1) Which of the following statements is correct?
a.A disadvantage of a minimum-wage law is that it may benefit unskilled workers who
are not low-income workers.
b.A disadvantage of a negative income tax program is that a poor person who chooses
not to work many hours would receive a cash benefit.
c.A disadvantage of an Earned Income Tax Credit (EITC) is that a person who is unable
to work due to a disability does not benefit from the program.
d.All of the above are correct.
2) For any given price, a firm in a competitive market will maximize profit by selecting
the level of output at which price intersects the
a.average total cost curve.
b.average variable cost curve.
c.marginal cost curve.
d.marginal revenue curve.
3) If a monopolist is able to perfectly price discriminate,
a.consumer surplus is always increased.
b.total surplus is always decreased.
c.consumer surplus and deadweight losses are transformed into monopoly profits.
d.the price effect dominates the output effect on monopoly revenue.
4)
If this economy moved from point P to point N, then
a.it still would not be producing efficiently.
b.there would be no gain in either engines or tvs.
c.it would be producing more engines and more tvs than at point P.
d.It is not possible for this economy to move from point P to point N without additional
resources.
5) If we observe that when the price of chocolate decreases by 10%, quantity demanded
increases by 25%, then the demand for chocolate is price elastic.
a.True
b.False
6) Differences in human capital are likely to
a.be unrelated to wage rate differences across gender classifications, since both men and
women are required to complete requirements for a high school diploma.
b.be most helpful in explaining age discrimination, but unhelpful in explaining race
discrimination.
c.explain some of the differences in average wage rates across age classifications.
d.explain all of the differences in average wage rates across gender classifications.
7) Figure 16-4
At the profit-maximizing, or loss-minimizing, output level, the firm in this figure has
total revenue of approximately
a. $12,000.
b. $21,000.
c. $24,000.
d. $27,300.
8) According to the neoclassical theory of distribution, the wages paid to workers
depend on the
a.supply of labor.
b.demand for labor.
c.marginal productivity of labor.
d.All of the above are correct.
9) Table 14-11
Suppose that a firm in a competitive market faces the following prices and costs:
The marginal revenue from producing the 5th unit equals
(i)$6.
(ii)the price.
(iii)the marginal cost.
a.(i) only
b.(i) and (ii) only
c.(iii) only
d.(i), (ii), and (iii)
10) The tax on cigarettes is an example of
a.a consumption tax.
b.a corrective tax.
c.an income tax.
d.a command-and-control policy.
11) Table 16-6
Beatrice’s Birthday Cakes is one bakery among many in the market for birthday cakes.
The following table presents cost and revenue data for birthday cakes at Beatrice’s.
If the government forced Beatrice’s to produce at the efficient scale of output, what is
the maximum profit Beatrice’s could earn?
a.$59
b.$67
c.$101
d.$126
12) Economics alone cannot determine the best way to balance the goals of efficiency
and equity.
a.True
b.False
13) Condorcet explained his paradox in a 1951 book called Social Choice and
Individual Values.
a.True
b.False