1) A firm operating in a perfectly competitive industry will continue to operate if it
earns zero economic profits because it is likely to be earning positive accounting
profits.
a.True
b.False
2) The following table contains some production possibilities for an economy for a
given month.
If the production possibilities frontier is a straight line, then “?” must be
a.150
b.225
c.300
d.375
3) Tax evasion is legal, but tax avoidance is illegal.
a.True
b.False
4) Figure 21-6
Refer to Figure 21-6. Suppose a consumer has $200 in income, the price of popcorn is
$1, and the price of Mt. Dew is $2. What is the value of B?
a. 200
b.100
c.50
d.25
5) Table 7-17
Both the demand curve and the supply curve are straight lines. At equilibrium, producer
surplus is
a.$24.
b.$32.
c.$48.
d.$64.
6) Consider Paul’s decision to go to college. If he goes to college, he will spend $90,000
on tuition, $15,000 on room and board, and $7,000 on books. If he does not go to
college, he will earn $22,000 working at a construction job and he will spend $11,000
on room and board. Paul’s cost of going to college is
a.$96,000.
b.$110,000.
c.$114,000.
d.$123,000.
7) Figure 9-2
The figure illustrates the market for calculators in a country.
At the world price and with free trade,
a.the domestic quantity of calculators demanded is greater than the domestic quantity of
calculators supplied.
b.the calculator market is in equilibrium.
c.the domestic demand for calculators is perfectly inelastic.
d.both domestic producers of calculators and domestic consumers of calculators are
better off than they were without free trade.
8) Suppose Japan exports televisions to the United States and imports sugar from
Argentina. This situation suggests
a.Japan has a comparative advantage relative to the United States in producing
televisions, and Argentina has a comparative advantage relative to Japan in producing
sugar.
b.Japan has a comparative advantage relative to the United States in producing sugar,
and Argentina has a comparative advantage relative to Japan in producing televisions.
c.Japan has an absolute advantage relative to the United States in producing televisions,
and Argentina has an absolute advantage relative to Japan in producing sugar.
d.Japan has an absolute advantage relative to Argentina in producing sugar, and the
United States has an absolute advantage relative to Japan in producing televisions.
9) The Tragedy of the Commons occurs because
a.common resources are rival in consumption.
b.government does not efficiently allocate society’s scarce resources.
c.people consider the value of resources in the future more than in the present.
d.markets do not account for the presence of property rights.
10) Figure 10-3
At the private market outcome, the equilibrium price will be
a.P0.
b.P1.
c.P2.
d.None of the above is correct.
11)
Efficient production is represented by which point(s)?
a.Q, R, U
b.R, T, U
c.R, U
d.S, T
12) Which of the following statements is correct?
a.The human-capital theory of education could be called a productivity-enhancing
theory.
b.The human-capital theory of education could be called a productivity-revealing
theory.
c.The signaling theory of education could be called a productivity-enhancing theory.
d.The signaling theory of education has been disproven by a number of prominent
economists.