1) When a firm decides to retain its earnings instead of paying dividends, the
stockholders necessarily suffer.
a.True
b.False
2) When the marginal product of an input declines as the quantity of that input
increases, the production function exhibits
a.increasing marginal product.
b.diminishing marginal product.
c.diminishing total product.
d.Both b and c are correct.
3) Because monopolistically competitive firms produce differentiated products, each
firm
a.faces a demand curve that is horizontal.
b.faces a demand curve that is vertical.
c.has no control over product price.
d.has some control over product price.
4) Table 12-4
What is the marginal tax rate for a person who makes $130,000?
a. 30%
b.40%
c.50%
d.60%
5) Economists view the fact that Florida grows oranges, Texas pumps oil, and
California makes wine as
a.confirmation of the virtues of free trade.
b.confirmation of the infant-industry argument.
c.confirmation that free trade agreements are not necessary.
d.confirmation that specialization in absolute advantage works.
6) This table describes the police protection demands for three equal sized groups of
people in Safetyville. The second, third, and fourth columns show the number of
person-hours of police protection per day that a group will demand for a given price
(the first column).
What is the value of the 39th unit of police protection in Safetyville?
a. $24
b. $42
c. $54
d. $72
7) Maurice faces a progressive federal income tax structure that has the following
marginal tax rates: 0 percent on the first $10,000, 10 percent on the next $10,000, 15
percent on the next $10,000, 25 percent on the next $10,000, and 50 percent on all
additional income. In addition, he must pay 5 percent of his income in state income tax
and 15.3 percent of his labor income in federal payroll taxes. Maurice earns $60,000 per
year in salary and another $10,000 per year in non-labor income. What is his average
tax rate?
a.17.19 percent
b.46.69 percent
c.48.87 percent
d.56.01 percent
8) Tax revenue equals the size of the tax multiplied by the quantity sold in the market
after the tax is levied.
a.True
b.False
9) This economy fully employs its resources when it
produces 35 dishwashers and zero doghouses.
a.True
b.False
10) Assume that England and Spain can switch between producing cheese and
producing bread at a constant rate.
England should export
a.cheese and import bread.
b.bread and import cheese.
c.both goods and import neither good.
d.neither good and import both goods.
11) Table 12-9
United States Income Tax Rates for a Single Individual, 2012 and 2013.
Ruby Sue is a single person whose taxable income is $100,000 a year. What is her
marginal tax rate in 2013?
a.15%
b.27%
c.30%
d.35%
12) The demand for grape-flavored Hubba Bubba bubble gum is likely
a.inelastic because there are many close substitutes for grape-flavored Hubba Bubba .
b.elastic because there are many close substitutes for grape-flavored Hubba Bubba.
c.inelastic because the market is broadly defined.
d.elastic because the market is broadly defined.
13) Panel (a)
Panel (b)
Panel (c)
Panel (d)
Which of the four panels illustrates a decrease in quantity demanded?
a.Panel (a)
b.Panel (b)
c.Panel (c)
d.Panel (d)
14) Table 10-4
The table represents a market in which
a.there is no externality.
b.there is a positive externality.
c.there is a negative externality.
d.The answer cannot be determined from inspection of the table.
15) Whenever a determinant of supply other than price changes, the supply curve shifts.
a.True
b.False
16) Figure 7-24
Refer to Figure 7-24. At equilibrium, total surplus is measured by the area
a.ABD.
b.ABF.
c.FBD.
d.HGCI.
17) 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. If Nadia chooses to not clean, then Maddie will
a.clean, and Maddie’s payoff will be 10.
b.not clean, and Maddie’s payoff will be 50.
c.clean, and Maddie’s payoff will be 30.
d.not clean, and Maddie’s payoff will be 10.