1) Corporate profits are
a.included in payroll taxes.
b.exempt from taxes.
c.taxed twice, once as profit and once as dividends.
d.taxed to pay for Medicare.
2) The two taxes that together provide the U.S. federal government with almost 80
percent of its revenue are
a.individual income taxes and property taxes.
b.individual income taxes and corporate income taxes.
c.individual income taxes and payroll taxes.
d.sales taxes and payroll taxes.
3) Because of the greater flexibility that firms have in the long run, all short-run cost
curves lie on or above the long-run curve.
a.True
b.False
4) When a surplus exists in a market, sellers
a.raise price, which increases quantity demanded and decreases quantity supplied, until
the surplus is eliminated.
b.raise price, which decreases quantity demanded and increases quantity supplied, until
the surplus is eliminated.
c.lower price, which increases quantity demanded and decreases quantity supplied, until
the surplus is eliminated.
d.lower price, which decreases quantity demanded and increases quantity supplied, until
the surplus is eliminated.
5) Because elephants roam freely in many countries in Africa, each individual African
elephant poacher has
a.a strong incentive to kill as many elephants as he can find.
b.a strong incentive to protect the elephants.
c.the ability to save the elephants.
d.None of the above is correct.
6) Don is convinced that it would be best if the U.S. was on a gold standard. He
enthusiastically reads any editorials or articles that confirm his view. He frequently
dismisses editorials and articles that argue against the gold standard because he
presumes they are flawed or written by “crackpots.” Don’s behavior is an example of
which of the following systematic mistakes that people make?
a.people are overconfident
b.people give too much weight to a small number of vivid observations
c.people are reluctant to change their minds
d.All of the above are correct.
7) The benefit to sellers of participating in a market is measured by the
a.amount of taxes collected on sales of the good.
b.producer surplus.
c.amount sellers receive for their product.
d.sellers’ willingness to sell.
8) The length of the short run
a.is different for different types of firms.
b.can never exceed 3 years.
c.can never exceed 1 year.
d.is always less than 6 months.
9) Suppose price is measured along the vertical axis on a graph. When price changes,
there will be a
a.rotation of the curve.
b.shift of the curve.
c.movement along the curve.
d.change in the slope of the curve.
10) Perry’s Production Possibilities FrontierJordan’s Production Possibilities
Frontier
If the price of Vanilla Coke is $6.90, who will purchase the good?
a.all five individuals
b.Megan, Mallory and Audrey
c.David, Laura and Megan
d.David and Laura
12) Figure 8-1
Suppose the government imposes a tax of P’ – P”’. The consumer surplus after the tax is
measured by the area
a.J+K+I.
b.J.
c.M.
d.L+M+Y.
13) Scenario 12-1
Ken places a $20 value on a cigar, and Mark places a $17 value on it. The equilibrium
price for this brand of cigar is $15.
How much total consumer surplus do Ken and Mark get when each purchases one
cigar?
a.$1
b.$2
c.$5
d.$7