1)
Assume, for the good in question, two specific points on the demand curve are (Q =
2,000, P= $15) and (Q = 2,400, P = $12). Then which of the following scenarios is
possible?
a.Both of these points lie on section BC of the demand curve.
b.The vertical intercept of the demand curve is the point (Q = 0, P = $22).
c.The horizontal intercept of the demand curve is the point (Q = 5,000, P = $0).
d.Any of these scenarios is possible.
2) Farm programs that pay farmers not to plant crops on all their land
a.hurt farmers by lowering their total revenue and hurt consumers by causing shortages
of some food items.
b.help farmers by cutting costs, which helps consumers by lowering food prices.
c.help farmers by increasing total revenue in the market but hurt consumers by raising
food prices.
d.help farmers directly since they receive government payments but have no real effects
on consumers.
3) Senator Bright, who understands economic principles, is trying to convince workers
in her district that trade with other countries is beneficial. Senator Bright should argue
that trade can be beneficial
a.only if it allows us to obtain things that we couldn’t make for ourselves.
b.because it allows specialization, which increases total output.
c.to us if we can gain and the others involved in the trade lose.
d.in only a limited number of circumstances because others are typically self-interested.
4) Scarcity means that there is less of a good or resource available than people wish to
have.
a.True
b.False
5) The administrative burden of complying with tax laws is a cost to the government
but not to taxpayers.
a.True
b.False
6) An increase in immigration will lower the equilibrium wage, all else held constant.
a.True
b.False
7) If the supply of a product increases, then we would expect equilibrium price
a.to increase and equilibrium quantity to decrease.
b.to decrease and equilibrium quantity to increase.
c.and equilibrium quantity to both increase.
d.and equilibrium quantity to both decrease.
8)
Table 12-15
The tax system is
a.proportional.
b.regressive.
c.progressive.
d.lump sum.
9) Which of the following is not an effective method of reducing negative externalities?
a.relying on voluntary compliance
b.taxing the output of industries that pollute
c.creating legal environmental standards
d.increasing public spending on cleanup and reduction of pollution
10) Benefits from trade would not include
a.the ability of people and nations to specialize.
b.a greater variety of goods and services becoming available.
c.less competition.
d.lower prices.
11) In the long run, each firm in a competitive industry earns
a.zero accounting profits.
b.zero economic profits.
c.positive economic profits.
d.Both a and b are correct.
12) US and French Production Opportunities
France has an absolute advantage in the production of
a.wine.
b.cheese.
c.both wine and cheese.
d.neither wine nor cheese.
13) Fiona’s hourly wage decreases from $10 to $8. Which of the following describes a
consequence of the decrease in Fiona’s wage?
a.The opportunity cost of Fiona’s leisure time has decreased.
b.Fiona may choose to work more hours due to the decrease in her wage.
c.Fiona may choose to work fewer hours due to the decrease in her wage.
d.All of the above are correct.