1) Suppose a firm in each of the two markets listed below were to increase its price by
25 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.restaurants and MP3 players
b.electricity and natural gas
c.corn and satellite radio
d.rice and soybeans
2) Table 18-7
Refer to Table 18-7. To maximize its profit, the firm will hire workers as long as the
value of the marginal product of labor equals or exceeds
a.$100.
b.$200.
c.$400.
d.$500.
3) Figure 13-3
The graph illustrates a typical total cost curve. Based on its shape, what does the
corresponding production function look like?
a.an upward-sloping curve that increases at an increasing rate
b.an upward-sloping curve that increases at a decreasing rate
c.a downward-sloping curve
d.a horizontal straight line
4) When a competitive firm doubles the quantity of output it sells, its
a.total revenue doubles.
b.average revenue doubles.
c.marginal revenue doubles.
d.profits must increase.
5) Figure 10-4
The socially optimal quantity would be
a.Q1.
b.Q2.
c.Q3.
d.Q4.
6) Assume that a college student purchases only Ramen noodles and textbooks. If
Ramen noodles are an inferior good and textbooks are a normal good, then the
substitution effect associated with a decrease in the price of a textbook, by itself, will
result in
a.a decrease in the consumption of textbooks and a decrease in the consumption of
Ramen noodles.
b.a decrease in the consumption of textbooks and an increase in the consumption of
Ramen noodles.
c.an increase in the consumption of textbooks and an increase in the consumption of
Ramen noodles.
d.an increase in the consumption of textbooks and a decrease in the consumption of
Ramen noodles.
7) Dr. Benson is regarded as, by far, the best dentist in his part of the country, yet his
income is not significantly higher than the average income for a dentist in his area. In
contrast, Bo Johnson, the best baseball player in that region, earns five times the
average salary of all baseball players. The most likely explanation is that
a.the widespread perception that Dr. Benson is a great dentist is, in fact, incorrect.
b.the baseball players’ union is more powerful than the professional association of
dentists.
c.Bo Johnson, unlike Dr. Benson, can provide his services to millions of people
simultaneously.
d.chance plays a role in determining people’s incomes, resulting in earnings
discrepancies that are hard to
explain or justify.
8) For a horizontal demand curve,
a.the slope is undefined, and the is equal to 0.
b.the slope is equal to 0, and the is undefined.
c.both the slope and are undefined.
d.both the slope and are equal to 0.
9) Scenario 18-5
Suppose that workers from northern Minnesota, North Dakota, and Montana decide to
emigrate to southern Canada.
Refer to Scenario 18-5. In the labor market in southern Canada, the equilibrium wage
a.and the equilibrium quantity of labor will rise.
b.and the equilibrium quantity of labor will fall.
c.will rise, and the equilibrium quantity of labor will fall.
d.will fall, and the equilibrium quantity of labor will rise.
10) Figure 8-13
Suppose the government places a $5 per-unit tax on this good. The tax causes the price
received by sellers to
a.decrease by $5.
b.decrease by $3.
c.decrease by $2.
d.increase by $5.
11) The regular pattern of income variation over a person’s life is called the
a.earned income cycle.
b.substitution effect.
c.life cycle.
d.pattern of change.
12)
To gain 2 tractors by moving from point W to point V, society must sacrifice
a.12 sofas.
b.employment.
c.efficiency.
d.More than one of the above is correct.
13) Table 15-7
Sally owns the only shoe store in town. She has the following cost and revenue
information.
What is total profit at the profit-maximizing quantity?
a. $100
b. $245
c. $265
d. $395
14) Assume the nation of Teeveeland does not trade with the rest of the world. By
comparing the world price of televisions to the price of televisions in Teeveeland, we
can determine whether
a.consumer surplus exceeds producer surplus in Teeveeland.
b.Teeveeland has an absolute advantage in producing televisions.
c.Teeveeland has a comparative advantage in producing televisions.
d.All of the above are correct.
15) Table 18-7
Refer to Table 18-7. What is the value of the cell labeled JJ?
a.-$300
b.-$200
c.-$100
d.$0
16) Which of the following is an approach used by economists to calculate the value of
a human life?
a.comparing the salaries of people who live in cities with more traffic lights to those
who live in cities with fewer traffic lights
b.comparing the wages of more risky occupations to less risky occupations
c.comparing the costs of vehicles with safety features such as side-impact airbags to
those without such safety features
d.All of the above are correct.
17) The problem of moral hazard is a problem of hidden action.
a.True
b.False
18) For economists, statements about the world are of two types:
a.assumptions and theories.
b.true statements and false statements.
c.specific statements and general statements.
d.positive statements and normative statements.