1) When we compare economic welfare in a monopoly market to a competitive market,
the profits earned by the monopolist represent
a.a transfer of benefits from the consumer to the producer.
b.a loss in total welfare.
c.the higher marginal costs incurred by the monopolists in comparison to competitive
firms.
d.the higher marginal revenues gained by the monopolists in comparison to competitive
firms.
2) In reality, perfect price discrimination is
a.used by about 75 percent of all monopolies.
b.used by about 50 percent of all monopolies.
c.seldom used by monopolies because it leads to lower profits.
d.rarely possible.
3) The most obvious benefit of specialization and trade is that they allow us to
a.work more hours per week than we otherwise would be able to work.
b.consume more goods than we otherwise would be able to consume.
c.spend more money on goods that are beneficial to society, and less money on goods
that are harmful to society.
d.consume more goods by forcing people in other countries to consume fewer goods.
4) Table 17-33
Suppose that Robert and Howard own the only two movie studios in California. Each
producer must choose between a low budget and a high budget strategy for his next
film. The economic profit from each strategy is indicated in the table below:
Refer to Table 17-33. Does Robert have a dominant strategy? If so, describe it.
5) When McDonald’s opens a store in Dhaka, Bangladesh, it has a strong incentive to
enforce product quality consistent with stores in the United States.
a.True
b.False
6) Advocates of antipoverty programs believe that fighting poverty
a.can make everyone better off.
b.is most successfully accomplished by charities.
c.is most efficiently accomplished by the market.
d.reduces the well-being of tax payers.
7) Figure 14-1
Suppose that a firm in a competitive market has the following cost curves:
The firm will earn a negative economic profit but remain in business in the short run if
the market price is
a.above $6.30 but less than $8.
b.above $6.30.
c.less than $6.30 but more than $4.50.
d.less than $4.50.
8) A budget surplus occurs when government receipts fall short of government
spending.
a.True
b.False
9) Cups of coffee per day and the hours that
someone can go without sleep appear to have
a.a positive correlation.
b.a negative correlation.
c.a random correlation.
d.no correlation.
10) A newspaper’s classified ads are an example of a market.
a.True
b.False
11) Table 22-19
The 600 voters of Appleton are deciding by majority rule how much to spend on a new
library.
Refer to Table 22-19. If an election were held between spending $2 million and $4
million, the median voter would vote for
a.$2 million and $2 million would win.
b.$2 million and $2 million would win.
c.$4 million and $2 million would win.
d.$4 million and $4 million would win.
12) To fully understand how taxes affect economic well-being, we must compare the
a.benefit to buyers with the loss to sellers.
b.price paid by buyers to the price received by sellers.
c.profits earned by firms to the losses incurred by consumers.
d.decrease in total surplus to the increase in revenue raised by the government.
13) The increase in living standards of American workers over the past century is
primarily due to
a.the success of labor unions.
b.minimum-wage laws.
c.improvements in productivity.
d.None of the above are correct.
14) An upward-sloping labor-supply curve implies that an increase in the wage induces
a.firms to decrease the quantity of labor they hire.
b.firms to increase the quantity of labor they hire.
c.workers to increase the quantity of labor they supply.
d.workers to increase the quantity of leisure they enjoy.
15) Table 12-10
If Miss Kay has $80,000 in taxable income, her average tax rate is
a. 18.5%.
b. 20.2%.
c. 21.8%.
d. 25.0%.
16) What is the fundamental basis for trade among nations?
a.shortages or surpluses in nations that do not trade
b.misguided economic policies
c.absolute advantage
d.comparative advantage