1) A movement along a supply curve is called a change in supply while a shift of the
supply curve is called a change in quantity supplied.
a.True
b.False
2) Answer the following questions based on the table. A consumer is able to consume
the following bundles of rice and beans when the price of rice is $2 and the price of
beans is $3.
a.How much is this consumer’s income?
b.Draw a budget constraint given this information. Label it B.
c.Construct a new budget constraint showing the change if the price of rice falls $1.
Label this C.
d.Given the original prices for rice ($2) and beans ($3), construct a new budget
constraint if this consumer’s income increased to $48. Label this D.
3) Refer to Figure 9-20. With trade, Vietnam will
a.export 1,000 units of rice.
b.export 1,500 units of rice.
c.import 1,000 units of rice.
d.import 1,500 units of rice.
4) If the government removes a binding price ceiling in a market, then the producer
surplus in that market will increase.
a.True
b.False
5) Scenario 14-4
The information below applies to a competitive firm that sells its output for $40 per
unit.
– When the firm produces and sells 150 units of output, its average total cost is $24.50.
– When the firm produces and sells 151 units of output, its average total cost is $24.55.
When the firm produces 150 units of output, its profit is
a. $2,150.00.
b. $2,325.00.
c. $3,100.75.
d. $3,675.00.
6) An optimal tax on pollution would result in which of the following?
a.Producers will choose not to produce any pollution.
b.Producers will internalize the cost of the pollution.
c.Producers will maximize production.
d.The value to consumers at market equilibrium will exceed the social cost of
production.
7) Suppose the figure shows the market
demand for laptop computers. Suppose the price of wireless keyboards, a
complementary good, increases. Which of the following changes would occur?
a.a movement along D2 from point A to point B
b.a movement along D2 from point B to point A
c.a shift from D1 to D2
d.a shift from D2 to D1
8) Panel (a)
Panel (b)
The graphs show the demand for cigarettes. In Panel (a), the arrows are consistent with
which of the following events?
a.Tobacco and marijuana are complements, and the price of marijuana decreased.
b.Tobacco is a “gateway drug,” and the price of marijuana increased.
c.The price of cigarettes increased.
d.The arrows are consistent with all of these events.
9) Figure 17-4. Aaron and Ed are roommates. After a big snowstorm, their driveway
needs to be shoveled. Each person has to decide whether to take part in shoveling the
driveway. At the end of the day, either the driveway will be shoveled (if one or both
roommates take part in shoveling), or it will remain unshoveled (if neither roommate
shovels). With happiness measured on a scale of 1 (very unhappy) to 10 (very happy),
the possible outcomes are as follows:
Refer to Figure 17-4. The dominant strategy for Ed is to
a.shovel, and the dominant strategy for Aaron is to shovel.
b.shovel, and the dominant strategy for Aaron is to refrain from shoveling.
c.refrain from shoveling, and the dominant strategy for Aaron is to shovel.
d.refrain from shoveling, and there is no dominant strategy for Aaron.
10) Figure 7-21
When the price is P1, area B represents
a.total surplus.
b.producer surplus.
c.consumer surplus.
d.profits.
11) When demand is inelastic, a decrease in price increases total revenue.
a.True
b.False