1) Scenario 13-4
Suppose that Abdul opens a coffee shop. He receives a loan from a bank for $100,000.
He withdraws $50,000 from his personal savings account. The interest rate on the loan
is 8%, and the interest rate on his savings account is 2%.
Abdul’s implicit cost of capital is
a. $8,000.
b. $4,000.
c. $2,000.
d. $1,000.
2) A monopolist does not have a supply curve because the firm’s decision about how
much to supply is impossible to separate from the demand curve it faces.
a.True
b.False
3) In the long-run equilibrium of a market with free entry and exit, if all firms have the
same cost structure, then
a.marginal cost exceeds average total cost.
b.the price of the good exceeds average total cost.
c.average total cost exceeds the price of the good.
d.firms are operating at their efficient scale.
4) During the life of a drug patent, the monopoly pharmaceutical firm maximizes profit
by producing the quantity at which marginal revenue equals marginal cost.
a.True
b.False
5) The market wage could be higher than the equilibrium wage if a worker
a.is a superstar.
b.belongs to a labor union.
c.has more human capital.
d.All of the above are correct.
6) The economic life cycle describes how young people usually have higher savings
rates than middle-aged people.
a.True
b.False
7) Refer to Figure 9-17. Without trade, consumer surplus is
a.$400 and producer surplus is $200.
b.$400 and producer surplus is $800.
c.$1,600 and producer surplus is $200.
d.$1,600 and producer surplus is $800.
8) By allowing an income-tax deduction for charitable contributions, the government
a.encourages a private solution to a particular positive-externality problem.
b.discourages a private solution to a particular positive-externality problem.
c.encourages a private solution to a particular negative-externality problem.
d.discourages a private solution to a particular negative-externality problem.
9) Which of the following represents a potential solution to the problem of
environmental pollution?
a.corrective taxes
b.well established property rights
c.government regulation
d.All of the above are correct.
10) Figure 9-4. The domestic country is Nicaragua.
The change in total surplus in Nicaragua because of trade is
a.$625, and this is an increase in total surplus.
b.$750, and this is an increase in total surplus.
c.$625, and this is a decrease in total surplus.
d.$750, and this is a decrease in total surplus.
11) Figure 10-9