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1) If preferences exhibit the property of transitivity, then
a.the preferences are irrational.
b.individuals prefer more government involvement in private markets than do people
whose preferences are not transitive.
c.preferences change over time more quickly than when preferences are not transitive.
d.preferences satisfy one of the properties assumed to be desirable by Kenneth Arrow in
Social Choice and Individual Values.
2) Which of the following statements is not correct?
a.Based on studies of human decision making, most people value fairness.
b.Based on studies of human decision making, some people's preference are
inconsistent over time.
c.Government intervention is the best remedy for the problems caused by asymmetric
information.
d.Advertising can be an example of a company signaling the quality of its products.
3) Consider the labor market for computer programmers. During the late 1990s, the
value of the marginal product of all computer programmers increased dramatically.
Holding all else equal, the equilibrium quantity in the labor market for computer
programmers
a.increased.
b.decreased.
c.did not change.
d.It is not possible to determine the equilibrium quantity.
4) The fact that movie star Angelina Jolie's salary is much higher than the salary earned
by the world's best nurse can
best be explained by the
a.failure of the market to reward talent fairly.
b.large number of nurses.
c.willingness of some people to accept a lower wage rate in order to do work they find
personally rewarding.
d.superstar phenomenon.
5) A decrease in the price of DVD players leads consumers to buy more DVD players.
From this information we can conclude that DVD players
a.are normal goods.
b.are inferior goods.
c.are luxury goods.
d.could be any of the above.
6) Pens are normal goods. What will happen to the equilibrium price of pens if the price
of pencils rises, consumers experience an increase in income, writing in ink becomes
fashionable, people expect the price of pens to rise in the near future, the population
increases, fewer firms manufacture pens, and the wages of pen-makers increase?
a.Price will rise.
b.Price will fall.
c.Price will stay exactly the same.
d.The price change will be ambiguous.
7) Which of the following would shift a market labor supply curve to the right?
a.an increase in the price of output
b.an increase in immigration
c.a labor-saving technological change
d.a decrease in the wage rate
8) Table 15-10
The monopolist faces the following demand curve:
If the monopolist has total fixed costs of $40 and a constant marginal cost of $5, how
much profit can the firm earn at the profit-maximizing level of output?
a. $128
b. $120
c. $80
d. $8
9) The theory of oligopoly provides a reason why
a.perfect competition is not a useful object of study.
b.price is less than marginal cost for many firms.
c.all countries can benefit from free trade among nations.
d.firms do not want to capture larger shares of their markets.
10) Chile's Production Possibilities Frontier Colombia's Production Possibilities
Frontier
If
Chile and Colombia each spends all of its time producing the good in which it has a
comparative advantage and the countries agree to trade 7 pounds of coffee for 5 pounds
of soybeans, then Chile will consume
a.7 pounds of coffee and 7 pounds of soybeans and Colombia will consume 5 pounds of
coffee and 5 pounds of soybeans.
b.7 pounds of coffee and 7 pounds of soybeans and Colombia will consume 5 pounds of
coffee and 11 pounds of soybeans.
c.23 pounds of coffee and 7 pounds of soybeans and Colombia will consume 5 pounds
of coffee and 5 pounds of soybeans.
d.23 pounds of coffee and 7 pounds of soybeans and Colombia will consume 5 pounds
of coffee and 11 pounds of soybeans.
11) A quota is
a.a tax placed on imports.
b.a limit on the quantity of imports.
c.a tax on exports to other countries.
d.an excess of exports over imports.
