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An decrease in the price of oranges would lead to a(n)
a. increased supply of oranges.
b. increase in the prices of inputs used in orange production.
c. a movement down and to the left along the supply curve for oranges.
d. a movement up and to the right along the supply curve for oranges.
The minimum wage has its greatest impact on the market for
a. female labor.
b. older labor.
c. black labor.
d. teenage labor.
Figure 917
Refer to Figure 917. With free trade, the country imports
a. 16 units of the good.
b. 24 units of the good.
c. 60 units of the good.
d. 64 units of the good.
Which of these statements best represents the law of supply?
a. When input prices increase, sellers produce less of the good.
b. When production technology improves, sellers produce less of the good.
c. When the price of a good decreases, sellers produce less of the good.
d. When sellers’ supplies of a good increase, the price of the good increases.
A tax on buyers will shift the
a. demand curve upward by the amount of the tax.
b. demand curve downward by the amount of the tax.
c. supply curve upward by the amount of the tax.
d. supply curve downward by the amount of the tax.
Which of the following is likely to have the most price inelastic demand?
a. strawberrybanana milk shakes
b. gasoline in the short run
c. diamond earrings
d. box seats at a major league baseball game
When economists make positive statements, they are
a. speaking as scientists.
b. speaking as policy advisers.
c. making claims about how the world should be.
d. revealing that they are very conservative in their views of how the world works.
Suppose there are only two people in the world. Each person’s production possibilities
frontier also represents his or her consumption possibilities when
a. neither person faces tradeoffs.
b. the frontiers are straight lines.
c. the frontiers are bowed out.
d. they choose not to trade with one another.
In a certain economy, jam and bread are produced, and the economy currently operates
on its production possibilities frontier. Which of the following events would allow the
economy to produce more jam and more bread, relative to the quantities of those goods
that are being produced now?
a. Unemployed labor is put to work producing jam and bread.
b. The economy puts its idle capital to work producing jam and bread.
c. The economy experiences economic growth.
d. All of the above are correct.
Serena Williams should probably not mow her own lawn because
a. her opportunity cost of mowing her lawn is higher than the cost of paying someone to
mow it for her.
b. she has a comparative advantage in mowing her lawn relative to a landscaping
service.
c. she has an absolute advantage in mowing her lawn relative to a landscaping service.
d. she might sprain her ankle.
Figure 215
Refer to Figure 215. Consider the production possibilities frontier for an economy that
produces only sofas and cars. The opportunity cost of each car is
a. the slope of the production possibilities frontier.
b. 3/2 sofas.
c. 2/3 of a sofa.
d. Both a and b are correct.
Figure 36
Maxine’s Production Possibilities FrontierDaisy’s Production Possibilities Frontier
Refer to Figure 36. If the production possibilities frontier shown for Maxine is for 3
hours of work, then how long does it take Maxine to make one pie?
a. 1/4 hour
b. 1/3 hour
c. 3 hours
d. 4 hours
Figure 95
The figure illustrates the market for tricycles in a country.
Refer to Figure 95. With trade, total surplus is
a. $3,240.
b. $6,480.
c. $7,760.
d. $15,520.
Figure 79
Refer to Figure 79. If producer surplus is $19, then the price of the good is
a. $11.50.
b. $14.50.
c. $13.50.
d. $9.75.
Figure 85
Suppose that the government imposes a tax of P3 P1.
Refer to Figure 85. Producer surplus before the tax was levied is represented by area
a. A.
b. A+B+C.
c. D+H+F.
d. F.
Assume, for England, that the domestic price of wine without international trade is
lower than the world price of wine. This suggests that, in the production of wine,
a. England has a comparative advantage over other countries and England will export
wine.
b. England has a comparative advantage over other countries and England will import
wine.
c. other countries have a comparative advantage over England and England will export
wine.
d. other countries have a comparative advantage over England and England will import
wine.
A circularflow diagram is a model that
a. helps to explain how participants in the economy interact with one another.
b. helps to explain how the economy is organized.
c. incorporates all aspects of the real economy.
d. Both (a) and (b) are correct.
Holding all other forces constant, if decreasing the price of a good leads to an increase
in total revenue, then the demand for the good must be
a. unit elastic.
b. inelastic.
c. elastic.
d. None of the above is correct because a price decrease never leads to an increase in
total revenue.
A decrease in quantity supplied
a. results in a movement downward and to the left along a fixed supply curve.
b. results in a movement upward and to the right along a fixed supply curve.
c. shifts the supply curve to the left.
d. shifts the supply curve to the right.
Figure 89
The vertical distance between points A and C represents a tax in the market.
Refer to Figure 89. The producer surplus with the tax is
a. $3,000.
b. $6,000.
c. $9,000.
d. $12,000.
Taxes on labor encourage which of the following?
a. labor demand to be more inelastic
b. mothers to stay at home rather than work in the labor force
c. workers to work overtime
d. fathers to take on second jobs
Figure 923
The following diagram shows the domestic demand and domestic supply for a market.
Assume that the world price in this market is $120 per unit.
Refer to Figure 923. Consumer surplus with free trade is
a. $75.
b. $150.
c. $200.
d. $300.
What would happen to the equilibrium price and quantity of latts if the cost of
producing steamed milk, which is used to make latts, rises?
a. Both the equilibrium price and quantity would increase.
b. Both the equilibrium price and quantity would decrease.
c. The equilibrium price would increase, and the equilibrium quantity would decrease.
d. The equilibrium price would decrease, and the equilibrium quantity would increase.
An increase in the overall level of prices in an economy is referred to as
a. the income effect.
b. inflation.
c. deflation.
d. the substitution effect.
If the price elasticity of supply for wheat is less than 1, then the supply of wheat is
a. inelastic.
b. elastic.
c. unit elastic.
d. quite sensitive to changes in income.
If the government removes a tax on a good, then the price paid by buyers will
a. increase, and the price received by sellers will increase.
b. increase, and the price received by sellers will decrease.
c. decrease, and the price received by sellers will increase.
d. decrease, and the price received by sellers will decrease.
The market supply curve
a. is found by vertically adding the individual supply curves.
b. slopes downward.
c. represents the sum of the prices that all the sellers are willing to accept for a given
quantity of the good.
d. represents the sum of the quantities supplied by all the sellers at each price of the
good.
The production possibilities frontier provides an illustration of the principle that
a. trade can make everyone better off.
b. governments can sometimes improve market outcomes.
c. people face tradeoffs.
d. people respond to incentives.
Figure 724
Refer to Figure 724. If 4 units of the good are produced and sold, then
a. producer surplus is greater than consumer surplus.
b. consumer surplus is $16.
c. total surplus is minimized.
d. total surplus is not maximized.
To say that a price ceiling is binding is to say that the price ceiling
a. results in a shortage.
b. is set below the equilibrium price.
c. causes quantity demanded to exceed quantity supplied.
d. All of the above are correct.
