1) In 2011, the federal government spent 9 percent of the budget on net interest. Which
of the following statements regarding net interest is correct?
a.If the government pays down its debt, the amount of the budget needed for net interest
decreases.
b.If the government accrues more debt, the amount of the budget needed for net interest
increases.
c.In 2011, the federal government spent 325 billion dollars to cover interest payments
on its loans.
d.All of the above are correct.
2) The labor supply curve shifts when
a.employers need to hire more people.
b.employers develop new technology.
c.workers change the number of hours that they want to work at any given wage.
d.workers become more productive.
3) A firm in a competitive market has the following cost structure:
If the market price is $16, this firm will
a.produce 4 units of output in the short run and exit in the long run.
b.produce 5 units of output in the short run and exit in the long run.
c.produce 5 units of output in the short run and face competition from new market
entrants in the long run.
d.shut down in the short run and exit in the long run.
4) Traci consumes two goods, lemonade and pretzels. Lemonade costs $2 per glass, and
she consumes it to the point where the marginal utility she receives from her last glass
of lemonade is 4. Pretzels cost $3 per bag. The relationship between the marginal utility
Traci gets from eating a bag of pretzels and the number of bags she eats per month is as
follows:
If Traci is maximizing her utility, how many bags of pretzels does she buy each month?
a.3
b.4
c.5
d.6
5) An example of a perfectly competitive market would be the market for
a.tennis racquets.
b.pizza.
c.garbage collection.
d.wheat.
6) Figure 9-5
The figure illustrates the market for tricycles in a country.
Total surplus with trade exceeds total surplus without trade by
a. $640.
b. $1,280.
c. $2,560.
d. $3,840.
7) Refer to Scenario 9-2. Suppose the world price of cardboard is $60 and international
trade is allowed. Then Boxland’s consumers demand
a.110 tons of cardboard and Boxland’s producers supply 120 tons of cardboard.
b.96 tons of cardboard and Boxland’s producers supply 96 tons of cardboard.
c.96 tons of cardboard and Boxland’s producers supply 115 tons of cardboard.
d.80 tons of cardboard and Boxland’s producers supply 120 tons of cardboard.
8) If the number of sellers in a market increases, then the
a.demand in that market will increase.
b.supply in that market will increase.
c.supply in that market will decrease.
d.demand in that market will decrease.
9) In perfect competition as well as in monopolistic competition,
a.marginal revenue is equal to price for each firm.
b.profit is positive in a long-run equilibrium for each firm.
c.entry and exit by firms are restricted.
d.there are many firms in a single market.
10) When an infinite value is placed on human life, policymakers who rely on
cost-benefit analysis
a.are forced to pursue any project in which a single human life is saved.
b.are likely to make decisions that optimally allocate society’s scarce resources.
c.would not pursue any public project that would not save human life.
d.would be forced to rely on private markets to provide public goods.
11) The cost of production plus producer surplus is the price a seller is paid.
a.True
b.False
12) Since people get sick at all hours of the day, some nurses who work in hospitals are
required to work the night shift.
In most cases, the nurses who work the night shift earn a higher hourly wage for the
same work as the nurses who work the day shift. This difference in pay is referred to as
a
a.discriminatory wage practice.
b.compensating differential.
c.wage inequity.
d.a market inefficiency.
13) Table 17-12
The table shows the town of Driveaway’s demand schedule for gasoline. Assume the
town’s gasoline seller(s) incurs a cost of $2 for each gallon sold, with no fixed cost.
Refer to Table 17-12. If there are exactly two sellers of gasoline in Driveaway and if
they collude, then which of the following outcomes is most likely?
a.Each seller will sell 50 gallons and charge a price of $7.
b.Each seller will sell 75 gallons and charge a price of $2.50.
c.Each seller will sell 75 gallons and charge a price of $5.
d.Each seller will sell 100 gallons and charge a price of $4.
14) When an industry has many firms, the industry is
a.an oligopoly if the firms sell differentiated products, but it is monopolistically
competitive if the firms sell identical products.
b.an oligopoly if the firms sell differentiated products, but it is perfectly competitive if
the firms sell identical products.
c.monopolistically competitive if the firms sell differentiated products, but it is
perfectly competitive if the firms sell identical products.
d.perfectly competitive if the firms sell differentiated products, but it is
monopolistically competitive if the firms sell identical products.
15) Suppose that antitrust laws were successful in moving the allocation of resources in
the computer software industry closer to the social optimum. This situation would
illustrate which of the following Ten Principles of Economics?
a.Trade can make everyone better off.
b.The cost of something is what you give up to get it.
c.Governments can sometimes improve market outcomes.
d.A country’s standard of living depends on its ability to produce goods and services.
16) Table 18-3
Refer to Table 18-3. For Firm B, the marginal product of labor is
a.increasing.
b.constant.
c.decreasing.
d.negative.
17) Arturo’s Production Possibilities FrontierDina’s Production Possibilities
Frontier