1) The supply curve for stand up paddle boards
a.shifts when the price of stand up paddle boards changes because the price of stand up
paddle boards is measured on the vertical axis of the graph.
b.shifts when the price of stand up paddle boards changes because the quantity supplied
of stand up paddle boards is measured on the horizontal axis of the graph.
c.does not shift when the price of stand up paddle boards changes because the price of
stand up paddle boards is measured on the vertical axis of the graph.
d.does not shift when the price of stand up paddle boards changes because the price of
stand up paddle boards is measured on the horizontal axis of the graph.
2) A monopolist that practices perfect price discrimination
a.creates no deadweight loss.
b.charges one group of buyers a higher price than another group, such as offering a
student discount.
c.charges a higher price but produces the same monopoly level of output as when a
single price is charged.
d.charges some customers a price below marginal cost because costs are covered by the
high-priced buyers.
3) Figure 7-34
Refer to Figure 7-34. Suppose there is initially a price floor set at $10 in this market. If
the government removed the price floor, by how much would total consumer surplus
increase for those consumers who enter the market after the price floor is removed?
4) Which of the following is not a characteristic of a perfectly competitive market?
a.Sellers set the price of the product.
b.There are many sellers.
c.Buyers must accept the price the market determines.
d.All of the above are characteristics of a perfectly competitive market.
5) Nontoll roads can be either public goods or common resources, depending upon the
degree of congestion.
a.True
b.False
6) Which of the following statements about private goods and public goods is correct?
a.Private goods and public goods are both excludable.
b.Private goods and public goods are both rival in consumption.
c.Private goods are not excludable and public goods are excludable.
d.Private goods are rival in consumption and public goods are not excludable.
7) In 2011, the largest source of receipts for state and local governments was individual
income taxes.
a.True
b.False
8)
Using the midpoint method, what is the price elasticity of supply between $5 and $6?
a. 0.60
b.0.64
c.1.57
d.1.67
9) A buyer is willing to buy a product at a price greater than or equal to his willingness
to pay, but would refuse to buy a product at a price less than his willingness to pay.
a.True
b.False
10) If a firm is facing elastic demand, then the firm should decrease price to increase
revenue.
a.True
b.False
11) Consumer surplus
a.is the amount of a good that a consumer can buy at a price below equilibrium price.
b.is the amount a consumer is willing to pay minus the amount the consumer actually
pays.
c.is the number of consumers who are excluded from a market because of scarcity.
d.measures how much a seller values a good.
12) If a sawmill creates too much noise for local residents,
a.noise restrictions will force residents to move out of the area.
b.a sense of social responsibility will cause owners of the mill to reduce noise levels.
c.the government can raise economic well-being through noise-control regulations.
d.the government should avoid intervening because the market will allocate resources
efficiently.
13) Marginal costs are costs that do not vary with the quantity of output produced.
a.True
b.False
14) An assumption an economist might make while studying international trade is
a.there are only two countries.
b.countries only produce two goods.
c.technology does not change.
d.All of the above are possible assumptions.
15) While in college, Marty and Laura each buy 15 bus tickets per month. After they
graduate and have full-time jobs, Marty buys 0 bus tickets per month and Laura buys 28
bus tickets per month. Comparing income elasticity of demand for bus tickets, Marty’s
a.is negative, and Laura’s is positive.
b.is positive, and Laura’s is negative.
c.is zero, and Laura’s is positive.
d.is zero, and Laura’s is negative.
16) Other things the same, in which case is the quantity produced the highest?
a.There is one firm.
b.There are two firms that successfully collude.
c.There are two firms in Nash equilibrium.
d.There are a very large number of firms.
17) Which city currently charges drivers a “congestion toll” to drive into the heart of the
city’s financial, legal, and entertainment district?
a.Washington, D.C.
b.Sydney
c.Tokyo
d.London
18) Sally and Harry both work at the local factory producing cars. Sally earns $22 per
hour working the day shift, and Harry earns $25 per hour working the night shift. Sally
and Harry do the same job, have the same experience, and have the same level of
education. This means that the
a.higher-paying job has a compensating wage differential of $3 per hour.
b.higher-paying job has a compensating wage differential of $25 per hour.
c.higher-paying job is intrinsically more attractive than the lower-paying job.
d.factory is discriminating against Sally because she is a woman.
19) An increase in the price of pizza will shift the demand curve for pizza to the left.
a.True
b.False