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1) Assume that Aruba and Iceland can switch between producing coolers and producing
radios at a constant rate.
Which of the following combinations of coolers and radios could Aruba produce in one
40- hour week?
a.3 coolers and 7 radios
b.5 coolers and 6 radios
c.11 coolers and 4 radios
d.13 coolers and 3 radios
2) Which of the following is an example of satisficing behavior?
a.You continue studying for your economics exam until you believe you'll get a score
that's good enough.
b.You spend time looking over the lettuce at the grocery store in order to make sure you
get the best head of lettuce.
c.You clean your room to the point where you think it's clean enough that further time
can be used for more productive purposes.
d.You carefully plan your day in order to get "the most out of life."
3) Demand is said to be price elastic if
a.the price of the good responds substantially to changes in demand.
b.demand shifts substantially when income or the expected future price of the good
changes.
c.buyers do not respond much to changes in the price of the good.
d.buyers respond substantially to changes in the price of the good.
4) Uzbekistan's Production Possibilities FrontierAzerbaijan's Production
Possibilities Frontier
Suppose Azerbaijan is willing to trade 3 nails to Uzbekistan for every bolt that
Uzbekistan makes and sends to Azerbaijan. Which of the following combinations of
bolts and nails could Azerbaijan then consume, assuming Uzbekistan specializes in
making bolts and Azerbaijan specializes in making nails?
a.8 bolts and 56 nails
b.14 bolts and 44 nails
c.18 bolts and 32 nails
d.20 bolts and 26 nails
5) Table 14-13
Diana's Dress Emporium
What is Diana's economic profit at the profit maximizing point?
a.$78
b.$243
c.$278
d.$375
6) Heath's income elasticity of demand for concerts is 2. All else equal, this means that
if his income increases by 10
percent, he will purchase tickets for
a.2 percent more concerts.
b.5 percent more concerts.
c.10 percent more concerts.
d.20 percent more concerts.
7) In the United States, incomes historically have grown about 2 percent per year. At
this rate, average income doubles every
a.15 years.
b.25 years.
c.35 years.
d.45 years.
8) For both parties to gain from trade, the price at which they trade must lie exactly in
the middle of the two opportunity costs.
a.True
b.False
9) A recent outbreak of hepatitis was linked to a national fast-food restaurant chain.
This is an example of a case in which
a.brand name identity increases the effectiveness of markets.
b.brand name identity can be detrimental to the profitability of a firm.
c.advertising is ineffective in salvaging perceptions of product quality.
d.advertising cannot be used to establish brand loyalty.
10) A profit-maximizing firm in a competitive market will decrease production when
marginal cost exceeds average revenue.
a.True
b.False
11) A CPA recently has come to expect higher prices for expert tax advice in the near
future. We would expect
a.the CPA to supply more expert tax advice now than she was supplying previously.
b.the CPA to supply less expert tax advice now than she was supplying previously.
c.the demand for this CPA's expert tax advice to fall.
d.no change in the CPA's current supply¾ instead, future supply will be affected.
