1) Figure 8-2
The vertical distance between points A and B represents a tax in the market.
The loss of consumer surplus as a result of the tax is
a. $1.50.
b. $3.
c. $4.50.
d. $6.
2) Table 15-18
A monopolist faces the following demand curve:
Suppose marginal cost is constant at $8 per unit.
Suppose the firm depicted in the table is selling a prescription drug for which it had a
patent, but the patent has expired. As new firms enter the market and sell the generic
version of this drug competitively, what quantity will be sold?
a.3 units
b.4 units
c.5 units
d.6 units
3) Suppose the only two goods that Charlie consumes are wine and cheese. When wine
sells for $10 a bottle and cheese sell for $10 a pound, he buys 6 bottles of wine and 4
pounds of cheese – spending his entire income of $100. One day the price of wine falls
to $5 a bottle and the price of cheese increases to $20 a pound, while his income does
not change. The bundle of wine and cheese that he purchased at the old prices now
costs
a.the same amount at the new prices.
b.less than Charlie’s income at the new prices.
c.more than Charlie’s income at the new prices.
d.We do not have enough information to answer the question.
4) The claim that advertising reduces the elasticity of demand is likely to be made by a
defender of advertising.
a.True
b.False
5) If the for two goods is negative, then the two goods are substitutes.
a.True
b.False
6) Arturo’s Production Possibilities FrontierDina’s Production Possibilities
Frontier
a.A.
b.B.
c.C.
d.D.
10) Table 15-5
A monopolist faces the following demand curve:
The monopolist has total fixed costs of $60 and has a constant marginal cost of $15.
What is the profit-maximizing level of production?
a.2 units
b.3 units
c.4 units
d.5 units
11) David Ricardo was the author of the 1817 book Principles of Political Economy and
Taxation.
a.True
b.False
12) A movement along the demand curve might be caused by a change in
a.income.
b.the prices of substitutes or complements.
c.expectations about future prices.
d.the price of the good or service that is being demanded.
13) Bintu’s Production Possibilities FrontierJuba’s Production Possibilities
Frontier
If the
production possibilities frontier shown for Juba is for 2 hours of work, then how long
does it take Juba to make one bowl?
a.1/8 hour
b.1/2 hour
c.2 hours
d.8 hours
14) A monopoly chooses to supply the market with a quantity of a product that is
determined by the intersection of the
a.marginal cost and demand curves.
b.average total cost and demand curves.
c.marginal revenue and average total cost curves.
d.marginal revenue and marginal cost curves.
15) Alice and Betty’s Production Possibilities in one 8hour day.
Alice’s Production Possibilities FrontierBetty’s Production Possibilities Frontier
a.Alice’s opportunity cost of 1 pitcher of lemonade is 1/2 of a pizza and Betty’s
opportunity cost of 1 pitcher of lemonade is 2/3 of a pizza.
b.Alice’s opportunity cost of 1 pitcher of lemonade is 2 pizzas and Betty’s opportunity
cost of 1 pitcher of lemonade is 1.5 pizzas.
c.Alice’s opportunity cost of 1 pitcher of lemonade is 10 pizzas and Betty’s opportunity
cost of 1 pitcher of lemonade is 10 pizzas.
d.Alice’s opportunity cost of 1 pitcher of lemonade is 200 pizzas and Betty’s
opportunity cost of 1 pitcher of lemonade is 300 pizzas.
16) Figure 9-2
The figure illustrates the market for calculators in a country.
Without trade, producer surplus is
a. $423.
b. $845.
c. $1,690.
d. $3,380.
17) Figure 8-25
Suppose the government places a $4 tax per unit on this good. How much is consumer
surplus after the tax is imposed?
18) An action taken by an informed party to reveal private information to an
uninformed party is called
19) The failure of majority rule to produce transitive preferences for society is called
the
20) Figure 9-28
The following diagram shows the domestic demand and domestic supply curves in a
market.
Suppose the world price in this market is $6. If the country allows free trade, how much
is total surplus?
21) For the economy as a whole, about what percentage of total firm revenue is spent
on advertising?
22) Table 17-35
Suppose that two coal mining companies – Allied and Barclay – own adjacent land
suitable for excavating coal mines. The profits that each firm earns depends on both the
number of mines it excavates and the number of mines excavated by the other firm. The
table below lists each firm’s individual profits:
Refer to Table 17-35. Does Barclay have a dominant strategy? If so, describe it.
23) Of the following groups, which group is least likely to live in poverty – whites,
blacks, Hispanics, Asians?
24) Scenario 19-6
Suppose that in the competitive market for auto repair, firms prefer to hire men rather
than women. Assume that the women applying for positions have the same skills,
experience, and work ethic as the men. As a result of this discrimination, the demand
for women is lower than it otherwise would be.
Refer to Scenario 19-6. If the firms in this market are profit-maximizers and customers
do not care if a woman or a man works on their car, what will likely happen?
25) If the two countries specialize and trade with each other, which country will import
compasses?
26) Scenario 20-7
Zooey is a single mother of two young children whose husband died in a tragic car
accident. She earns $20,000 per year working as a cashier at a grocery store. The
government uses a negative income tax system in which Taxes owed = (1/4 of income)
– $15,000.
Refer to Scenario 20-7. One of Zooey’s friends tells her she would have more money
for the year if she quit her job and filed her tax return with $0 in income. Is her friend
correct? Why or why not?