1) Table 18-7
Refer to Table 18-7. What is the value of the cell labeled II?
a.-$100
b.$100
c.$200
d.$300
2) College-age athletes who drop out of college to play professional sports
a.are not rational decision makers.
b.are well aware that their opportunity cost of attending college is very high.
c.are concerned more about present circumstances than their future.
d.underestimate the value of a college education.
3) Table 7-4
The numbers in Table 7-1 reveal the maximum willingness to pay for a ticket to a
Chicago Cubs vs. St. Louis Cardinal’s baseball game at Wrigley Field.
If tickets sell for $40 each, then what is the total consumer surplus in the market?
a. $90.
b.$30.
c.$70.
d. $110.
4) The US should not restrict employers from outsourcing work to foreign countries is a
normative statement.
a.True
b.False
5) Offering different opportunities to similar individuals who differ only by race, ethnic
group, sex, age, or other personal characteristics is called
a.a compensating differential.
b.an efficiency wage.
c.discrimination.
d.compensating variation.
6) Which of the following statements is correct?
a.A minimum wage law will result in less additional unemployment if labor demand is
elastic rather than inelastic.
b.An in-kind transfer allows a person to use the benefit to purchase whatever they think
they need most.
c.If a tax policy states that taxes owed equal 1/3 of income less $15,000, a person
earning $25,000 per year would owe $6,666.67 in taxes.
d.Welfare reform enacted in 1996 limited the amount of time recipients could stay on
welfare.
7) Which of the following statements correctly describes the relationship between the
size of the deadweight loss and the amount of tax revenue as the size of a tax increases
from a small tax to a medium tax and finally to a large tax?
a.Both the size of the deadweight loss and tax revenue increase.
b.The size of the deadweight loss increases, but the tax revenue decreases.
c.The size of the deadweight loss increases, but the tax revenue first increases, then
decreases.
d.Both the size of the deadweight loss and tax revenue decrease.
8) Table 13-6
Wooden Chair Factory
Each worker at the Wooden Chair Factory costs $12 per hour. The cost of each machine
is$20 per day regardless of the number of chairs produced. Assume the number of
machines does not change. If the factory produces at a rate of 78 chairs per hour, what
is the total machine cost per day?
a.$20
b.$40
c.$240
d. We are unable to determine total machine costs from the information given.
9)
Suppose this demand curve is a straight, downward-sloping line all the way from the
horizontal intercept to the vertical intercept. We choose two prices, P1and P2, and the
corresponding quantities demanded, Q1and Q2, for the purpose of calculating the . Also
suppose P2> P1. In which of the following cases could we possibly find that (i) demand
is elastic and (ii) a decrease in price from P1to P2 causes an decrease in total revenue?
a. 0 < P1 < P2 < $10
b. $10 < P1 < P2 $20
c. P1 > $20
d. None of the above is correct
10) Evidence suggests that, in markets with differentiated products but little advertising,
a.consumers are not confused by conflicting signals.
b.firms are generally less profitable.
c.markets are less efficient.
d.consumers make better choices.
11) In many cases, tax loopholes are designed by Congress to
a.give special treatment to specific types of behavior.
b.reduce the overall administrative burden of the tax system.
c.raise revenues for special projects.
d.All of the above are correct.
12) Table 7-17
Both the demand curve and the supply curve are straight lines. If the price is $4 but
only 6 units are bought and sold, consumer surplus will be
a.$21.
b.$28.
c.$36.
d.$42.
13) Table 18-7
Refer to Table 18-7. What is the value for the cell labeled FF?
a.30
b.40
c.100
d.400
14) University researchers create a positive externality because what they discover in
their research labs can easily be learned by others who haven’t contributed to the
research costs. If there are no subsidies, what is the relationship between the
equilibrium quantity of university research and the optimal quantity of university
research produced?
a.They are equal.
b.The equilibrium quantity is greater than the socially optimal quantity.
c.The equilibrium quantity is less than the socially optimal quantity.
d.There is not enough information to answer the question.
15) In a market economy, supply and demand are important because they
a.are direct policy tools used by government agencies to regulate the economy.
b.illustrate when an market is in equilibrium, but they are not helpful when a market is
out of equilibrium.
c.can be used to predict the impact on the economy of various events and policies.
d.All of the above are correct.
16) The following diagram shows two budget lines: A and B.
Which of the following could explain the change in the budget line from A to B?
a.a simultaneous decrease in the price of X and the price of Y
b.an increase in income
c.a decrease in income and a decrease in the price of Y
d.Both a and b are correct.
17) Table 15-7
Sally owns the only shoe store in town. She has the following cost and revenue
information.
Sally will maximize her profits by selling
a.3 pairs of shoes.
b.4 pairs of shoes.
c.6 pairs of shoes.
d.7 pairs of shoes.
18) Scenario 14-3
Suppose a certain competitive firm is producing Q=500 units of output. The marginal
cost of the 500th unit is $17, and the average total cost of producing 500 units is $12.
The firm sells its output for $20.
At Q=499, the firm‘s profits equal
a. $3,980.
b. $3,992.
c. $3,997.
d. $4,017.
19) Of all the taxes collected in the U.S. economy, what percentage is collected by the
federal government?
20)
21) Table 22-24
The citizens of Mayville are having a severe budget shortage and are faced with
eliminating athletics from the town high school. The town administrator has determined
that the town can afford to maintain one sport. Exactly one of the three choices will
prevail, and the choice will be made by way of pairwise voting, with the majority
determining the outcome on each vote. The preferences of the voters are summarized in
the table below.
Voter Type
Refer to Table 22-24. If the town administrator asks voters to choose first between
basketball and football and then between the winner of the first vote and hockey, which
sport will win the final vote?
22) The U.S. economy experienced a significant slowdown in productivity growth that
lasted from about 1973 to about __________.
23) Figure 9-27
The following diagram shows the domestic demand and supply curves in a market.
Assume that the world price in this market is $20 per unit.
If the country allows free trade, how many units will domestic consumers demand and
how many units will domestic producers produce?
24) Due to free entry and exit in monopolistic competition, in the long run price must
be equal to
25) Table 12-24
Would the tax system be justified due to the benefits principle?
26) Explain how the output effect and the price effect influence the production decision
of the individual oligopolist.