1) Education and on-the-job training are sources of human capital.
a.True
b.False
2) If Ernie’s individual labor supply curve is upward sloping, then Ernie responds to an
increase in the
a.wage by working more hours per week.
b.opportunity cost of leisure by working fewer hours per week.
c.opportunity cost of leisure by taking more hours of leisure per week.
d.Both a and b are correct.
3) Because taxes distort incentives, they typically result in
a.deadweight losses.
b.reductions in consumer surplus.
c.reductions in producer surplus.
d.All of the above are correct.
4)
Figure 8-4
The vertical distance between points A and B represents a tax in the market.
The amount of the tax
on each unit of the good is
a.$5.
b.$7.
c.$8.
d.$12.
5) Which of the following statements is correct?
a.Gasoline taxes are an example of an EPA regulation.
b.Gasoline taxes are higher in many European countries than in the United States.
c.Gasoline taxes contribute to global warming.
d.Gasoline taxes are an example of a command-and-control policy.
6) A free rider problem arises when
a.there are very few beneficiaries and exclusion of any one of them is possible.
b.there are many beneficiaries and exclusion of any one of them is possible.
c.there are many beneficiaries and exclusion of any one of them is impossible.
d.there are very few beneficiaries and they all try to use the good simultaneously.
7) Figure 15-18
If there are no fixed costs of production, monopoly profit with perfect price
discrimination equals
a.$0.
b. $1,000.
c. $2,000.
d. $4,000.
8) Buyers and sellers neglect the external effects of their actions when deciding how
much to demand or supply.
a.True
b.False
9) When monopolistically competitive firms advertise, in the long run
a.they will still earn zero economic profit.
b.they can earn positive economic profit by increasing market share.
c.the market price must fall.
d.the market price must rise.
10) Table 15-6
A monopolist faces the following demand curve:
What is the marginal revenue from the sale of the 3rd unit?
a. -$3
b.$3
c.$9
d.$24
11) Scenario 22-6
Shana owns a boutique that sells highend women’s clothing and accessories. Katie
works part-time at the boutique and frequently is the only employee in this small store.
Shana pays Katie a wage that is higher than the market wage for this type of job. When
the store is not full of customers, Katie diligently works on displays and cleans to keep
the store looking its best. Belinda is a customer in the store who asks Katie’s opinion on
the quality of some jeans she is considering purchasing. Katie tells her the quality is
great even though she’s had several other customers return them due to flaws. Magda is
another customer who is returning a necklace without volunteering that a gem is
missing.
Refer to Scenario 22-6. Which of the ladies, if any, is committing a moral hazard?
12)
13) Adam and Barb go to the store to purchase some lottery tickets. Without looking at
the price, Adam says “I’ll take 10 lottery tickets,” and Barb says “I’ll take $10 worth of
lottery tickets.” What is each person’s for lottery tickets?
14) Suppose in the country of Jumanji that the price of wheat with no trade allowed is
above the world price of wheat. If Jumanji allows free trade, will Jumanji be an
importer or an exporter of wheat?
15) If the two countries decide to trade with each other, which country should specialize
in producing compasses?
16) Figure 21-31
The figure shows two indifference curves and two budget constraints for a consumer
named Kevin.
Refer to Figure 21-31. If point B is Kevin’s optimum, then at that optimum, what is his
opportunity cost of a sweater in terms of shirts?
17) If a good is produced with technology that allows the best producer to supply every
customer at a low cost and every customer in the market wants to enjoy the good
supplied by the best producer, the best producer will be called a