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1) Consider a good for which the number of people who benefit from the good is large
and the exclusion of any one those people is impossible. In this case, the market for this
good will likely
a.be provided by a private firm rather than the government.
b.have a free-rider problem.
c.not exist.
d.be limited to a small number of units of production.
2) In a particular country in 1999, the average worker had to work 20 hours to produce
55 units of output. In that same country in 2009, the average worker needed to work 28
hours to produce 77 units of output. In that country, the productivity of the average
worker
a.increased by 2 percent between 1999 and 2009.
b.increased by 5 percent between 1999 and 2009.
c.remained unchanged between 1999 and 2009.
d.decreased by 3 percent between 1999 and 2009.
3) Table 20-12
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 20-12. According to the information in the table, which race had the
most income inequality in 2010?
a.Asian
b.Black
c.Hispanic
d.White
4) Maureen's college raises the cost of room and board per semester. This increase
raises Maureen's opportunity cost of attending college
a.even if the amount she would have to pay for room and board if she didn't attend
college rose by the same amount. An increase in opportunity cost reduces Maureen's
incentive to attend college.
b.even if the amount she would have to pay for room and board if she didn't attend
college rose by the same amount. An increase in opportunity cost increases Maureen's
incentive to attend college.
c.only if the amount she would have to pay for room and board if she didn't attend
college rose by less than the increase in the amount her college charges. An increase in
opportunity cost reduces Maureen's incentive to attend college.
d.only if the amount she would have to pay for room and board if she didn't attend
college rose by less than the increase in the amount her college charges. An increase in
opportunity cost increases Maureen's incentive to attend college.
5)
According to the graph, snowstorms
a.and snowblowers sold are positively correlated.
b.and snowblowers sold are negatively correlated
c.and snowblowers sold are uncorrelated.
d.are caused by more snowblowers being sold.
6) When an externality is present, the market equilibrium is
a.efficient, and the equilibrium maximizes the total benefit to society as a whole.
b.efficient, but the equilibrium does not maximize the total benefit to society as a
whole.
c.inefficient, but the equilibrium maximizes the total benefit to society as a whole.
d.inefficient, and the equilibrium does not maximize the total benefit to society as a
whole.
7) Customer discrimination is illegal in the United States.
a.True
b.False
8) Encouraging firms to invest in research and development and individuals to engage
in creative endeavors such as writing novels is one justification for
a.resource monopolies.
b.natural monopolies.
c.government-created monopolies.
d.breaking up monopolies into smaller firms.
9) Government intervention cannot improve the allocation of resources for goods that
do not have prices attached to them.
a.True
b.False
10) Figure 8-8
Suppose the government imposes a $10 per unit tax on a good.
The tax causes consumer surplus to decrease by the area
a.A.
b.B+C.
c.A+B+C.
d.A+B+C+D+F.
11) When a local grocery store offers discount coupons in the Sunday paper it is most
likely trying to
a.reduce prices for all customers.
b.encourage literacy.
c.encourage arbitrage.
d.price discriminate.
12) An oligopolist will increase production if the output effect is
a.less than the price effect.
b.equal to the price effect.
c.greater than the price effect.
d.The oligopolist never has an incentive to increase production.
13) Scenario 18-1
Harry owns a snow-removal business. He hires workers to shovel driveways for him
during the winter. The first worker he hires can shovel twelve driveways in one day.
When Harry hires two workers, they can shovel a total of 22 driveways in one day.
When Harry hires a third worker, he shovels an additional eight driveways in one day.
Refer to Scenario 18-1. What is the total productivity of three workers?
a.12
b.22
c.30
d.42
14) What is Antigua's opportunity cost of one umbrella?
a.3/5 towels
b.2/3 towels
c.3/2 towels
d.5/3 towels
15) Figure 8-13
Suppose the government places a $5 per-unit tax on this good. The tax causes the price
paid by buyers to
a.decrease by $5.
b.increase by $5.
c.increase by $3.
d.increase by $2.
16) Suppose the between hot dogs and mustard is -2.00. This implies that a 20 percent
increase in the price of hot dogs will cause the quantity of mustard purchased to
a.fall by 200 percent.
b.fall by 40 percent.
c.rise by 200 percent.
d.rise by 40 percent.
17) If these are the only four sellers in the market, then the market quantity supplied at
a price of $4 is
a.4 units.
b.7.5 units.
c.10 units.
d.30 units.
18) Which of the following statements represents the idea behind signaling in
education?
a.Education can turn an unproductive person into a productive person.
b.Education increases the marginal productivity of naturally productive workers.
c.More productive people are more inclined to educate themselves.
d.All of the above are correct.
