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1) If one person's use of a good diminishes another person's enjoyment of it, the good is
a.rival in consumption.
b.excludable.
c.normal.
d.exhaustible.
2)
Which of the following is not a result of the shift of the economy's production
possibilities frontier from Panel (a) to Panel (b)?
a.the tradeoff between the production of donuts and coffee changes
b.the opportunity cost of a cup of coffee is higher at all levels of coffee production
c.production of 4 donuts and 2 cups of coffee becomes possible
d.production of 1 donut and 4 cups of coffee becomes efficient
3) Which of the following statements is correct?
a.Assuming that explicit costs are positive, economic profit is greater than accounting
profit.
b.Assuming that implicit costs are positive, accounting profit is greater than economic
profit.
c.Assuming that explicit costs are positive, accounting profit is equal to economic
profit.
d.Assuming that implicit costs are positive, economic profit is positive.
4) Candice is planning her activities for a hot summer day. She would like to go to the
local swimming pool and see the latest blockbuster movie, but because she can only get
tickets to the movie for the same time that the pool is open she can only choose one
activity. This illustrates the basic principle that
a.people respond to incentives.
b.rational people think at the margin.
c.people face tradeoffs.
d.improvements in efficiency sometimes come at the expense of equality.
5) In the United States, the marginal tax rate on individual federal income tax
a.decreases as income increases.
b.increases as income increases.
c.is constant at all income levels.
d.applies only to payroll taxes.
6) A downward-sloping demand curve
a.is a feature of all monopolistically competitive firms.
b.means that the firm in question will never experience a zero profit.
c.causes marginal revenue to exceed price.
d.prohibits firms from earning positive economic profits in the long run.
7)
A tornado siren in a small town is an example of the type of good represented by Box
a.A.
b.B.
c.C.
d.D.
8) Relationship between Price and Restaurant Meals
A movement from point A to point Z is called
a.a shift in demand.
b.a movement along the demand curve.
c.a shift in supply.
d.a movement along the supply curve.
9) Because many good substitutes exist for a competitive firm's product, the demand
curve that it faces is
a.unit-elastic.
b.perfectly inelastic.
c.perfectly elastic.
d.inelastic only over a certain region.
10) Assuming education results in a positive externality, which of the following
statements is correct?
a.The social cost of producing education exceeds the private cost of producing
education.
b.The positive externality can be depicted on a graph by the vertical distance between
the supply curve and the social-cost curve.
c.The socially optimal quantity of education will exceed the market equilibrium
quantity of education.
d.All of the above are correct.
11) Honduras is an importer of goose-down pillows. The world price of these pillows is
$50. Honduras imposes a $7 tariff on pillows. Honduras is a price-taker in the pillow
market. As a result of the tariff, the price of goose-down pillows in Honduras
a.remains at $50 and the quantity of goose-down pillows purchased in Honduras
decreases.
b.increases to $57 and the quantity of goose-down pillows purchased in Honduras
decreases.
c.increases to a new price between $50 and $57 and the quantity of goose-down pillows
purchased in Honduras decreases.
d.increases to a new price above $57 and the quantity of goose-down pillows purchased
in Honduras remains the same.
12) Table 15-21
Tommy's Tie Company, a monopolist, has the following cost and revenue information.
Assume that Tommy's is able to engage in perfect price discrimination.
If the monopolist can engage in perfect price discrimination, what is the marginal
revenue from selling the 8th tie?
a.$45
b.$60
c.$80
d.$95
13) Economists, like mathematicians, physicists, and biologists,
a.make use of the scientific method.
b.try to address their subject with a scientist's objectivity.
c.devise theories, collect data, and then analyze these data in an attempt to verify or
refute their theories.
d.All of the above are correct.
14) Which scenario describes the market for oil in the long run?
a.A
b.B
c.C
d.D
15) When markets fail, public policy can potentially remedy the problem and increase
economic efficiency.
a.True
b.False
