1) What is the equilibrium price in this
market?
a.$8
b.$12
c.$16
d.$20
2) What percent of families are poor for eight or more years?
a.more than 20 percent
b.between 15 and 20 percent
c.approximately 10 percent
d.less than 3 percent
3) An increase in the price of a good will
a.increase demand.
b.decrease demand.
c.increase quantity demanded.
d.decrease quantity demanded.
4) Suppose a firm in each of the two markets listed below were to increase its price by
15 percent. In which pair would the firm in the first market listed experience a dramatic
decline in sales, but the firm in the second market listed would not?
a.cotton and soybeans
b.gasoline and corn
c.#2 lead pencils and college textbooks
d.electricity and cable television
5) Figure 16-11
The graph depicts a monopolistically competitive firm in the short run. Which of the
following explanations best describes the long run adjustment?
a.More firms will enter this market and each firm will have a smaller share of the total
market demand, shifting this firm’s demand curve to the left.
b.More firms will enter this market and each firm will have a larger share of the total
market demand, shifting this firm’s demand to the right.
c.Firms will exit this market and each firm will have a smaller share of the total market
demand, shifting this firm’s demand to the left.
d.Firms will exit this market and each firm will have a larger share of the total market
demand, shifting this firm’s demand to the right.
6) When a firm experiences diminishing marginal product, what is the shape of the
curve that represents the value of the marginal product of labor?
a.U-shaped
b.vertical
c.downward sloping
d.upward sloping
7) Figure 9-10. The figure applies to Mexico and the good is rifles.
Mexico’s gains from trade are represented by the area that is bounded by the points
a. (0, P0), (Q0, P0), (Q2, P1), and (0, P1).
b. (0, P1), (0, P2), (Q0, P0), and (Q1, P1).
c. (Q0, P0), (Q2, P1), and (Q1, P1).
d. (0, P0), (0, P2), and (Q0, P0).
8) Figure 15-17
Which of the following areas represents
the deadweight loss from this profit-maximizing monopolist?
a.ABE
b.BCFE
c.EFG
d.ACG
9) Where can an economy not produce?
a.inside its production possibilities frontier
b.on its production possibilities frontier
c.outside its production possibilities frontier
d.at the endpoints of its production possibilities frontier
10) A lump-sum tax
a.is most frequently used to tax real property.
b.does not distort incentives.
c.distorts incentives more than any other type of tax.
d.is the most fair tax.
11) Scenario 13-1
Korie wants to start her own business making custom furniture. She can purchase a
factory that costs $400,000. Korie currently has $500,000 in the bank earning 3 percent
interest per year.
If Korie purchases the factory with her own money, what is the annual implicit
opportunity cost of purchasing the factory?
a.$0
b. $3,000
c. $12,000
d. $15,000
12) If sellers do not adjust their quantities supplied at all in response to a change in
price,
a.advances in technology must be prevalent.
b.the time period under consideration must be very long.
c.supply is perfectly elastic.
d.supply is perfectly inelastic.
13) In empirical analyses of factors that help explain wages,
a.effort and ability are not likely to contribute to large differences in wages in the U.S.
economy.
b.economists typically find that measurable factors explain less than half of the
variation in wages.
c.economists typically find few factors that are not explicitly measurable.
d.unmeasurable influences on wage differences are found to be quite small.
14) Which of the following is a positive, as opposed to a normative, statement?
a.The US Department of Justice should allow a merger between AT&T and T-Mobile
because it would have little effect on consumers.
b.Antitrust laws should be used to prevent further concentration in the wireless
telephone service market.
c.The US Department of Justice sued AT&T to block its merger with T-Mobile.
d.The wireless telephone service market is too highly concentrated.
15) The highest form of competition is called
a.arbitrage.
b.monopolistic competition.
c.equilibrium.
d.perfect competition.
16) Marginal revenue can become negative for
a.both competitive and monopoly firms.
b.competitive firms but not for monopoly firms.
c.monopoly firms but not for competitive firms.
d.neither competitive nor monopoly firms.
17) Which of the following concepts cannot be illustrated by the production
possibilities frontier?
a.efficiency
b.opportunity cost
c.equality
d.trade-offs
18) Figure 14-9
In the figure below, panel (a) depicts the linear marginal cost of a firm in a competitive
market, and panel (b) depicts the linear market supply curve for a market with a fixed
number of identical firms.
If there are 100 identical firms in this market, what is the value of Q2?
a. 10,000
b. 20,000
c. 40,000
d. 80,000
19) A negative externality
a.is a cost to a bystander.
b.is a cost to the buyer.
c.is a cost to the seller.
d.exists with all market transactions.