1) Which of these activities will most likely impose an external cost?
a.An athlete works out at a gym.
b.A secretary smokes a cigarette in a crowded break room.
c.A young mother pushes her baby in a stroller.
d.A construction worker eats a hotdog during his lunch break.
2) In addition to tax payments, the two other primary costs that a tax system inevitably
imposes on taxpayers are
a.deadweight losses and administrative burdens.
b.deadweight losses and frustration with the political system.
c.administrative burdens and tax-preparation costs.
d.administrative burdens and the risk of punishment for failure to comply with tax laws.
3) Suppose that 300 bottles of soda are demanded at a particular price. If the price of a
bottle of soda rises from that price by 6 percent, the number of bottles of soda
demanded falls to 275. Using the midpoint approach to calculate the , it follows that the
a.demand for bottles of soda in this price range is perfectly elastic.
b.price increase will increase the total revenue of soda sellers.
c. for bottles of soda in this price range is about 0.69.
d. for bottles of soda in this price range is about 1.45.
4) Given that the median male is better paid than the median female, which of the
following is a valid explanation for wage differences?
a.compensating differentials
b.differences in human capital
c.discrimination
d.All of the above can be a partial explanation.
5) The curves shown are
a.supply curves.
b.demand curves.
c.preference curves.
d.income-consumption curves.
6) A firm will shut down in the short run if, for all positive levels of output,
a.its losses exceed its fixed costs.
b.its total revenue is less than its variable costs.
c.the price of its product is less than its average variable cost.
d.All of the above are correct.
7) When a firm experiences diseconomies of scale,
a.short-run average total cost is minimized.
b.long-run average total cost is minimized.
c.long-run average total cost increases as output increases.
d.long-run average total cost decreases as output increases.
8) Advertising during the Super Bowl is an example of information about quality
contained primarily in the existence and expense of the advertising.
a.True
b.False
9) Figure 16-9
The figure is drawn for a monopolistically-competitive firm.
For this firm, the long-run equilibrium quantity of output is
a.100 and the long-run equilibrium price is $90.
b.100 and the long-run equilibrium price is $140.
c.133.33 and the long-run equilibrium price is $56.67.
d.133.33 and the long-run equilibrium price is $123.33.
10) Which of the following is a disadvantage of government provision of a public good
such as national defense?
(i)The government does not know the exact willingness of consumers to pay for the
public good.
(ii)The free-rider problem is more likely to occur when the government provides a
public good than when the private sector provides a public good.
(iii)Taxpayers do not agree on the optimal quantity of the public good that the
government should provide.
a.(i) only
b.(i) and (ii) only
c.(i) and (iii) only
d.(i), (ii), and (iii)
11) Figure 13-9
The figure below depicts average total cost functions for a firm that produces
automobiles.
At levels of output between M and N, the firm experiences
a.economies of scale.
b.diseconomies of scale.
c.constant returns to scale.
d.both the benefits of specialization and diminishing marginal productivity.
12) Figure 15-10
What area measures the deadweight loss?
a. (B-F)*K
b. 0.5[(P-O)*(L-O)]
c. 0.5[(A-H)*(L-J)]
d. 0.5[(B-F)*(L-K)]
13) Workers at a bicycle assembly plant currently earn the mandatory minimum wage.
If the federal government increases the minimum wage by $1.00 per hour, then it is
likely that the
a.demand for bicycle assembly workers will increase.
b.supply of bicycles will shift to the right.
c.supply of bicycles will shift to the left.
d.firm must increase output to maintain profit levels.
14) Which of the following is an example of human capital for a college economics
professor?
a.years of experience
b.”clickers” which interface with an inclass computer system and display the results of
student “votes”
c.chalk
d.internet access in the classroom
15)
Which of the following price changes would result in no change in sellers’ total
revenue?
a.The price increases from $15 to $21.
b.The price increases from $18 to $21.
c.The price decreases from $24 to $18.
d.The price decreases from $27 to $24.
16) Suppose there is a decrease in the price of corn. If corn is an input into the
production of ethanol, we would expect the supply curve for ethanol to
a.shift rightward.
b.shift leftward.
c.become flatter.
d.remain unchanged.
17) Measures of poverty that fail to account for the value of in-kind transfers
a.understate the actual poverty rate.
b.have little effect on the validity of reported poverty rates.
c.are generally more reliable measures of actual poverty rates.
d.overstate the actual poverty rate.
18) Use a graph to demonstrate the circumstances that would prevail in a competitive
market where firms are earning economic profits. Can this scenario be maintained in
the long run? Explain your answer.
19) Figure 9-29
The following diagram shows the domestic demand and domestic supply curves in a
market. Assume that the world price in this market is $1 per unit.
Suppose the country imposes a $1 per unit tariff. If the country allows trade with a
tariff, how much are consumer surplus and producer surplus?
20) The production function depicts a relationship between which two variables? Also,
draw a production function that exhibits diminishing marginal product.
21) Greg’s Production Possibilities
Catherine’s Production Possibilities
Which if any good(s) does Greg have an absolute advantage producing?
22) The term refers to the size of the economic pie, and the term refers to how the pie is
divided.
23) The following table shows the supply and demand schedules in a market.
At a price of $8, how large of a surplus will there be in this market?
24) Table 17-35
Suppose that two coal mining companies – Allied and Barclay – own adjacent land
suitable for excavating coal mines. The profits that each firm earns depends on both the
number of mines it excavates and the number of mines excavated by the other firm. The
table below lists each firm’s individual profits:
Refer to Table 17-35. Does Allied have a dominant strategy? If so, describe it.
25) Table 22-25
Sophie, Huan, and Santiago are lost with no map or GPS available. They come to an
intersection at which they can turn left, turn right, or continue going straight. Their
preferences are summarized in the table.
Refer to Table 22-25. The travelers decide to conduct pairwise voting with the majority
determining the outcome of each vote to decide their next move. If they first choose
between going left and going straight, and then choose between the winner of the first
vote and going right, which direction will they go?
26) Economists use the term to refer to the ability of a single person (or a small group)
to have a substantial influence on market prices.