1) Most firms have
a.no monopoly pricing power.
b.some monopoly pricing power.
c.absolute monopoly pricing power.
d.the ability to earn monopoly profits.
2) Table 20-3
The Distribution of Income in Edgerton
Refer to Table 20-3. According to the table, what percent of families in Edgerton have
income levels below
$76,000?
a.20 percent.
b.40 percent.
c.60 percent.
d.80 percent.
3) In competitive markets, buyers
a.are price takers, but sellers are price setters.
b.are price setters, but sellers are price takers.
c.and sellers are price takers.
d.and sellers are price setters.
4) Whose demand does not obey the law of demand?
a.Abby’s
b.Brandi’s
c.Carrie’s
d.DeeDee’s
5) Which of the following is likely to have the most price elastic demand?
a.latt©s
b.doctor’s visits
c.eggs
d.natural gas
6) Which of the following statements is correct?
a.Government should tax goods with either positive or negative externalities.
b.Government should tax goods with negative externalities and subsidize goods with
positive externalities.
c.Government should subsidize goods with either positive or negative externalities.
d.Government should tax goods with positive externalities and subsidize goods with
negative externalities.
7) A certain production possibilities frontier shows production possibilities for two
goods, jewelry and clothing. Which of the following concepts cannot be illustrated by
this model?
a.the flow of dollars between sellers of jewelry and clothing and buyers of jewelry and
clothing
b.the tradeoff between production of jewelry and production of clothing
c.the opportunity cost of clothing in terms of jewelry
d.the effect of economic growth on production possibilities involving jewelry and
clothing
8) The before-trade price of fish in Germany is $8.00 per pound. The world price of fish
is $6.00 per pound. Germany is a price-taker in the fish market. If Germany allows
trade in fish, then Germany will become an
a.importer of fish and the price of fish in Germany will be $6.00.
b.importer of fish and the price of fish in Germany will be $8.00.
c.exporter of fish and the price of fish in Germany will be $6.00.
d.exporter of fish and the price of fish in Germany will be $8.00.
9) Yasmine
Mercedes
Which of the following statements is correct?
a.If the price is $6, the market quantity demanded is 15 units.
b.If the price is $9, the market quantity demanded is 24 units.
c.If the price is $12, the market quantity demanded is 9 units.
d.If the price is $15, the market quantity demanded is 39 units.
10) Figure 21-20
The following graph illustrates a representative consumer’s preferences for
marshmallows and chocolate chip cookies:
Refer to Figure 21-20. Assume that the consumer has an income of $40. If the price of
chocolate chips is $4 and the price of marshmallows is $4, the optimizing consumer
would choose to purchase
a.9 marshmallows and 6 chocolate chips.
b.10 marshmallows and 10 chocolate chips.
c.5 marshmallows and 5 chocolate chips.
d.3 marshmallows and 9 chocolate chips.
11) For a monopolistically competitive firm, at the profit-maximizing quantity of
output,
a.price exceeds marginal cost.
b.marginal revenue exceeds marginal cost.
c.marginal cost exceeds average revenue.
d.price equals marginal revenue.
12) Two economists created fake resumes with either common African-American
names such as Lakisha and Jamal or common white names such as Emily and Greg.
After sending them to potential employers with “Help Wanted” ads in Boston and
Chicago newspapers, they found that
a.black employees earned 50 percent less than white employees in Chicago but that
blacks and whites had similar wages in Boston.
b.black employees earned 50 percent less than white employees in Boston but that
blacks and whites had similar wages in Chicago.
c.job applicants with white names received 50 percent more phone calls from interested
employers.
d.job applicants with white names received 7 percent more phone calls from interested
employers.
13) Which of the following students exhibits satisficing behavior?
a.Mick studies his economics notes every night so that he can be sure to earn a perfect
score on his exam.
b.Bill studies his economics notes for a few hours the night before the test because he
will be satisfied with a C on his exam.
c.Marguerite studies extensively as she will only be satisfied with a very high score.
d.None of these students exhibits satisficing behavior.
14) A surplus exists in a market if
a.there is an excess demand for the good.
b.quantity demanded exceeds quantity supplied.
c.the current price is above its equilibrium price.
d.All of the above are correct.
15) The demand schedule below pertains to sandwiches demanded per week.
Suppose Harry, Darby, and Jake are the only demanders of sandwiches. Also suppose
the following:
€¢ x = 2.
€¢The current price of a sandwich is $3.00.
€¢The market quantity supplied of sandwiches is 4
€¢The slope of the supply curve is 2.
Then there is currently a
a.shortage of 6 sandwiches, and the equilibrium price of a sandwich is less than $3.00.
b.shortage of 6 sandwiches, and the equilibrium price of a sandwich is $5.00.
c.surplus of 6 sandwiches, and the equilibrium price of a sandwich is less than $3.00.
d.surplus of 6 sandwiches, and the equilibrium price of a sandwich is $5.00.
16) Figure 7-34
Refer to Figure 7-34. Suppose there is initially a price floor set at $10 in this market. If
the government removed the price floor, by how much would total consumer surplus
increase for those consumers who were purchasing the good when the price floor was in
place?
17) It does not matter whether a tax is levied on the buyers or the sellers of a good
because
a.sellers always bear the full burden of the tax.
b.buyers always bear the full burden of the tax.
c.buyers and sellers will share the burden of the tax.
d.None of the above is correct; the incidence of the tax does depend on whether the
buyers or the sellers are required to pay the tax.
18) Figure 13-1
Suppose the production function shifts from TP2 to TP1. Such a shift in the total
product curve is most likely due to a decrease in the firm’s
a.costs of production.
b.product price.
c.market share.
d.productivity.