Compared with a normal monopolist, an effective price-discriminating monopolist
produces a:
A. smaller output at a lower profit.
B. smaller output but at a larger profit.
C. larger output at a larger profit.
D. larger output but at a lower profit.
Answer:
If people are given one of two items of the same value and are given the choice to
exchange it:
A. about 50 percent will make the change since half will prefer the other item.
B. everyone will keep the first item since it was free.
C. everyone will trade since people like to trade.
D. most will keep the original item since they are averse to losing what they have.
Answer:
The following matrix represents a payoff matrix for a:
A. zero sum game.
B. non-zero sum game.
C. repeated game.
D. sequential game.
Answer:
Suppose OPEC announces that it will increase production. Using supply and demand
analysis to predict the effect of increased production on equilibrium price and quantity,
the first step is to show the:
A. demand curve shifting to the right.
B. demand curve shifting to the left.
C. supply curve shifting to the right.
D. supply curve shifting to the left.
Answer:
Refer to the graph shown. If the firm wants to produce 900 units of output, it should use
the plant size represented by:
A. SATC1.
B. SATC2.
C. SATC3.
D. SATC4.
Answer:
Which short-run cost curve continually declines as output increases?
A. Total cost
B. Average variable cost
C. Average fixed cost
D. Marginal cost
Answer:
A mixed strategy is most useful:
A. in sequential games.
B. in simultaneous games.
C. in both sequential and simultaneous games.
D. only when the outcome is random.
Answer:
Refer to the graph shown. At a price of $0.60 per dozen:
A. there is a surplus of 2,000 dozen eggs per week.
B. the market is in equilibrium.
C. there is a shortage of 3,000 dozen eggs per week.
D. there is a shortage of 2,000 dozen eggs per week.
Answer:
Refer to the graph shown. When price increases from $4 to $6, total revenue:
A. increases from $200 to $250.
B. increases from $150 to $200.
C. decreases from $200 to $150.
D. decreases from $250 to $200.
Answer:
Refer to the graph shown. Which of the following curves demonstrates a perfectly
elastic demand curve?
A. A
B. B
C. C
D. None of the curves
Answer:
If the percentage increase in the quantity supplied equals the percentage increase in the
price, the supply:
A. is elastic.
B. is inelastic.
C. has unit elasticity.
D. is perfectly elastic.
Answer:
Refer to the table shown that depicts a third-party payer market. What is the cost of this
program to the third-party if a $1 co-pay is established?
A. $0
B. $600
C. $1,800
D. $2,400
Answer:
Which of the following is the best example of an excise tax?
A. A tax on all capital gains (the amount by which the value of an asset has risen
between the time it was purchased and the time it was sold)
B. A tax paid by employers on income paid to workers
C. A tax collected on each gallon of gasoline sold
D. A tax that is levied on the value of land and buildings
Answer:
On average, globalization has:
A. been insignificant.
B. left Americans no better or not worse off.
C. hurt Americans.
D. benefited Americans.
Answer:
We call the situation in which the government makes a problem worse when it attempts
to deal with it a(n):
A. incentive compatibility problem.
B. deadweight loss.
C. nudge.
D. government failure.
Answer:
Refer to the graph shown. As a result of a tariff T imposed on speedboats, the price that
foreign suppliers will receive probably will be:
A. P1.
B. P2.
C. P3.
D. P4.
Answer:
Economists focus on self-interest in explaining choices because:
A. individuals often are motivated by selflessness.
B. economists know people are selfish even if psychologists don’t.
C. economists do not believe that there is more to making choices than maximizing
utility.
D. it is a useful way to approach problems.
Answer:
Suppose the equilibrium price of oranges is $0.79, but government takes steps to
prevent the price from exceeding $0.60. The likely result will be a:
A. lower equilibrium price for oranges as the supply curve for oranges shifts to the
right.
B. higher equilibrium price for oranges as the demand curve for oranges shifts to the
right.
C. shortage of oranges as the price ceiling keeps the market from reaching equilibrium.
D. surplus of oranges as the price ceiling keeps the market from reaching equilibrium.
Answer:
Which of the following is most likely an example of diseconomies of scale?
A. The per-unit costs on Excel Publishing Company’s manuals fell after it received a
large order from the government.
B. Alpha-Beta Inc. raised its price by 10 percent after a 5 percent increase in production
costs.
