1) Figure 18-7
Refer to Figure 18-7. Which of the following would shift the labor supply curve from
S1 to S2?
a.a change in workers’ attitudes toward the work-leisure tradeoff
b.decreases in wages in other labor markets
c.immigration of workers into the region or country
d.All of the above are correct.
2) Table 13-20
Listed in the table are the long-run total costs for three different firms.
Refer to Table 13-20. Firm A is experiencing constant returns to scale.
a.True
b.False
3) The y-coordinate is the
a.first number of an ordered pair and represents the point’s horizontal location.
b.second number of an ordered pair and represents the point’s horizontal location.
c.first number of an ordered pair and represents the point’s vertical location.
d.second number of an ordered pair and represents the point’s vertical location.
4) Which of the following is not a negative externality associated with driving cars?
a.congestion
b.pollution
c.repairs
d.accidents
5) Table 10-3
The market equilibrium quantity of output is
a.3 units.
b.4 units.
c.5 units.
d.6 units.
6) In general, elasticity is a measure of
a.the extent to which advances in technology are adopted by producers.
b.the extent to which a market is competitive.
c.how firms’ profits respond to changes in market prices.
d.how much buyers and sellers respond to changes in market conditions.
7) Which of the following will cause a decrease in producer surplus?
a.the imposition of a binding price ceiling in the market
b.an increase in the number of buyers of the good
c.income increases and buyers consider the good to be normal
d.the price of a complement decreases
8) Which of the following is the preferred strategy for the government to follow to
remedy the inefficient allocation of resources associated with monopolies?
a.preventing mergers through antitrust laws
b.regulating the prices that monopolies can charge
c.doing nothing
d.None of the above strategies is preferred. Each is a viable strategy.
9) For which of the following individuals would the opportunity cost of going to
college be highest?
a.a promising young mathematician who will command a high salary once she earns her
college degree
b.a student with average grades who has never held a job
c.a famous, highly-paid actor who wants to take time away from show business to
finish college and earn a degree
d.a student who is the best player on his college basketball team, but who lacks the
skills necessary to play professional basketball
10) An optimizing consumer will select the consumption bundle in which the marginal
rate of substitution
a.is equal to the price of the least-expensive good.
b.exceeds the marginal utility of each good by the greatest amount.
c.is less than the slope of the budget constraint.
d.None of the above is correct.
11) The only qualification to receive government assistance under a negative income
tax is
a.pre-school children.
b.to be enrolled in job training.
c.a working head-of-household.
d.a low income.
12) The demand for Godiva mint chocolates is likely quite elastic because
a.there are many close substitutes.
b.this particular type of chocolate is viewed as a luxury by many chocolate lovers.
c.the market is narrowly defined.
d.All of the above are correct.
13) Figure 14-9
In the figure below, panel (a) depicts the linear marginal cost of a firm in a competitive
market, and panel (b) depicts the linear market supply curve for a market with a fixed
number of identical firms.
If there are 300 identical firms in this market, what level of output will be supplied to
the market when price is $1.00?
a.300
b. 6,000
c. 30,000
d. 60,000
14) A species of snakes became extinct due to pollution in a river where the snakes once
lived. This is an example of
a.a market failure caused by an externality.
b.a market failure caused by market power.
c.a market failure caused by equality.
d.There is no market failure in this case.
15) Each of the following explains why cost-benefit analysis is difficult except
a.there is no price with which to judge the value of a public good.
b.surveys are often biased and unreliable.
c.it is difficult to identify all factors that influence costs and benefits of public goods.
d.government projects rarely have sufficient funding to complete them on time.
16) An example of an explicit cost of production would be the
a.cost of forgone labor earnings for an entrepreneur.
b.lost opportunity to invest in capital markets when the money is invested in one’s
business.
c.lease payments for the land on which a firm’s factory stands.
d.Both a and c are correct.
17) A company that formerly produced music CDs went out of business because too
many potential customers bought illegally-produced copies of the CDs instead of
buying the product directly from the company. This instance serves as an example of
a.market power.
b.inefficient trade.
c.inadequate enforcement of property rights.
d.the invisible hand at work.
18) Difference in wages can be explained by differences in
a.job characteristics and worker characteristics.
b.job characteristics but not worker characteristics.
c.worker characteristics but not job characteristics.
d.neither worker characteristics or job characteristics.