium quantity is less than the socially optimal quantity.
d.There is not enough information to answer the question.