1) Table 17-24
Two firms are considering going out of business and selling their assets. Each considers
what happens if the other goes out of business. The payoff matrix below shows the net
gain or loss to each firm.
Refer to Table 17-24. What is the Nash equilibrium?
a.A and B both stay in business
b.A stays in business, B sells
c.B stays in business, A sells
d.Both A and B sell
2) Evidence of discrimination in labor markets
a.applies only to race and gender.
b.is conclusively identified by large differences in average wages rates between men
and women.
c.is difficult to verify by reference to differences in average wage rates.
d.is more easily identified on the basis of race than gender.
3) Taxes affect market participants by increasing the price paid by the buyer and
received by the seller.
a.True
b.False
4) Figure 8-9
The vertical distance between points A and C represents a tax in the market.
The imposition of the tax causes the
quantity sold to
a.increase by 20 units.
b.increase by 500 units.
c.decrease by 20 units.
d.decrease by 500 units.
5) Refer to Scenario 9-2. Suppose the world price of cardboard is $60. Then, relative
to the no-trade situation, international trade in cardboard produces which of the
following results for Boxland?
a.It decreases consumer surplus, increases producer surplus, and decreases total surplus.
b.It decreases consumer surplus, increases producer surplus, and increases total surplus.
c.It decreases consumer surplus, decreases producer surplus, and decreases total
surplus.
d.It increases consumer surplus, increases producer surplus, and increases total surplus.
6) Table 22-7
Suppose that residents of a town are asked to vote on the best way to improve the safety
of an intersection. The three choices are: a stoplight, a 4-way stop, and a 2-way stop.
The voters are divided into three groups based on their preferences.
Voter Type
Refer to Table 22-7. If the vote were conducted according to a Borda count system
where each person’s first choice receives 3 points, second choice 2 points, and third
choice 1 point, the result would be
a.a 2-way stop.
b.a 4-way stop.
c.a stoplight
d.a tie between a 2-way stop and a stoplight.
7) The opportunity cost of moving from point B to point A
is zero.
a.True
b.False
8) Assume that the farmer and the rancher can switch between producing pork and
producing tomatoes at a constant rate.
Assume that the farmer and the rancher each has 24 labor hours available. If each
person spends all his time producing the good in which he has a comparative advantage,
then total production is
a.4 pounds of pork and 6 pounds of tomatoes.
b.6 pounds of pork and 8 pounds of tomatoes.
c.4 pounds of pork and 8 pounds of tomatoes.
d.6 pounds of pork and 6 pounds of tomatoes.
9) A market force that can prevent firms from price discriminating is
a.fluctuating resource prices.
b.arbitrage.
c.high fixed costs.
d.marginal-cost pricing.
10) An inferior good is one in which
a.the average consumer chooses not to consume.
b.the good is not equally valued by all consumers.
c.an increase in income increases consumption of the good.
d.an increase in income decreases consumption of the good.
11) Under majority rule, the order in which items are voted on is
a.unimportant, and this is a lesson of the Condorcet paradox.
b.unimportant, and this is a lesson of Arrow’s impossibility theorem.
c.important, and this is a lesson of the Condorcet paradox.
d.important, and this is a lesson of Arrow’s impossibility theorem.
12) Table 18-6
Refer to Table 18-6. What is the value for the cell labeled BB?
a.$300
b.$200
c.$100
d.-$100
13) Taxes on labor have the effect of encouraging
a.workers to work more hours.
b.the elderly to postpone retirement.
c.second earners within a family to take a job.
d.unscrupulous people to take part in the underground economy.
14) In analyzing international trade, we often focus on a country whose economy is
small relative to the rest of the world. We do so
a.because it is impossible to analyze the gains and losses from international trade
without making this assumption.
b.because then we can assume that world prices of goods are unaffected by that
country’s participation in international trade.
c.in order to rule out the possibility of tariffs or quotas.
d.All of the above are correct.
15) If the price elasticity of supply is 1.5, and a price increase led to a 1.8% increase in
quantity supplied, then the price increase is about
a. 0.67%.
b. 0.83%.
c. 1.20%.
d. 2.70%.
16) Tax evasion is
a.facilitated by legal deductions to taxable income.
b.the same as tax avoidance.
c.recommended by the American Accounting Association.
d.illegal.
17) The demand for desserts tends to be more inelastic than the demand for red velvet
cake.
a.True
b.False
18) Maxine’s Production Possibilities FrontierDaisy’s Production Possibilities
Frontier