1) Above-equilibrium wages caused by efficiency wages will most likely result in
a.a shortage of labor.
b.increased unemployment.
c.compensating wage differentials.
d.an decrease in the quantity of labor supplied.
2) Most studies have found that tobacco and marijuana are substitutes rather than
complements.
a.True
b.False
3) Private markets fail to reach a socially optimal equilibrium when negative
externalities are present because
a.social costs equal private costs at the private market solution.
b.private costs exceed social costs at the private market solution.
c.social costs exceed private costs at the private market solution.
d.they internalize externalities.
4) Figure 9-7. The figure applies to the nation of Wales and the good is cheese.
Which of the following is a valid equation for Welsh producer surplus with trade?
a.Producer surplus with trade = (1/2)P0Q0.
b.Producer surplus with trade = (1/2)P1Q1.
c.Producer surplus with trade = (1/2)P1Q2.
d.None of the above is correct.
5) What is flowing from rectangle 1 to
oval A?
a.revenue
b.goods and services sold
c.factors of production
d.labor, land, and capital
6) Table 17-20
Nadia and Maddie are two college roommates who both prefer a clean common space
in their dorm room, but neither enjoys cleaning. The roommates must each make a
decision to either clean or not clean the dorm room’s common space. The payoff table
for this situation is provided below, where the higher a player’s payoff number, the
better off that player is. The payoffs in each cell are shown as (payoff for Nadia, payoff
for Maddie).
Refer to Table 17-20. What is the Nash Equilibrium in this dorm room cleaning game?
a.Nadia: Clean Maddie: Clean
b.Nadia: Don’t Clean Maddie: Clean
c.Nadia: Clean Maddie: Don’t Clean
d.Nadia: Don’t Clean Maddie: Don’t Clean
7)
Which point on the graph best represents the fact that, because resources are scarce, not
every conceivable outcome is feasible?
a.point J
b.point K
c.point L
d.point M
8) A monopolist maximizes profits by
a.producing an output level where marginal revenue equals marginal cost.
b.charging a price equal to marginal revenue and marginal cost.
c.charging a price where marginal cost equals average total cost.
d.Both a and b are correct.
9) At low levels of production, the firm
a.benefits from increased size because it can take advantage of greater specialization.
b.has the potential for economies of scale.
c.is unlikely to experiences acute problems with coordination.
d.All of the above are correct.
10) A small island off the coast of Cape Cod contains two restaurants and two retail
stores. Tourists need to take a ferry boat to reach the island, but with a recent slowdown
in the economy, tourists are less willing to pay for the boat ride to visit the island. The
owners of the restaurants and stores on the island – Restaurants 1 and 2, and Stores A
and B – think that if tourists could ride the ferry for free, they would be happy to visit
the island, eat and shop. The business owners are considering contributing to a pool of
money that will be used to pay for roundtrip ferry service each day. The table represents
their willingness to pay, that is, the maximum amount that each business owner is
willing to contribute, per day, to pay for each ferry trip.
Suppose the cost to run the ferry for each roundtrip is $500. How many ferry trips
should there be to maximize the total surplus of the four business owners?
a.1
b.2
c.3
d.4
11) Suppose a consumer is currently spending all of her available income on two goods:
music CDs and DVDs. If the price of a CD is $9, the price of a DVD is $18, and she is
currently consuming 10 CDs and 5 DVDs, what is the consumer’s income?
a.$90
b.$180
c.$270
d.$360
12) Figure 18-1
On the graph, L represents the quantity of labor and Q represents the quantity of output
per week.
Refer to Figure 18-1. The shape of the curve suggests the presence of
a.an inverted production function.
b.diminishing total product.
c.increasing marginal product.
d.diminishing marginal product.