1) The discovery of a new hybrid wheat would increase the supply of wheat. As a result,
wheat farmers would realize an increase in total revenue if the
a.supply of wheat is elastic.
b.supply of wheat is inelastic.
c.demand for wheat is inelastic.
d.demand for wheat is elastic.
2) As the tax on a good increases from $1 per unit to $2 per unit to $3 per unit and so
on, the
a.tax revenue increases at first, but it eventually peaks and then decreases.
b.deadweight loss increases at first, but it eventually peaks and then decreases.
c.tax revenue always increases, and the deadweight loss always increases.
d.tax revenue always decreases, and the deadweight loss always increases.
3) Labor-augmenting technological advances increase the marginal productivity of
labor.
a.True
b.False
4) If the price elasticity of supply for wheat is less than 1, then the supply of wheat is
a.inelastic.
b.elastic.
c.unit elastic.
d.quite sensitive to changes in income.
5) Large or persistent inflation is almost always caused by
a.excessive government spending.
b.excessive growth in the quantity of money.
c.foreign competition.
d.higher-than-normal levels of productivity.
6) If these are the only four sellers in the market, then when the price increases from $6
to $8, the market quantity supplied
a.increases by 0.5 units.
b.increases by 2 units.
c.decreases by 4 units.
d.increases by 42 units.
7) A tax on a good causes the size of the market to shrink.
a.True
b.False
8) A corrective tax
a.causes each factory to reduce pollution by the same amount.
b.assigns a legal pollution limit for firms.
c.places a price on the right to pollute.
d.costs society more than pollution regulations.
9) Efficiency is attained when
a.total surplus is maximized.
b.producer surplus is maximized.
c.all resources are being used.
d.consumer surplus is maximized and producer surplus is minimized.
10) Which of the following programs to alleviate poverty would be most favored by
philosopher Robert Nozick?
a.a negative income tax
b.an Earned Income Tax Credit (EITC)
c.an in-kind transfer program
d.None of the programs would be favored by Nozick.
11) Table 15-4
A monopolist faces the following demand curve:
In order to maximize profits, the monopolist should produce
a.7.5 units.
b.10 units.
c.where marginal revenue equals marginal cost.
d.Both a and c are correct.