1) The idea that rational employers think at the margin is central to understanding how
many units of labor they choose to employ.
a.True
b.False
2) Supply-side economics is a term associated with the views of
a.Ronald Reagan and Arthur Laffer.
b.Karl Marx.
c.Bill Clinton and Greg Mankiw.
d.Milton Friedman.
3) The income effect in the work-leisure model induces a person to work less in
response to higher wages, which tends to make the labor-supply curve slope backward.
a.True
b.False
4) The demand schedule below pertains to sandwiches demanded per week.
Regarding Harry and Darby, for whom are sandwiches a normal good?
a.only for Harry
b.only for Darby
c.for both Harry and Darby
d.This cannot be determined from the given information.
5) Vertical and horizontal equity are widely accepted and applying them to evaluate a
tax system is always straightforward.
a.True
b.False
6) Refer to Figure 7-22.
If 40 units of the good are bought and sold, then
a.the marginal cost to sellers is equal to the marginal value to buyers.
b.the marginal value to buyers is greater than the marginal cost to sellers.
c.the marginal cost to sellers is greater than the marginal value to buyers.
d.producer surplus would be greater than consumer surplus.
7) Figure 16-10
The figure is drawn for a monopolistically-competitive firm.
Efficient scale is reached
a.at 100 units.
b.at 133.33 units.
c.between 133.33 units and 154.92 units.
d.at 154.92 units.
8) In imperfectly competitive markets, increasing production will decrease the price of
all units sold. This concept is known as the
a.income effect.
b.cost effect.
c.output effect.
d.price effect.
9) Scenario 13-6
Ziva is an organic lettuce farmer, but she also spends part of her day as a professional
organizing consultant. As a consultant, Ziva helps people organize their houses. Due to
the popularity of her home-organization services, Farmer Ziva has more clients
requesting her services than she has time to help if she maintains her farming business.
Farmer Ziva charges $25 an hour for her home-organization services. One spring day,
Ziva spends 10 hours in her fields planting $130 worth of seeds on her farm. She
expects that the seeds she planted will yield $300 worth of lettuce.
Ziva’s economic profit from farming equals
a. $-130.
b. $-80.
c. $130.
d. $170.
10) Which political philosophy focuses on the process of determining the distribution of
income rather than on the outcome?
a.utilitarianism
b.liberalism
c.libertarianism
d.welfarism