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1) Figure 21-5
Refer to Figure 21-5. In graph (b), what is the price of good X relative to the price of
good Y (i.e., Px/Py)?
a. 1/3
b.1
c.3
d.10
2)
If rectangle D is larger than rectangle A, then
a.demand is elastic between prices P1and P2
b.a decrease in price from P2to P1will cause an increase in total revenue
c.the magnitude of the percent change in price between P1and P2is smaller than the
magnitude of the corresponding percent change in quantity demanded
d.All of the above are correct
3) Which of the following statements is correct about the extent of disagreement among
economists?
a.There is a great deal of agreement among economists on virtually every economic
issue.
b.There is a great deal of agreement among economists on many important economic
issues.
c.All disagreements among economists are attributable to differences in their values.
d.All disagreements among economists are attributable to the fact that different
economists have different degrees of faith in the validity of alternative economic
theories.
4) Which of the following statements is not correct?
a.Trade allows for specialization.
b.Trade has the potential to benefit all nations.
c.Trade allows nations to consume outside of their production possibilities curves.
d.Absolute advantage is the driving force of specialization.
5) Table 12-16
The tax system is
a.proportional.
b.regressive.
c.progressive.
d.lump sum.
6) When the government redistributes income to achieve greater equality, it
a.distorts incentives.
b.improves efficiency.
c.focuses on middle income brackets.
d.relies on foreign aid to help balance the budget.
7) A firm in a monopolistically competitive market can earn short-run profits but not
long-run profits.
a.True
b.False
8) In a monopolistically competitive industry, firms set price
a.equal to marginal cost since each firm is a price taker.
b.below marginal cost since each firm is a price taker.
c.above marginal cost since each firm is a price setter.
d.always a fraction of marginal cost since each firm is a price setter.
9) Which of the following would cause
the demand curve to shift from Demand A to Demand B in the market for oranges in the
United States?
a.a freeze in Florida
b.a technological advance that allows oranges to ripen faster
c.a decrease in the price of apples
d.an announcement by the FDA that oranges prevent heart disease
10)
Which of the following statements is correct?
a.A congested toll road is an example of the type of good represented by Box B.
b.An uncongested toll road is an example of the type of good represented by Box D.
c.A congested nontoll road is an example of the type of good represented by Box C.
d.An uncongested nontoll road is an example of the type of good represented by Box A.
11) Table 17-19
Consider a small town that has two grocery stores from which residents can choose to
buy a loaf of bread. The store owners each must make a decision to set a high bread
price or a low bread price. The payoff table, showing profit per week, is provided
below. The profit in each cell is shown as (Store 1, Store 2).
Refer to Table 17-19. If grocery store 2 sets a high price, what price should grocery
store 1 set? And what will grocery store 1's payoff equal?
a.Low price, $400
b.High price, $325
c.Low price, $50
d.High price, $400
12) If Honduras were to subsidize the production of wool blankets and sell them in
Sweden at artificially low prices, the Swedish economy would be worse off.
a.True
b.False
13) At the equilibrium price,
a.200 units would be supplied and demanded.
b.400 units would be supplied and demanded.
c.600 units would be supplied and demanded.
d.600 units would be supplied, but only 200 would be demanded.
14) According to a utilitarian, total social utility will be maximized when marginal
dollars are distributed to the people with the
a.lowest marginal utility of income.
b.highest marginal utility of income.
c.highest total utility from their income.
d.most productive labor resources.
15) Table 14-13
Diana's Dress Emporium
In order to maximize profits, how many units should Diana's Dress Emporium
produce?
a.5
b.6
c.7
d.8
16) Scenario 16-5
McDonald's restaurants has recently announced intentions to open a new restaurant in
Smalltown, Indiana. Assume that the fast-food restaurant market in Smalltown is
characterized by monopolistic competition.
As a result of the new McDonald's, residents of Smalltown are likely to benefit from
a.a product-variety externality.
b.a business-stealing externality.
c.the fact that McDonald's will increase its production to achieve the efficient scale.
d.Both b and c are correct.
