The price of a good will be demand determined if
A) the demand for the good is unit elastic.
B) the demand for the good is perfectly inelastic.
C) the supply of the good is perfectly elastic.
D) the supply of the good is perfectly inelastic.
The table shows the relationship between income and utility for Sue.
Table 17.2
Refer to Table 17.2. Sue earns $40,000 annually. She has the opportunity to bet her
entire salary on the upcoming super bowl. If Sue takes the bet, she will pick the
Patriots. She believes that the Patriots have a 50-50 chance of winning the game. If the
Patriots win, Sue will double her money ($80,000) but if they lose she loses her entire
salary ($0). This bet can be characterized as ________.
A) risk neutral
B) an unfair bet
C) a fair bet
D) risk loving
Assume the total product of three workers is 60 and the total product of four workers is
80. The four workers’ average product is ________ while the fourth worker’s marginal
product is ________.
A) 5; 15
B) 15; 5
C) 20; 20
D) 80; 20
Firms gain control over price in monopolistic competition by
A) blocking entry of other firms into the industry.
B) producing a product for which there are no close substitutes.
C) differentiating their products.
D) colluding with other firms to set prices.
Goods produced by the economic system that are used as inputs in the production of
future goods and services are
A) consumable goods.
B) capital goods.
C) tangible goods.
D) depreciation goods.
Figure 16.1
Refer to Figure 16.1. The ________ imposed as a result of producing the market
(unregulated) level of fertilizer is $300.
A) marginal damage cost
B) total damage
C) marginal private cost
D) tax
Of the following, ________ is the best example of an oligopolistic industry.
A) grocery stores
B) automobiles production
C) electric power
D) soybean farming
A family that earns $20,000 a year pays $400 a year in city wage taxes. A family that
earns $40,000 a year pays $1,400 a year in city wage taxes. The city wage tax is a
________ tax.
A) progressive
B) regressive
C) proportional
D) benefits-received
Comparing the after-tax distribution of income to the before-tax distribution of income,
it is true that the after-tax distribution of income
A) is more equitable than the before-tax distribution of income.
B) is less equitable than the before-tax distribution of income.
C) is more equal than the before-tax distribution of income.
D) is virtually the same as the before-tax distribution of income.
Figure 9.7
Refer to Figure 9.7. The firm’s ________ point is at a price of $6.
A) profit maximizing
B) break-even
C) shut down
D) loss maximizing
If a firm’s profit is $0, then it must be true that
A) TR equals TC.
B) TR equals TVC.
C) TR equals TFC.
D) TFC is zero.
The bottom fifth of families in the income distribution receive the least amount of their
income from
A) labor income.
B) property income.
C) transfer income.
D) the government.
For a given individual, as their income decreases, their utility from that income
A) increases at an increasing rate.
B) decreases at a decreasing rate.
C) increases at a decreasing rate.
D) decreases at an increasing rate.
Related to the Economics in Practice on page 108: Which of the following, if true,
would most effectively undermine the argument that raising cigarette taxes reduces the
number of people who smoke cigarettes?
A) The demand for cigarettes is relatively inelastic.
B) The demand for cigarettes is relatively elastic.
C) The supply for cigarettes is relatively inelastic.
D) The supply for cigarettes is relatively elastic.
The population in ________ countries grows at a rate of 1.7% a year.
A) developing
B) first-world
C) industrial
D) democratic
You lend a friend $20,000 for a year. At the end of the year your friend agrees to pay
you $21,100. The interest rate on this loan is
A) 50%.
B) 00%.
C) 50%.
D) indeterminate from this information.
Hudson has two job offers when he graduates from college. Hudson views the offers as
identical, except for the salary terms. The first offer is at a fixed annual salary of
$45,000. The second offer is at a fixed salary of $25,000 plus a possible bonus of
$40,000. Hudson believes that he has a 50-50 chance of earning the bonus. If Hudson
takes the offer that maximizes his expected utility and he is risk neutral, then
A) he will take the first offer.
B) he will take the second offer.
C) he is indifferent between the offersboth yield the same expected utility.
D) Indeterminate from the given informationwe cannot say what he will do.
