1) Consider a small town with only three families, the Greene family, the Brown family,
and the Black family. The town does not currently have any streetlights so it is very
dark at night. The three families are considering putting in streetlights on Main Street
and are trying to determine how many lights to install. The table below shows each
family’s willingness to pay for each streetlight.
Suppose the cost to install each streetlight is $900 and the families have agreed to split
the cost of the streetlights equally. If the families vote to determine the number of
streetlights to install, basing their decision solely on their own willingness to pay (and
trying to maximize their own surplus), what is the greatest number of streetlights for
which the majority of families would vote “yes?”
a.1 streetlight
b.2 streetlights
c.3 streetlights
d.4 streetlights
2) The following table shows the number of cases of water each seller is willing to sell
at the prices listed.
If Alpine Springs and Dew Good are the only two suppliers in this market, by how
much does the market quantity supplied change with each $3 increase in price?
a.-200 cases
b.-100 cases
c.100 cases
d.200 cases
3) Table 20-1
The following table shows the distribution of income in Marysville.
Refer to Table 20-1. Fifty percent of all families have incomes below what level?
a.$30,000
b.$60,000
c.$90,000
d.There is insufficient information to answer this question.
4)
What is the equilibrium price in this market?
a.$0
b.$5
c.$10
d.$20
5) The benefits principle is used to justify
a.sales taxes.
b.gasoline taxes.
c.’sin” taxes on cigarettes and alcoholic beverages.
d.personal income taxes.
6) If the United States legally allowed for a market in transplant organs, it is estimated
that one kidney would sell for at least $100,000.
a.True
b.False
7) Figure 9-1
The figure illustrates the market for coffee in Guatemala.
In the absence of trade, total surplus in the Guatemalan coffee market amounts to
a. 750.
b. 1,100.
c. 1,514.
d. 1,650.
8) Which of the following statements is not correct?
a.The median voter theorem explains why politicians appeal to the middle of the voting
distribution.
b.Based on studies of human decision making, most people prefer to procrastinate, both
in the immediate future and in the distant future.
c.Screening refers to an uninformed party trying to extract information from an
informed party.
d.Advertising can be an example of a company signaling the quality of its products.
9) A table that shows the relationship between the price of a good and the quantity
demanded of that good is called a
a.price-quantity schedule.
b.buyer schedule.
c.demand schedule.
d.demand curve.
10) Figure 14-14
If the market starts in equilibrium at point Z in panel (b), a decrease in demand will
ultimately lead to
a.more firms in the industry but lower levels of output for each firm.
b.fewer firms in the market.
c.a new long-run equilibrium at point X in panel (b).
d.lower prices once the new long-run equilibrium is reached.