1) At price of $1.25, a paper manufacturer is willing to supply 150 spiral notebooks per
day. At a price of $1.50, the paper manufacturer is willing to supply 175 spiral
notebooks per day. Using the midpoint method, the price elasticity of supply is about
a. 1.18
b. 1.00
c. 0.85
d. 0.25
2) The production of methamphetamine (meth) is a social problem in the Midwest.
Iowa is considering two potential programs: Operation Methbust would increase the
number of sheriffs’ deputies to search out and destroy methamphetamine labs.
Operation Say No to Meth would increase the training required of public school
teachers so that they could better educate students about the health risks of using meth.
Assuming that each program were successful, which of the following statements is
correct?
a.Both Operation Methbust and Say No would reduce the demand for meth.
b.Both Operation Methbust and Say No would reduce the supply of meth.
c.Operation Methbust would reduce the demand for meth; Operation Say No would
reduce the supply of meth.
d.Operation Methbust would reduce the supply of meth; Operation Say No would
reduce the demand for meth.
3) Figure 7-24
Refer to Figure 7-24. If 4 units of the good are produced and sold, then
a.producer surplus is greater than consumer surplus.
b.consumer surplus is $16.
c.total surplus is minimized.
d.total surplus is not maximized.
4) Scenario 12-1
Ken places a $20 value on a cigar, and Mark places a $17 value on it. The equilibrium
price for this brand of cigar is $15.
Suppose the government levies a tax of $3 on each cigar, and the equilibrium price of a
cigar increases to $18. What is total consumer surplus after the tax is levied?
a.$0
b.$2
c.$5
d.$6
5) Suppose that two supply curves pass through the same point. One is steep, and the
other is flat. Which of the following statements is correct?
a.The flatter supply curve represents a supply that is inelastic relative to the supply
represented by the steeper supply curve.
b.The steeper supply curve represents a supply that is inelastic relative to the supply
represented by the flatter supply curve.
c.Given two prices with which to calculate the price elasticity of supply, that elasticity
would be the same for both curves.
d.A decrease in demand will increase total revenue if the steeper supply curve is
relevant, while a decrease in demand will decrease total revenue if the flatter supply
cure is relevant.
6) Which of the following expressions can be used to compute the ?
a. =€¢.
b. =€¢.
c. =€¢.
d. =€¢.
7) At a price of $20, there would be a(n)
a.shortage. The law of supply and demand predicts that the price will fall from $20 to a
lower price.
b.surplus. The law of supply and demand predicts that the price will rise from $20 to a
higher price.
c.excess demand. The law of supply and demand predicts that the price will rise from
$20 to a higher price.
d.excess supply. The law of supply and demand predicts that the price will fall from $20
to a lower price.
8) As a result of a labeling mistake at the chemical factory, a farmer accidentally sprays
weedkiller rather than fertilizer on half her land. As a result, she loses half of her
productive farmland. If the property of diminishing returns applies to all factors of
production, she should expect to see the marginal productivity of her remaining land
a.increase.
b.remain unchanged.
c.decrease but remain positive.
d.decrease and become negative.
9) Production possibilities frontiers can be used to illustrate scarcity, trade-offs,
opportunity cost, efficiency, unemployment, technological advances, and economic
growth.
a.True
b.False
10) A person’s tendency to smoke a cigarette after promising himself that he will quit is
an example of the behavioral economics insight that people are inconsistent over time
a.True
b.False