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1) The government enforces property rights by
a.requiring property owners to pay property taxes.
b.providing police and courts.
c.forcing people to own property.
d.providing public parks and recreation facilities.
2)
Using the midpoint method, between prices of $50 and $60, is about
a. 0.22
b. 0.82
c. 1.22
d. 2
3) Assume that Japan and Korea can switch between producing cars and producing
airplanes at a constant rate.
Korea should specialize in the production of
a.cars and import airplanes.
b.airplanes and import cars.
c.both goods and import neither good.
d.neither good and import both goods.
4) Goods that are not excludable are usually
a.higher priced than excludable goods.
b.higher priced than rival goods.
c.in short supply.
d.free of charge.
5) Use a graph to illustrate the quantity of pollution that would be emitted (a) after a
corrective tax has been imposed and (b) after tradable pollution permits have been
imposed. Could these two quantities ever be equivalent?
6) Figure 8-3
The vertical distance between points A and C represents a tax in the market.
Which of the following equations is valid for the deadweight loss of the tax?
a.Deadweight loss = (1/2)(P2 - P1)(Q2 + Q1)
b.Deadweight loss = (1/2)(P3 - P1)(Q2 + Q1)
c.Deadweight loss = (1/2)(P3 - P2)(Q2 - Q1)
d.Deadweight loss = (1/2)(P3 - P1)(Q2 - Q1)
7) The fact that many inputs are fixed in the short run but variable in the long run has
little impact on the firm's cost curves.
a.True
b.False
8)
The movement from point M to point K could be caused by
a.an advance in production technology.
b.an improvement in efficiency.
c.economic growth.
d.unemployment.
9) Table 12-2
Suppose that the government imposes a $2 tax on delights, causing the price to increase
from $4.00 to $6.00. Deadweight loss arises because
a.Lucy will pay more tax as a percentage of her value of delights than Ricky.
b.Ricky must pay the $2.00 tax from his consumer surplus.
c.Ricky will have to pay a higher price for delights.
d.Lucy will leave the market.
10) The deadweight loss for a monopolist equals one-half of its profits for any given
level of output.
a.True
b.False
11) The Sherman Antitrust Act prohibits executives of competing companies from
a.fixing prices, but it does not prohibit them from talking about fixing prices.
b.even talking about fixing prices.
c.sharing with one another their knowledge of game theory.
d.failing to stand by agreements that they had made with one another.
12) Figure 21-19
Refer to Figure 21-19. Assume that the consumer depicted in the figure has an income
of $20. The price of Skittles is $2 and the price of M&M's is $4. The consumer will
choose a consumption bundle where the marginal rate of substitution is
a. 2
b. 2/3
c. 1/2
d. 1/3
13) Table 20-15
Income Inequality in 2010 in the United States by Race
The values in the table reflect the percentages of pre-tax-and-transfer income.
Source: US Census Bureau
Refer to Table 20-15. Which race shows the least equal distribution of income?
14) What particular characteristic do public goods and common resources have in
common?
15) With eight hours of work Elmer can produce 20 pounds of carrots or 15 pounds of
peas. With eight hours Bugs can produce 10 pounds of carrots or 7.5 pounds of peas.
Can Elmer and Bugs gain from trade? Defend your answer.
16) Describe the difference between the purchase price of capital and the rental price of
capital. If you know the value of marginal product from the flow of capital services,
how would you determine the market price for the capital stock?
17) The problem that arises in markets in which the seller knows more about the
characteristics of the good being sold than the buyer knows is
18) Suppose the market for home-grown peppers in the town of Smallville is comprised
of two farmers. Suppose the two farmers try to collude. Explain why their collusion
might not be successful.
