1)
Refer to the diagram for athletic shoes. The optimal output of shoes is:
A.Q1.
B.Q2.
C.Q3.
D.greater than Q3.
2) The traditional view regarding population and growth in DVCs is that:
A.The most important factor affecting population growth in DVCs is per capita
consumption of energy
B.Unemployment and underemployment are the major sources of population growth in
DVCs
C.Reduced birthrates must come first in DVCs, and then higher per capita incomes will
follow
D.Higher per capita incomes must come first in DVCs, and then reduced birth rates will
follow
3)
Refer to the graph. Using Qd for quantity demanded and P for price, which of the
following equations correctly states the demand for this product?
A.P = Qd/10.
B.P = 50 – P/2.
C.P = 10 – .2Qd.
D.P = 10 – 2Qd.
4) The larger the positive cross elasticity coefficient of demand between products X and
Y, the:
A.stronger their complementariness.
B.greater their substitutability.
C.smaller the price elasticity of demand for both products.
D.the less sensitive purchases of each are to increases in income.
5) With a tax of $2,000 on $30,000 of income, and $2,000 on $70,000 of income, we
can describe the structure of this tax as:
A.Progressive
B.Proportional
C.Regressive
D.Marginal
6) The hottest, new boy band, 2Hot2Handle, has just begun their U.S. tour. The supply
and demand schedules for the local 2Hot2Handle show is below, with the arena
capacity fixed at 2,000 seats.
Answer the following questions.
(a)Riding on their enormous popularity, 2Hot2Handle decides to set the price of tickets
of all tickets at $60. Is the market for tickets at equilibrium? If not, calculate the size of
the shortage/surplus.
(b)Hoping to gain publicity by creating long lines for tickets, 2Hot2Handle decides to
lower ticket prices to $30. Is the market for tickets at equilibrium? If not, calculate the
size of the shortage/surplus.
(c)Will a price of $30 be an efficient outcome? If the price of $30 does not change, how
might an efficient outcome be reached?
7) Economic growth is a result of:
A.A reduction in the unemployment rate
B.An increase in the opportunity costs of production
C.A decrease in the demand for resources
D.An increase in the supply of resources
8) Economic profit might result from:
A.easy entry into industries.
B.dynamic change and uncertainty.
C.X-inefficiency.
D.a decline in entrepreneurship.
9)
Refer to the diagrams. Assume that only wheat can be grown on the three grades of land
shown in Figures (a), (b), and (c). Also assume that identical amounts of labor, capital,
and other needed inputs are used in farming each grade of land. On the basis of these
three figures, we can say that:
A.the land shown in both Figures (a) and (b) is a “free good.”
B.the land shown in Figure (a) only is a “free good.”
C.the land shown in all three figures is a “free good.”
D.land is not a “free good” in any of the three figures.
10) Critics of the regulation of natural monopolies contend that:
A.regulation increases the incentive of firms to lower costs.
B.regulated firms may use creative accounting to reduce costs, prices, and profits.
C.when rates of return are based on the value of real capital, an uneconomic
substitution of labor for capital may occur.
D.the industry may “capture” or control the regulatory commission.
11) The government adds to its overall public debt whenever it:
A.Runs a budget deficit
B.Increases money supply in the economy
C.Buys government bonds
D.Raises tax collection
12) The following diagram is a flexible exchange market for foreign currency:
Refer to the diagram. At the price $.80 for 1 euro:
A.the quantity of euros demanded equals the quantity supplied.
B.the dollar-euro exchange rate is unstable.
C.the dollar price of 1 euro equals the euro price of 1 dollar.
D.there will be a surplus of euros in the foreign exchange market.
13) The theory of resource pricing is sometimes referred to by economists as the theory
of income distribution. Why?
14) What are the effects of migration on the real wages and output of a low-wage nation
and a high-wage nation? What are the simplifications used to analyze these effects?
15) Define the four basic types of trade barriers.
16) Using your knowledge gained from this chapter, briefly explain why government
pork is created, even when the government spending appears ridiculous.
17) Define labor market discrimination. How much of the differences in the earnings of
workers are explained by discrimination?
18) Why is there a shortage of donated human organs that can be used for transplants?
19) Why does the marginal resource cost exceed the wage rate in the case of a
monopsonistic firm? Explain and illustrate with an example.
20) Discuss how the 3-D printer is set to make manufactured goods more affordable for
the average person in the United States.
21) Why must normal profits be counted as a cost, according to economists?
22) How do direct controls and specific taxes affect externalities? Briefly explain in
terms of supply and demand.