1) According to utilitarians, the ultimate objective of public actions should be to
a.ensure the poor can afford an adequate diet.
b.distribute income uniformly.
c.maximize the sum of individual utility.
d.prevent all people from experiencing diminishing marginal utility.
2) Who gets scarce resources in a market economy?
a.the government
b.whoever the government decides gets them
c.whoever wants them
d.whoever is willing and able to pay the price
3) A consumer has preferences over two goods, X and Y. Suppose we graph this
consumer’s preferences (which satisfy the usual properties of indifference curves) and
budget constraint on a diagram with X on the horizontal axis and Y on the vertical axis.
At the consumer’s current consumption bundle, the consumer is spending all available
income, and the marginal rate of substitution is less than the slope of the budget
constraint. We can conclude that the consumer
a.is currently maximizing satisfaction subject to the budget constraint.
b.could increase satisfaction by consuming more X and less Y.
c.could increase satisfaction by consuming less X and more Y.
d.could purchase more X and more Y and increase total satisfaction.
4) Perry’s Production Possibilities FrontierJordan’s Production Possibilities
Frontier
a.True
b.False
9) In a monopolistically competitive market, the demand curves faced by incumbent
firms are unaffected by the entry of new firms into the market.
a.True
b.False
10) When a monopolist reduces the quantity of output it produces and sells, the
a.price of its output increases.
b.price of its output remains constant.
c.price of its output decreases.
d.profits for the firm always decrease.
11) When demand is perfectly inelastic, the demand curve will be
a.negatively sloped, because buyers decrease their purchases when the price rises.
b.vertical, because buyers purchase the same amount as before whenever the price rises
or falls.
c.positively sloped, because buyers increase their purchases when price rises.
d.positively sloped, because buyers increase their total expenditures when price rises.
12) Since 1959 when the official data on the poverty rate began, the poverty rate was at
its highest in
a.1959
b.1968
c.1977
d.1986