1) If macaroni and cheese is an inferior good, what would happen to the equilibrium
price and quantity of macaroni and cheese if consumers’ incomes rise?
a.Both the equilibrium price and quantity would increase.
b.Both the equilibrium price and quantity would decrease.
c.The equilibrium price would increase, and the equilibrium quantity would decrease.
d.The equilibrium price would decrease, and the equilibrium quantity would increase.
2) Figure 8-1
Suppose the government imposes a tax of P’ – P”’. The area measured by J represents
a.consumer surplus after the tax.
b.consumer surplus before the tax.
c.producer surplus after the tax.
d.producer surplus before the tax.
3) If the value of the marginal product of labor is less than the wage, then the firm could
a.increase profit by hiring additional labor.
b.increase profit by reducing the amount of labor hired.
c.increase revenue by lowering output.
d.reduce total cost by hiring additional workers.
4) Cartels with a small number of firms have a greater probability of reaching the
monopoly outcome than do cartels with a larger number of firms.
a.True
b.False
5) Professional organizations and producer groups have an incentive to
a.restrict advertising in order to enhance competition on the basis of price.
b.restrict advertising in order to reduce competition on the basis of price.
c.encourage advertising in order to reduce competition on the basis of price.
d.encourage advertising in order to enhance competition on the basis of price.
6) Scenario 8-1
Erin would be willing to pay as much as $100 per week to have her house cleaned.
Ernesto’s opportunity cost of cleaning Erin’s house is $70 per week.
If Erin pays Ernesto $90 to clean her house, Erin’s consumer surplus is
a.$80.
b.$30.
c.$20.
d.$10.
7) Refer to Figure 7-22.
Assume demand increases, which causes the equilibrium price to increase from $50 to
$70.
The increase in producer surplus would be
a. $2,500.
b. $900.
c. $800.
d. $1,600.
8) The point where both x and y are zero is known as the
a.origin.
b.null.
c.zero coordinate.
d.center.
9) Table 16-4
This table shows the demand schedule, marginal cost, and average total cost for a
monopolistically competitive firm.
How much profit will this firm earn when it chooses its output to maximize profit?
a.a $12 loss
b.an $8 profit
c.a $25 profit
d.a $32 profit
10) Table 12-1
Assume that the price of a weekend ski pass is $45 and that the price reflects the actual
unit cost of providing a weekend of skiing. What is the value of the surplus that accrues
to all four skiers from their weekend trip?
a.$75
b.$105
c.$185
d.$215
11) The socially efficient level of production occurs where the marginal cost curve
intersects
a.average variable cost.
b.average total cost.
c.demand.
d.marginal revenue.
12) According to economist John Maynard Keynes, a great economist must also be a(n)
a.mathematician.
b.historian.
c.philosopher.
d.All of the above are correct.
13) Assume that England and Spain can switch between producing cheese and
producing bread at a constant rate.
England has a comparative advantage in the production of
a.cheese and Spain has a comparative advantage in the production of bread.
b.bread and Spain has a comparative advantage in the production of cheese.
c.both goods and Spain has a comparative advantage in the production of neither good.
d.neither good and Spain has a comparative advantage in the production of both goods.
14) Which of the following statements about the is correct?
a.The for a good measures the willingness of buyers of the good to buy less of the good
as its price increases.
b. reflects the many economic, psychological, and social forces that shape consumer
tastes.
c.Other things equal, if good x has close substitutes and good y does not have close
substitutes, then the demand for good x will be more elastic than the demand for good
y.
d.All of the above are correct.
15) Table 22-3
Three family members — Seamus, Maeve, and Siobhan — are deciding what type of
movie to attend. The three choices are an action adventure, comedy, or horror. The first,
second, and third choices for each person are as indicated in the table below.
Refer to Table 22-3. Suppose the three decide to make the decision based on pairwise
majority voting. If they first choose between Action and Comedy and then choose
between the winner of the first vote and Horror, which movie alternative will win?
a.Action
b.Comedy
c.Horror
d.There is no clear winner – Comedy and Horror will tie.
16) When we move upward and to the left along a linear, downward-sloping demand
curve,
a.first becomes smaller, then larger.
b.always becomes larger.
c.always becomes smaller.
d.first becomes larger, then smaller.
17) Today’s supply curve for iPods could shift in response to a change in
a.today’s price of iPods.
b.the expected future price of iPods.
c.the number of buyers of iPods.
d.All of the above are correct.
18) Different values are not a reason for disagreement among economists.
a.True
b.False
19) One existing government program that works much like a negative income tax is
the Earned Income Tax Credit.
a.True
b.False