Investors put up $52,000 to construct a building and purchase all equipment for a new
restaurant. The investors expect to earn a minimum return of 10 percent on their
investment. The restaurant is open 52 weeks per year and serves 900 meals per week.
The fixed costs are spread over the 52 weeks (i.e. prorated weekly). Included in the
fixed costs is the 10% return to the investors and $1,000 per week in other fixed costs.
Variable costs include $1,000 in weekly wages and $600 per week for materials,
electricity, etc. The restaurant charges $3 on average per meal.
The weekly economic profit is
A) $1,000.
B) $0.
C) $900.
D) $3,600.
Economists no longer attack industry concentration with the same fervor they once did
because
A) even firms in highly concentrated industries can be pushed to produce efficiently
under certain market circumstances.
B) the benefits of product differentiation and product competition are illusory.
C) small firms do the most research in the United States.
D) substantial economies of scale result in completely competitive market structures.
An example of a public good is
A) an apple.
B) a public utility.
C) a joke.
D) a book.
Figure 7.4
Refer to Figure 7.4. The average product of the fifth worker is
A) 1.
B) 2.5.
C) 5.
D) 11.
We define a market as contestable if entry into the market is ________ and exit from
the market is ________.
A) easy; difficult
B) difficult; easy
C) difficult; difficult
D) easy; easy
The only advanced country to experience decreasing inequality in their income
distribution is ________.
A) the United States
B) Great Britain
C) France
D) Canada
Tax incidence is the ________.
A) behavior of shifting the tax to another party
B) ultimate distribution of a tax’s burden
C) structure of the tax
D) measure of the impact the tax has on employment and output
A World Bank study found that charging user fees for medical treatment in developing
countries
A) had no significant effect on treatment rates.
B) dramatically reduced treatment rates.
C) slightly increased treatment rates.
D) greatly increased treatment rates.
Price increases will ________ a household’s choice set.
A) increase
B) decrease
C) not change
D) sometimes increase and other times decrease
An ________ distribution of income would yield a ________ curve that is a 45-degree
line between 0 and 100%.
A) equal; Gini
B) unequal; Gini
C) equal; Lorenz
D) unequal; Lorenz
The total amount of tax you pay divided by your total income is the
A) marginal tax rate.
B) average tax rate.
C) total tax rate.
D) proportional tax rate.
The Wax Works sells 400 candles at a price of $6 per candle. The Wax Works’ total
costs for producing 400 candles are $2,500. The Wax Works’ economic profit is
A) -$100.
B) $0.
C) $2,400.
D) $2,500.
An individual earning $40,000 pays $3,200 in taxes. The marginal tax rate on any
income earned above $40,000 is 20%.
Suppose this person earns $60,000 and gives a tax deductible donation of $1,000 to
charity. The donation will reduce her tax payment by ________.
A) $80
B) $120
C) $200
D) $1,000
The Speedy Typesetting Company, a perfectly competitive firm, is currently producing
where P = MC and is earning a normal profit. The firm mainly employs minimum wage
workers and the government just increased the minimum wage from $5.85 to $6.55 per
hour. In the short run, this firm will most likely
A) reduce the amount of output it produces because its cost curves have shifted up and
to the left.
B) continue to produce the same amount of output because only its fixed costs have
increased.
C) produce more units of output to increase revenue to cover the additional fixed costs.
D) shut down because it will no longer be earning a normal profit.
Figure 3.9
Refer to Figure 3.9. Assume there are only two people in the market for coconuts: Sasha
and Kyle. Along the market demand curve for coconuts, at a price of ________,
quantity demanded would be ________.
A) $10; 9
B) $10; 10
C) $14; 9
D) $14; 8
When a monopolist’s marginal profit is negative, then it follows that
A) MR > ATC.
B) MR = MC.
C) MR > MC.
D) MR < MC.
Figure 4.1
Refer to Figure 4.1. The United States will import 6 million apples per day if a
per-apple tax of ________ is levied on imported apples.
A) 0 cents
B) 10 cents
C) 20 cents
D) 30 cents
Figure 6.15
Refer to Figure 6.15. At point ________, the slope of the indifference curve is -0.67.
A) A
B) B
C) C
D) All of the above are correct.