1) Discrimination by a manager in the hiring process
a.decreases the firm’s costs.
b.increases the firm’s costs.
c.is evident if a white manager refuses to hire a certain black applicant.
d.is evident if a male manager fails to hire a certain female applicant.
2) Which of the following is not correct?
a.Poverty is long-term problem for relatively few families.
b.Measurements of income inequality usually do not include in-kind transfers.
c.Measurements of income inequality use lifetime incomes rather than annual incomes.
d.Measurements of income inequality would be more meaningful if they reflected
permanent rather than current income.
3) A relatively steep demand curve indicates that
a.quantity demanded will adjust only slightly to a price change.
b.quantity demanded will adjust significantly to a price change.
c.quantity demanded will not adjust to a price change.
d.the change in quantity demanded will exactly equal a change in price.
4) Figure 21-3
In each case, the budget constraint moves from BC-1 to BC-2.
Refer to Figure 21-3. Which of the graphs in the figure could reflect a simultaneous
decrease in the prices of both goods?
(i)graph a
(ii)graph b
(iii)graph c
(iv)graph d
a.(i) only
b.(iv) only
c.(ii) or (iii) only
d.None of the above is correct.
5) Suppose that when income rises, the demand curve for doctor’s visits shifts to the
right. In this case, we know doctor’s visits are
a.inferior goods.
b.normal goods.
c.perfectly competitive goods.
d.durable goods.
6) In some cases, tradable pollution permits may be better than a corrective tax because
a.pollution permits allow for a market solution while a corrective tax does not.
b.pollution permits generate more revenue for the government than a corrective tax.
c.pollution permits are never preferred over a corrective tax.
d.the government can set a maximum level of pollution using permits.
7) Table 17-13
Two home-improvement stores (Lopes and HomeMax) in a growing urban area are
interested in expanding their market share. Both are interested in expanding the size of
their store and parking lot to accommodate potential growth in their customer base. The
following game depicts the strategic outcomes that result from the game. Increases in
annual profits of the two home-improvement stores are shown in the table below.
Refer to Table 17-13. Pursuing its own best interest, Lopes will
a.increase the size of its store and parking lot only if HomeMax also increases the size
of its store and parking lot.
b.increase the size of its store and parking lot only if HomeMax does not increase the
size of its store and parking lot.
c.increase the size of its store and parking lot regardless of the decision made by
HomeMax.
d.not increase the size of its store and parking lot regardless of the decision made by
HomeMax.
8) Suppose the figure shows the market
demand for Big Box e-readers. Suppose the price of the leading competitor’s ereaders, a
substitute good, decreases. Which of the following changes would occur?
a.a movement along D2 from point A to point B
b.a movement along D2 from point B to point A
c.a shift from D1 to D2
d.a shift from D2 to D1
9)
Over which range is the supply curve in this figure the most elastic?
a. $16 to $40
b. $40 to $100
c. $100 to $220
d. $220 to $430
10) At a price of $15, there would be a
a.surplus of 400 units.
b.shortage of 200 units.
c.shortage of 400 units.
d.shortage of 600 units.
11) If the price elasticity of supply is 1.2, and a price increase led to a 5% increase in
quantity supplied, then the price increase is about
a. 0.24%.
b. 4.2%.
c. 6%.
d. 6.2%.
12) Suppose that flower gardens create a positive externality equal to $1 per plant.
What is the relationship between the equilibrium quantity and the socially optimal
quantity of plants grown?
a.They are equal.
b.The equilibrium quantity is greater than the socially optimal quantity.
c.The equilibrium quantity is less than the socially optimal quantity.
d.There is not enough information to answer the question.
13) A monopolist that can practice perfect price discrimination will not impose a
deadweight loss on society.
a.True
b.False
14) One of the most difficult issues associated with trying to structure a tax policy to
satisfy horizontal equity is determining
a.whether or not a taxpayer falls within the highest income quintile.
b.the level of transfer payments made to low-income groups.
c.the source of income for taxpayers.
d.what differences are relevant to a family’s ability to pay.
15) The price elasticity of supply measures how much
a.the quantity supplied responds to changes in input prices.
b.the quantity supplied responds to changes in the price of the good.
c.the price of the good responds to changes in supply.
d.sellers respond to changes in technology.
16) Which of the following would shift the supply of Green Bay Packers football
jerseys to the left?
a.The Green Bay Packers make it to the Super Bowl.
b.The price of the jerseys increases by $15.
c.The technology of sewing machines use to make the jerseys improves.
d.The cost of the fabric used to make the jerseys increases.
17) Table 22-4
The fortunate residents of Anytown have a budget surplus. The mayor decided that it is
only fair to have the residents vote on what to do with the surplus. The mayor has
narrowed the options down to three possible projects: a playground, a library, or a
swimming pool. The voters fall into three categories and have preferences as illustrated
in the table.
Refer to Table 22-4. Which of the following statements is correct regarding the results
of pairwise voting in Anytown?
a.The results of pairwise voting depend on the order of the pairs but satisfy the
transitivity property.
b.The results of pairwise voting do not depend on the order of the pairs and satisfy the
transitivity property.
c.The results of pairwise voting depend on the order of the pairs and do not satisfy the
transitivity property.
d.The results of pairwise voting do not depend on the order of the pairs and do not
satisfy the transitivity property.
18) What is the term for offering different opportunities to similar individuals who
differ only by race, ethnic group, sex, age, or other personal characteristics?
19) A country has a comparative advantage in a product if the world price isthan that
country’s domestic price without trade.
20) State one benefit of government-granted monopolies like patents and copyrights.
21) An example of a private solution to externalities is charities. The government
encourages this private solution by allowing .
22) Suppose that the market for product X is characterized by a typical,
downward-sloping, linear demand curve and a typical, upward-sloping, linear supply
curve. If a $2 tax per unit results in a deadweight loss of $200, how large would be the
deadweight loss from a $6 tax per unit?