1) Productivity is defined as the quantity of goods and services produced from each unit
of labor input.
a.True
b.False
2) The following table shows the number of cases of water each seller is willing to sell
at the prices listed.
If the four suppliers listed are the only suppliers in this market and the market quantity
demanded is 500 cases when the price is $5.00, which of the following statements is
correct?
a.The market is in equilibrium at a price of $5.00.
b.There is a surplus of 100 cases at a price of $5.00.
c.There is a shortage of 100 cases at a price of $5.00.
d.There is a shortage of 50 cases at a price of $5.00.
3) Normative statements are
a.prescriptive, whereas positive statements are descriptive.
b.descriptive, whereas positive statements are prescriptive.
c.backward-looking, whereas positive statements are forward-looking.
d.forward-looking, whereas positive statements are backward-looking.
4) Suppose a monopolist chooses the price and production level that maximizes its
profit. From that point, to increase
society’s economic welfare, output would need to be increased as long as
a.average revenue exceeds marginal cost.
b.average revenue exceeds average total cost.
c.marginal revenue exceeds marginal cost.
d.marginal revenue exceeds average total cost.
5) Scenario 14-4
The information below applies to a competitive firm that sells its output for $40 per
unit.
– When the firm produces and sells 150 units of output, its average total cost is $24.50.
– When the firm produces and sells 151 units of output, its average total cost is $24.55.
Suppose the firm is currently producing and selling 150 units of output. Should the firm
increase its output to 151 units?
a.Yes, because the marginal revenue exceeds the marginal cost.
b.Yes, because the marginal revenue exceeds the average total cost.
c.No, because the marginal cost exceeds the marginal revenue.
d.No, because the average total cost exceeds the marginal revenue.
6) The marginal tax rate serves as a measure of the extent to which the tax system
discourages people from working.
a.True
b.False
7) Table 18-2
Refer to Table 18-2. The table shows the number of bracelets that can be assembled
per week by various numbers of workers. If the price per bracelet in a perfectly
competitive product market is $10, how many workers would the firm employ if the
weekly wage rate is $375?
a.2
b.3
c.4
d.5
8) A monopolist produces where P = MC = MR.
a.True
b.False
9) Consumer 1
Consumer 2
If these are the only two consumers in the market, then the market quantity demanded
at a price of $6 is
a.12 units.
b.14 units.
c.19 units.
d.21 units.
10) Suppose ABC Aluminum Inc. owns 80% of the world’s bauxite, a mineral used in
the production of aluminum. Which of the following reasons describes the fundamental
barrier to entry for the aluminum industry?
a.monopoly resources
b.government regulation
c.the production process
d.Both a and b are correct.
11) Scenario 16-3
Peter operates an ice cream shop in the center of Fairfield. He sells several unusual
flavors of organic, homemade ice cream so he has a monopoly over his own ice cream,
though he competes with many other firms selling ice cream in Fairfield for the same
customers. Peter’s demand and cost values for sales per day are given in the table below.
(Everyone who purchases Peter’s ice cream buys a double scoop cone because it’s so
delicious.)
What price should Peter charge per double scoop ice cream cone to maximize his
profit?
a. $5.60
b. $4.40
c. $3.20
d. $2.40
12) Temporary Assistance for Needy Families (TANF) is an example of a negative
income tax program.
a.True
b.False
13) When a good is rival in consumption,
a.one person’s use of the good diminishes another person’s ability to use it.
b.people can be prevented from using the good.
c.an unlimited number of people can use the good at the same time.
d.everyone will be excluded from obtaining the good.