1) Figure 21-23
Refer to Figure 21-23. When the price of X is $80, the price of Y is $20, and the
consumer’s income is $160, the consumer’s optimal choice is D. Then the price of X
decreases to $20. The substitution effect can be illustrated as the movement from
a.D to E.
b.D to C.
c.C to E.
d.E to D.
2) Table 18-7
Refer to Table 18-7. What is the market price of the final good?
a.$5
b.$6
c.$8
d.$10
3) Table 12-4
What is the average tax rate for a person who makes $130,000?
a. 30%
b.40%
c.50%
d.60%
4)
Figure 8-4
The vertical distance between points A and B represents a tax in the market.
The per-unit burden of
the tax on sellers is
a.$7.
b.$5.
c.$4.
d.$3.
5) A firm can earn economic profits in the short run
a.only when the market is perfectly competitive.
b.only when the market is a monopoly or monopolistically competitive.
c.only when the market is monopolistically competitive or perfectly competitive.
d.when the market is perfectly competitive, monopolistically competitive, or
monopolistic.
6) Draw a budget constraint that is consistent with the following prices and income.
Income = 200
PY = 50
PX = 25
a.Demonstrate how your original budget constraint would change if income increases to
500.
b.DemonstratehowyouroriginalbudgetconstraintwouldchangeifP
Y
decreasesto20.
c.DemonstratehowyouroriginalbudgetconstraintwouldchangeifP
X
increasesto40.
7) The graph below represents the various combinations of ham and cheese (in pounds)
that the nation of Bonovia could produce in a given month.
Whenever Bonovia increases its production of ham by 1 pound per month, then it must
decrease its production of cheese by
a.0.75 pound.
b.0.80 pound.
c.1.00 pounds.
d.1.25 pounds.
8) Seymour owns 3 acres of beautiful waterfront property on a large inland lake. In his
will, Seymour donates the land to the state with the understanding that the land will be
used as a state beach. Seymour wants an efficient way to prevent overcrowding at the
beach, so he should require
a.that all beach visitors pay the same entry fee regardless of the day of the week or time
of the year.
b.that the beach limit the number of visitors to 500 per day, without an entry fee.
c.an entry fee be charged on summer weekend days when many people tend to visit the
beach.
d.that only local residents be admitted to the beach.
9) The market for wheat is most likely considered a monopolistically competitive
market.
a.True
b.False
10) The opportunity cost of an item is
a.the number of hours that one must work in order to buy one unit of the item.
b.what you give up to get that item.
c.always less than the dollar value of the item.
d.always greater than the cost of producing the item.
11) The demand curve for a good is a line that relates
a.price and quantity demanded.
b.income and quantity demanded.
c.quantity demanded and quantity supplied.
d.price and income.
12) Figure 8-19
The vertical distance between points A and B represents the original tax.
The original tax can be represented by the
vertical distance AB. Suppose the government is deciding whether to lower the tax to
CD or raise it to FG. Which of the following statements is not correct?
a.Compared to the original tax, the larger tax will increase tax revenue.
b.Compared to the original tax, the smaller tax will decrease deadweight loss.
c.Compared to the original tax, the smaller tax will decrease tax revenue.
d.Compared to the original tax, the larger tax will increase deadweight loss.
13) There are four homes along Belmont Circle, which surrounds a small plot of land.
The land currently has no trees, and the 4 homeowners — Adams, Benitez, Chen, and
Davis — are considering the idea of contributing to a pool of money that will be used to
plant up to 4 trees. The table represents their willingness to pay, that is, the maximum
amount that each homeowner is willing to contribute toward each tree.
Suppose the cost to plant each tree is $120 and the 4 homeowners have agreed to split
all tree-planting costs equally. How many trees would Adams prefer to plant?
a.0
b.1
c.2
d.3
14) Table 22-18
The following table shows the preferences of four types of voters over four possible
alternatives as well as the percentage of the electorate with the given preferences.
Refer to Table 22-18. Suppose before any voting takes place that alternative W is
eliminated as an option. Based on this information, the median voter’s first choice is
a.X
b.Y
c.Z
d.The median voter’s first choice cannot be determined from the information given.
15) Table 20-10
*A Gini coefficient is a commonly used measure of income inequality, with values
between 0 and 1 (0 corresponds to perfect equality whereby everyone has exactly the
same income, and 1 corresponds to perfect inequality where one person has all the
income, while everyone else has zero income).
Source: The World Bank
Refer to Table 20-10. Which of the following statements is correct?
a.Latvia has the most unequal distribution of income.
b.France has a more equal distribution of income than Italy.
c.Sweden has the most equal distribution of income.
d.All of the above are correct.
16) Drug interdiction, which reduces the supply of drugs, may decrease drug-related
crime because the demand for drugs is inelastic.
a.True
b.False