Table 11-1
Table 11-1 shows the technology of production at the Matsuko’s Mushroom Farm for
the month of May. What is the marginal product of the 4th worker?
A) 137 pounds
B) 50 pounds
C) 12.5 pounds
D) 5 pounds
If, at the firm’s projected sales level, the marginal cost is $40, the average cost is $50
and the markup is 30 percent, then its selling price is
A) $40.
B) $50.
C) $52.
D) $65.
In ________, health care spending per person based on income per person is
significantly higher than the average for most other countries.
A) Austria
B) Canada
C) Norway
D) the United States
Figure 2-9
Figure 2-9 shows the production possibilities frontiers for Pakistan and Indonesia. Each
country produces two goods, cotton and cashews. What is the opportunity cost of
producing 1 bolt of cotton in Pakistan?
A) 3/8 of a pound of cashews
B) 5/8 of a pound of cashews
C) 1 3/5 pounds of cashews
D) 150 pounds of cashews
Economists Gary Becker and Kevin Murphy are associated with which of the
following?
A) the discovery of the first example of a Giffen good
B) They have argued that social factors are not important in explaining the choices
consumers make.
C) Consumers appear to receive utility from consuming goods they believe are popular.
D) They discovered that price changes have both income and substitution effects.
Adam Smith’s ________ refers to the process by which individuals acting in their own
self-interest bring about a market outcome that benefits society as a whole.
A) Utopian society
B) comparative advantage model
C) invisible hand
D) survival of the fittest theory
The substitution effect of a wage increase is observed when
A) the higher wage income causes workers to take more leisure and work less.
B) leisure’s higher opportunity cost causes workers to take less leisure and work more.
C) the higher wage income causes workers to take more leisure and work more.
D) leisure’s higher opportunity cost causes workers to take more leisure and work less.
Growth in potential GDP in the United States is estimated to be about
A) 8.25% per year.
B) 5.0% per year.
C) 3.2% per year.
D) 1.5% per year.
Vertical-equity is most closely associated with which of the following goals or
principles?
A) the horizontal-equity principle
B) the goal of economic efficiency
C) the goal of attaining social objectives
D) the ability-to-pay principle
Which of the following displays these two characteristics: nonrivalry and
nonexcludability in consumption?
A) a public good
B) a private good
C) a quasi-public good
D) a common resource
Suppose the demand curve for a product is downward sloping and the supply curve is
upward sloping. If a unit tax is imposed in the market for this product,
A) sellers bear the entire burden of the tax.
B) the tax burden will be shared among the government, buyers and sellers.
C) buyers bear the entire burden of the tax.
D) the tax burden will be shared by buyers and sellers.
Recent changes occurring within the U.S. health care system, including lower insurance
reimbursement rates, have resulted in
A) a growing number of doctor’s choosing to open private practices.
B) more medical practices being owned by hospitals than by individual doctors.
C) a majority of hospitals closing routine medical practices in order to focus only on
emergency care facilities.
D) a majority of doctors working directly for insurance companies.
You explain to your roommate Surya, who makes beaded headbands, about an
economic theory which asserts that consumers will purchase more of a product at lower
prices than they will at higher prices. She contends that the theory is incorrect because
over the past two years she has lowered the price of her headbands and yet has seen a
decrease in sales. How would you respond to Surya?
A) Surya is right; she has evidence to back her claim. The theory must be erroneous.
B) Surya is making the mistake of assuming that correlation implies causation.
C) I will explain to her that she is making the error of reverse causality: it is the
decrease in demand that has caused her to lower her prices.
D) I will explain to her that there are some omitted variables that have contributed to a
decrease in her sales such as changes in income.