1) When a country allows trade and becomes an importer of a good,
a.domestic producers become better off, and domestic consumers become worse off.
b.domestic producers become worse off, and domestic consumers become better off.
c.domestic consumers become better off, but the effect on the well-being of domestic
producers is ambiguous.
d.domestic producers become worse off, but the effect on the well-being of domestic
consumers is ambiguous.
2) Figure 8-7
The vertical distance between points A and B represents a tax in the market.
Which of the following statements is correct?
a.Total surplus before the tax is imposed is $500.
b.After the tax is imposed, consumer surplus is 45 percent of its pre-tax value.
c.After the tax is imposed, producer surplus is 45 percent of its pre-tax value.
d.All of the above are correct.
3) Some goods can be either common resources or public goods depending on
a.whether the good is rival in consumption.
b.whether the good is excludable.
c.the marginal cost of the good.
d.None of the above is correct.
4) When demand is inelastic, a decrease in price will cause
a.an increase in total revenue.
b.a decrease in total revenue.
c.no change in total revenue but an increase in quantity demanded.
d.no change in total revenue but a decrease in quantity demanded.
5) Assume that the farmer and the rancher can switch between producing meat and
producing potatoes at a constant rate.
Assume that the farmer and the rancher each has 24 labor hours available. If each
person divides his time equally between the production of meat and potatoes, then total
production is
a.6 pounds of meat and 4.5 pounds of potatoes.
b.5.5 pounds of meat and 8 pounds of potatoes.
c.12 pounds of meat and 9 pounds of potatoes.
d.5 pounds of meat and 5.5 pounds of potatoes.
6) If the marginal productivity of the sixth worker hired is less than the marginal
productivity of the fifth worker hired, then the addition of the sixth worker causes total
output to decline.
a.True
b.False
7) The national defense of the United States is not rival because
a.my enjoyment of the national defense does not diminish your enjoyment of the
national defense of the United States.
b.my enjoyment of the national defense does diminish your enjoyment of the national
defense of the United States.
c.once the nation is defended, it is impossible to prevent any single person from
enjoying the benefit of this defense.
d.once the nation is defended, it is possible to prevent any single person from enjoying
the benefit of this defense.
8) Figure 20-3
Refer to Figure 20-3. In 1968, the percent of children under age 18 in poverty is
a.higher than both the percentage of adults aged 18 to 64 and the percentage of elderly
aged 65 and over in poverty.
b.higher than the percentage of adults aged 18 to 64 but is lower than the percentage of
elderly aged 65 and over in poverty.
c.lower than both the percentage of adults aged 18 to 64 and the percentage of elderly
aged 65 and over in poverty.
d.lower than the percentage of adults aged 18 to 64 but is higher than the percentage of
elderly aged 65 and over in poverty.
9) When considering a person’s standard of living, data on the income distribution and
the poverty rate may provide an incomplete picture because the poor may
a.receive in-kind transfers.
b.be lending to smooth their income over their life cycle.
c.be saving to smooth their income due to a drop in transitory income.
d.under-report their income.
10) A payroll tax is also referred to as a social insurance tax.
a.True
b.False
11) Signaling is an action taken by an uninformed party to induce an informed party to
reveal information.
a.True
b.False
12) Table 14-2
The table represents a demand curve faced by a firm in a competitive market.
This firm maximizes total revenue by producing
a.1 units.
b.3 units.
c.5 units.
d.as many units as possible.
13) The following table shows the demand schedule for a particular good.
Using the midpoint method, what is the when price rises from $12 to $16?
a.0.43
b.0.67
c.2.33
d.4
14) The negative slope of the value of marginal product curve is most easily explained
by
a.tight labor markets.
b.a surplus of workers.
c.diminishing marginal product.
d.diminishing marginal cost.