Figure 11-3
Fancy Footwear manufactures shoes. Figure 11-3 shows Fancy Footwear’s marginal
product of labor and average product of labor curves in the short run.
For what quantity of labor does production display diminishing returns?
A) for more than 1 units of labor
B) for more than 4 unit of labor
C) for more than 5 units of labor
D) for more than 8 units of labor
An increase in the sensitivity of private spending (consumption, investment, and net
exports) to changes in the interest rate ________ the government purchases multiplier.
A) will decrease
B) will increase
C) will not change
D) may increase or may decrease
Figure 9-3
Since 1953 the United States
has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of
the quota. Without the quota, the domestic price of peanuts equals the world price
which is $2.00 per pound. What is the quantity of peanuts supplied by domestic
producers in the absence of a quota?
A) 10 million pounds
B) 28 million pounds
C) 30 million pounds
D) 40 million pounds
A monopolistically competitive firm is producing an output level where marginal
revenue is greater than marginal cost. What should this firm do to increase its profit or
reduce its losses?
A) The firm should raise its price.
B) The firm should decrease its fixed costs.
C) The firm should increase its implicit costs.
D) The firm should lower its price.
Costa Rica is a leading exporter of bananas. What explains the comparative advantage
of this country in banana production?
A) climate and soil conditions in Costa Rica, which are well-suited for banana
production
B) investment by multinational firms such as Chiquita Brands International and the
Dole Food Company
C) a large supply of unskilled labor
D) positive externalities
One Difference between the demand for a private good and that for a public good is that
A) with a private good, each consumer chooses the quantity she wants to consume but
with a public good, each consumer chooses the price she is willing to pay for a fixed
quantity.
B) with a private good, each consumer chooses the quantity she wants to consume but
with a public good, everyone consumes the same quantity.
C) with a private good, each consumer receives Different amounts of benefit from
consuming the product but with a public good, every consumer realizes the same
amount of benefit from consuming the product.
D) the marginal benefit from consuming the last unit of a public good always exceeds
the marginal benefit from consuming the last unit of a private good because there are
externalities in the consumption of the former.
Figure 15-10
What is the area that represents producer surplus under a monopoly?
A) the triangle 0P2E
B) the triangle 0P3H
C) the trapezium 0P1FH
D) the rectangle P1P3HF
After selling 1,000 three-ring binders Tony DiFulvio realizes that the marginal revenue
from selling the last binder was less than the marginal cost. From this we can conclude
that
A) Tony’s business earns a short-run economic profit.
B) Tony should shut down his business temporarily.
C) Tony’s profit fell after selling his 1,000th three-ring binder.
D) Tony’s profit would be greater if he sold an additional three-ring binder.
Political candidates often hold fund raisers by charging “per plate” for dinner. Wendy
purchased four tickets to a $1,000 per plate dinner for a local city council candidate. Is
this transaction economically efficient?
A) No, political candidates should never be allowed to overcharge for a fund raising
dinner.
B) Yes, it was a voluntary exchange that benefited both parties.
C) No, Wendy paid too much for four dinners.
D) Yes, it is efficient only from the perspective of the candidate but not from the
perspective of Wendy.
Which of the following would be categorized as an opportunity cost?
a. not being able to spend your $10,000 savings if you sink the money in your business
b. the cost of purchasing supplies for your house-cleaning business
c. the cost of purchasing auto insurance for your dry-cleaning delivery business
A) a only
B) a and c only
C) b and c only
D) all of the above