1) The diagram below pertains to the demand for turkey in the United States.
All else equal, sellers expecting the price of turkey to rise in the future would cause a
current move from
a.DA to DB.
b.DB to DA.
c.x to y.
d.y to x.
2) The maximin criterion suggests that social policy should
a.expropriate the factors of production from the capitalist class.
b.ensure an equal distribution of income.
c.elevate the well-being of those at the bottom of the income distribution.
d.elevate the well-being of all workers.
3) If, at the current price, there is a surplus of a good, then
a.sellers are producing more than buyers wish to buy.
b.the market must be in equilibrium.
c.the price is below the equilibrium price.
d.quantity demanded equals quantity supplied.
4) There is very little economic mobility in the United States, which means that once a
family is poor, it is very likely to remain poor for at least a decade.
a.True
b.False
5) Figure 21-4
In each case, the budget constraint moves from BC-1 to BC-2.
Refer to Figure 21-4. Which of the graphs in the figure could reflect an increase in
income?
a.graph a
b.graph b
c.graph d
d.None of the above is correct.
6) Higher education is a normal good. If its price falls,
a.the quantity demanded of higher education will fall.
b.the substitution and income effects work in opposite directions.
c.the income effect is positive.
d.higher education will be a Giffen good.
7) Equilibrium quantity must decrease when demand
a.increases and supply does not change, when demand does not change and supply
decreases, and when both demand and supply decrease.
b.increases and supply does not change, when demand does not change and supply
increases, and when both demand and supply decrease.
c.decreases and supply does not change, when demand does not change and supply
increases, and when both demand and supply decrease.
d.decreases and supply does not change, when demand does not change and supply
decreases, and when both demand and supply decrease.
8) Figure 13-2
The graph illustrates a typical production function. Based on its shape, what does the
corresponding total cost curve look like?
a.an upward-sloping curve that increases at an increasing rate
b.an upward-sloping curve that increases at a decreasing rate
c.a downward-sloping curve
d.a horizontal straight line
9) Table 15-9
Consider the following demand and cost information for a monopoly.
What is the marginal cost of the 4th unit?
a.$4
b.$14
c.$31
d.$62
10) Because each oligopolist cares about its own profit rather than the collective profit
of all the oligopolists together,
a.they are unable to maintain the same degree of monopoly power enjoyed by a
monopolist.
b.each firm’s profit always ends up being zero.
c.society is worse off as a result.
d.Both a and c are correct.
11) A survey of professional economists revealed that more than three-fourths of them
agreed with fourteen economic propositions. Which of the following is not one of those
propositions?
a.The United States should not restrict employers from outsourcing work to foreign
countries.
b.The United States should withdraw from the North American Free Trade Agreement
(NAFTA).
c.The United States should eliminate agricultural subsidies.
d.Local and state governments should eliminate subsidies to professional sports
franchises.
12) Suppose the price of a bag of frozen chicken nuggets decreases from $6.50 to $5.75
and, as a result, the quantity of bags demanded increases from 600 to 800. Using the
midpoint method, the for frozen chicken nuggets in the given price range is
a. 0.35.
b. 0.43.
c. 2.33.
d. 2.89.
13) The principle of comparative advantage does not provide answers to certain
questions. One of those questions is
a.Is it possible for specialization and trade to benefit more than one party to a trade?
b.Is it possible for specialization and trade to increase total output of traded goods?
c.Do opportunity costs play a role in people’s decisions to specialize in certain
activities?
d.What determines the price at which trade takes place?
14) Supply tends to be more elastic in the short run and more inelastic in the long run.
a.True
b.False
15) Your city newspaper publishes a “Best of” poll that lists its readers’ favorite
restaurants. Mundo Bar and Grill is ranked as the best casual restaurant. Your best
friend had dinner at Mundo Bar and Grill last week and commented that the food was
mediocre and the service was slow. You decide not to have dinner at Mundo Bar and
Grill based on your friend’s experience. Your decision illustrates that people
a.are reluctant to change their minds.
b.are overconfident.
c.give too much weight to a small number of vivid observations.
d.are satisficers.
16) Figure 13-9
The figure below depicts average total cost functions for a firm that produces
automobiles.
Which curve represents the long-run average total cost?
a.ATCA
b.ATCB
c.ATCC
d.ATCD
17) In the circular flow diagram, when Brian provides labor through the markets for
factors of production to ABC Company, the flow of money he receives in exchange is
called
18) How does the prisoners’ dilemma game apply to reallife situations?
19) Assume that a person consumes two goods, Coke and Snickers. Use a graph to
demonstrate how the consumer adjusts his/her optimal consumption bundle when the
price of Coke decreases. Carefully label all curves and axes. What will happen to
consumption if Coke is a normal good? What will happen to consumption if Coke is an
inferior good? (Remember to explain the possible change when the income effect
dominates and when the substitution effect dominates.)
20) Explain the difference between absolute advantage and comparative advantage.
Which is more important in determining trade patterns, absolute advantage or
comparative advantage? Why?
21) Figure 21-31
The figure shows two indifference curves and two budget constraints for a consumer
named Kevin.
Refer to Figure 21-31. If Kevin’s income is $1,260 and point A is his optimum, then
what is the price of a shirt?
22)
Using the midpoint method, compute the elasticity of demand between points A and B.
Is demand along this portion of the curve elastic or inelastic? Interpret your answer with
regard to price and quantity demanded. Now compute the elasticity of demand between
points B and C. Is demand along this portion of the curve elastic or inelastic?
23) The majority of Americans, when asked how many states they could name, think
they could name all fifty. However, when they are asked to do so, very few are able to
come up with all fifty. This is an example of which systematic mistake that people
make?
24) Scenario 8-3
Suppose the market demand and market supply curves are given by the equations:
Suppose that a tax of T is placed on buyers so that the demand curve becomes:
What price will sellers receive and what price will buyers pay after the tax is imposed?