C. Widget Manufacturing doubled its production by opening a new plant that was
identical to its old plant.
D. The XYZ Co. increased production capacity by 25 percent and experienced a 30
percent increase in its total cost.
Answer:
If workers enroll in a savings plan and are asked to check a box to opt out of it, we are
seeing an example of a nudge involving:
A. the enlightened option.
B. the information option.
C. the default option.
D. the incentive compatibility problem.
Answer:
Why do some stores offer senior citizen discounts on Tuesdays?
A. Most stores are perfect competitors in their geographic region.
B. Senior citizens have perfectly inelastic demand curves, whereas other shoppers do
not.
C. Senior citizens have more elastic demand schedules than do other shoppers.
D. Senior citizens have less elastic demand schedules than do other shoppers.
Answer:
Given a fixed level of spending, you will maximize utility when:
A. the total satisfaction from both goods is maximized regardless of cost.
B. the marginal satisfactions are maximized.
C. the ratios of the total utilities to their prices are equal.
D. the ratios of the marginal utilities to their prices are equal.
Answer:
Total cost is:
A. the sum of variable costs and fixed costs.
B. average variable cost times quantity.
C. the sum of average fixed cost and marginal cost.
D. the sum of fixed cost and average variable cost.
Answer:
The study by Brent Bratsberg and his colleagues suggests that income mobility in the
United States has:
A. declined but is still higher than in Europe.
B. increased and is still higher than in Europe.
C. declined and is lower than in Europe.
D. increased and is lower than in Europe.
Answer:
If quantity supplied exceeds quantity demanded, there is a tendency for:
A. price to fall to restore equilibrium.
B. price to rise to restore equilibrium.
C. the demand curve to shift to the left to restore equilibrium.
D. the demand curve to shift to the right to restore equilibrium.
Answer:
Total fixed costs:
A. are positive even when no output is produced.
B. are zero when no output is produced.
C. decrease as output increases.
D. increase as output increases.
Answer:
A labor supply elasticity of 1.4 means that a wage increase of:
A. 10 percent will reduce the quantity of labor supplied by 14 percent.
B. 10 percent will increase the quantity of labor supplied by 14 percent.
C. 10 percent will increase the quantity of labor supplied by 1.4 percent.
D. 14 percent will increase the quantity of labor supplied by 10 percent.
Answer:
Once vaccinated, a person cannot catch a cold or give a cold to someone else. As a
result, the marginal social benefit resulting from consumption of the vaccine:
A. exceeds the marginal benefit received by consumers of the vaccine.
B. equals the marginal social cost of producing the vaccine in a competitive
equilibrium.
C. equals the marginal benefit received by consumers of the vaccine in a competitive
equilibrium.
D. is less than the marginal benefit received by consumers of the vaccine.
Answer:
The marginal benefit of another T-shirt this month to Mary is $15. If the $10 price of
T-shirts reflects their marginal cost to Mary and Mary uses economic reasoning, she:
A. will sell the T-shirts she has to others who are willing to pay $10.
B. cannot gain by buying more T-shirts.
C. will buy more T-shirts this month.
D. will not buy any T-shirts this month.
Answer:
A business produces eight items and sells them for $25 each. The total cost of
producing the items is $190 for explicit costs and $200 for implicit costs. Accounting
profit is:
A. -$190.
B. $10.
C. $20.
D. $200.
Answer:
Given the graph, the quantity that would be associated with the price of $1 in a demand
table would be:
A. 6.
B. 5.
C. 4.
D. 3.
Answer:
Which of the following is a good example of government’s attempt to correct for
macroeconomic externalities?
A. Preventing excessive amounts of pollution
B. Providing public goods
C. Maintaining full employment
D. Providing for smoke-free public spaces
Answer:
The government serves as an actor in the economy when it:
A. alters anti-trust laws.
B. increases defense spending.
C. reduces the minimum wage.
D. improves health and safety standards for certain industries.
Answer:
A perfectly elastic supply curve would:
A. intersect the two axes at the origin.
B. intersect the horizontal axis.
C. be horizontal.
D. be vertical.
Answer:
Economic forces:
A. are more powerful than social and political forces.
B. are more powerful than social forces but less powerful than political forces.
C. are less powerful than social and political forces.
D. can be more or less powerful than political and social forces depending on the
circumstances.
Answer: