1) Table 22-17
Voter Type
Refer to Table 22-17. The table shows the preferences of three types of voters over
three possible outcomes: A, B, and C. In addition, the table shows the percentage of
voters of each type. Based on this information, which of the following statements is
true?
a.As the Condorcet Paradox predicts, majority rule fails to produce transitive
preferences for society.
b.As Arrow’s Impossibility Theorem demonstrates, it is impossible from this
information to determine which outcome the voters prefer.
c.The median voter theorem allows us to conclude that in a vote between B and C, B
will win since the Type 2 voter is the median voter.
d.While the Condorcet Paradox predicts that majority rule may not produce transitive
preferences for society as a whole, society’s preferences in this case are transitive.
2) Figure 9-1
The figure illustrates the market for coffee in Guatemala.
With trade, total surplus in the Guatemalan coffee market amounts to
a. 1,250.
b. 1,468.
c. 1,870.
d. 1,980.
3) The graph below pertains to the supply of paper to colleges and universities.
All else equal, buyers expecting paper to be more
expensive in the future would cause a current move from
a.x to y.
b.y to x.
c.SA to SB.
d.SB to SA.
4) In markets, prices move toward equilibrium because of
a.the actions of buyers and sellers.
b.government regulations placed on market participants.
c.increased competition among sellers.
d.buyers’ ability to affect market outcomes.
5) Without government intervention, public goods tend to be
a.overproduced and common resources tend to be overconsumed.
b.overproduced and common resources tend to be underconsumed.
c.underproduced and common resources tend to be overconsumed.
d.underproduced and common resources tend to be underconsumed.
6) Discrimination is a reflection of some people’s prejudice against certain groups in
society.
a.True
b.False
7) In the circular-flow diagram, one loop represents the flow of goods and services, and
the other loop represents the flow of factors of production.
a.True
b.False
8) An example of an externality is the impact of
a.bad weather on the income of farmers.
b.the personal income tax on a person’s ability to purchase goods and services.
c.pollution from a factory on the health of people in the vicinity of the factory.
d.increases in health care costs on the health of individuals in society.
9) Scenario 13-9
Ellie has been working for an engineering firm and earning an annual salary of $80,000.
She decides to open her own engineering business. Her annual expenses will include
$15,000 for office rent, $3,000 for equipment rental, $1,000 for supplies, $1,200 for
utilities, and a $35,000 salary for a secretary/bookkeeper. Ellie will cover her start-up
expenses by cashing in a $20,000 certificate of deposit on which she was earning
annual interest of $500.
Ellie’s annual implicit costs will equal
a. $55,200.
b. $75,200.
c. $80,500.
d. $165,700.
10) If a country allows free trade and imports cars, then it is the case that the gains to
domestic producers outweigh the losses to domestic consumers.
a.True
b.False
11) Table 22-16
The Johnson family is planning a vacation and, though Mr. and Mrs. Johnson will be
paying for the trip, they have decided to use a democratic voting process to choose their
destination. The family members’ preferences are reflected in the table below.
Refer to Table 22-16. Suppose that before the family can arrive at their decision,
Opryland announced that it will be closed for the season due to flooding. Mr. Johnson
recommends using a vote by majority rule and proposes first choosing between the
Grand Canyon and Sea World, and then choosing between the winner of the first vote
and Disneyland. If everyone votes according to their preferences,
a.the winner of the first vote will be Sea World, the winner of the second vote will be
Disneyland.
b.the winner of the first vote will be Sea World, the winner of the second vote will be
Grand Canyon.
c.the winner of the first vote will be Grand Canyon, the winner of the second vote will
be Disneyland.
d.the winner of the first vote will be Grand Canyon, the winner of the second vote will
be Grand Canyon.
12) If something happens to alter the quantity demanded at any given price, then the
demand curve shifts.
a.True
b.False