1)
This economy cannot produce at which point(s)?
a.L, M
b.N, O, P, Q
c.N, O, P
d.Q
2) The difference between economic profit and accounting profit is that economic profit
is calculated based on both implicit and explicit costs whereas accounting profit is
calculated based on explicit costs only.
a.True
b.False
3) If T represents the size of the tax on a good and Q represents the quantity of the good
that is sold, total tax revenue received by government can be expressed as
a.T/Q.
b.T+Q.
c.TxQ.
d.(TxQ)/Q.
4) Monopolistic competition differs from perfect competition because in
monopolistically competitive markets
a.there are barriers to entry.
b.all firms can eventually earn economic profits.
c.each of the sellers offers a somewhat different product.
d.strategic interactions between firms are important.
5) Figure 21-28
The figure below illustrates the preferences for a representative consumer, Christopher.
Refer to Figure 21-28. Interest rates increase by 3 percent. Christopher’s optimal choice
point moves from A to B Christopher consumes
a.less while he is younger and saves more than he did before interest rates increased.
b.more while he is younger and saves more than he did before interest rates increased.
c.less while he is younger and saves less than he did before interest rates increased.
d.more while he is younger and saves less than he did before interest rates increased.
6) In a competitive market, strategic interactions among the firms are not important.
a.True
b.False
7) For most students, the earnings they give up to attend college are
a.a minor cost when compared to the costs of tuition, room and board, and the like.
b.the single largest cost of their education.
c.about equal to the costs of room and board at college.
d.not considered true costs by an economist.
8) In the circular-flow diagram,
a.factors of production flow from government to firms.
b.goods and services flow from households to firms.
c.income paid to the factors of production flows from firms to households.
d.spending on goods and services flows from firms to households.
9) Economists view free trade as a way to raise living standards both at home and
abroad.
a.True
b.False
10) Bintu’s Production Possibilities FrontierJuba’s Production Possibilities
Frontier
The opportunity cost of 1 bowl for Juba is
a.1/4 cup.
b.2/3 cup.
c.3/2 cups.
d.4 cups.
11) When Joshua’s income increases, he purchases more primerib dinners than he did
before his income increased. For Joshua, prime-rib dinners are a(n)
a.normal good.
b.inferior good.
c.optimal good.
d.Giffen good.
12) A lump sum tax can never have horizontal equity.
a.True
b.False
13) The deadweight loss from a tax
a.does not vary in amount when the price elasticity of demand changes.
b.does not vary in amount when the amount of the tax per unit changes.
c.is larger, the larger is the amount of the tax per unit.
d.is smaller, the larger is the amount of the tax per unit.
14) Which of the following is a characteristic of a competitive market?
a.There are many buyers but few sellers.
b.Many firms have market power because they own patents.
c.Buyers and sellers are price takers..
d.Firms sell differentiated products.
15) Which of the following is an example of discrimination in the labor market?
a.Women earn less than men because women are more likely to be employed in
occupations that pay less, such as elementary school teachers rather than electrical
engineers.
b.Women earn less than men because women have, on average, fewer years of
experience in the labor force because women, on average, periodically leave the labor
force to raise children.
c.A pharmaceutical sales company pays women less than men because the company’s
customers, physicians and pharmacists, say that they prefer to deal with men rather than
women.
d.All of the above are examples of discrimination.