1) Ellen receives a raise at her current part-time job from $8 to $10 per hour. If her
labor supply curve is upward sloping, she will work fewer hours after receiving the pay
raise.
a.True
b.False
2)
Consider the production possibilities curve for a country that can produce sweaters,
apples (in bushels), or a combination of the two.
If this economy devotes all of its available resources to producing apples, then it will
produce
a.0 bushels of apples and 200 sweaters.
b.80 bushels of apples and 160 sweaters
c.180 bushels of apples and 200 sweaters.
d.180 bushels of apples and 0 sweaters.
3) Efficiency means everyone in the economy should receive an equal share of the
goods and services produced.
a.True
b.False
4) Like competitive firms, monopolies charge a price equal to marginal cost.
a.True
b.False
5) Figure 7-24
Refer to Figure 7-24. If 10 units of the good are produced and sold, then
a.the marginal cost to sellers exceeds the marginal value to buyers.
b.producer surplus is maximized.
c.total surplus is minimized.
d.the marginal value to buyers exceeds the marginal cost to sellers.
6) Kris and Kelly have been dating for several years. Kris loves Kelly very much and
wants to marry her. Which of the following is the best way to signal his love to her?
a.Kris should buy Kelly a box of his favorite chocolates.
b.Kris should give Kelly $15,000 cash to purchase her own engagement ring, since he
doesn’t know what kind she would like.
c.Kris should buy Kelly the diamond ring that she has been looking at recently in the
jewelry store window.
d.Kris should send Kelly a text asking for her hand in marriage.
7) Advocates of antipoverty programs claim that
a.the government has good information about what people are willing to pay to
eliminate poverty.
b.fighting poverty is a public good.
c.private sector will incur higher costs than the public sector for these programs.
d.All of the above are correct.
8) Which of the following is an advantage of an in-kind transfer in comparison to a cash
payment?
a.In-kind transfers cost less to administer than cash transfers.
b.In-kind transfers restrict the use of the benefit; thus, recipients receive necessities
such as food and health care.
c.In-kind transfers are more efficient than cash transfers.
d.In-kind transfers give the recipient more utility than cash transfers.
9) Assume that Brad and Theresa can switch between producing wheat and producing
beef at a constant rate.
What is Theresa’s opportunity cost of producing one bushel of wheat?
a.5/6 pound of beef
b.6/5 pound of beef
c.3/5 pound of beef
d.5/3 pounds of beef
10) For a firm operating in a perfectly competitive industry, marginal revenue and
average revenue are equal.
a.True
b.False
11) Monopolists are price takers.
a.True
b.False
12) Exceptionally favorable growing conditions in the vineyards of Napa Valley would
cause a(n)
a.increase in the demand for wine, increasing price.
b.increase in the supply of wine, decreasing price.
c.decrease in the demand for wine, decreasing price.
d.decrease in the supply of wine, increasing price.
13) If a monopolist can practice perfect price discrimination, the monopolist will
a.eliminate consumer surplus.
b.eliminate deadweight loss.
c.maximize profits.
d.All of the above are correct.
14) Figure 7-24
Refer to Figure 7-24. At equilibrium, consumer surplus is measured by the area
a.AHG.
b.AFB.
c.ABD.
d.BDF.
15) Figure 10-9