1) The slope of a horizontal line is infinite, and the slope of a vertical line is zero.
a.True
b.False
2) Aristotle writes, “What is common to many is taken least care of, for all men have
greater regard for what is their own than for what they possess in common with others.”
In this statement, Aristotle is referring to the free-rider problem that occurs when a
person receives the benefit of a good without paying for it.
a.True
b.False
3) In one month, Moira can knit 2 sweaters or 4 scarves. In one month, Tori can knit 1
sweater or 3 scarves. Together, they could produce more output in total if Moira knits
only sweaters and Tori knits only scarves.
a.True
b.False
4) a. What is the difference between a “change in demand” and a “change in quantity
demanded?” Graph your answer.
b. For each of the following changes, determine whether there will be a change in
quantity demanded or a change in demand.
i.a change in the price of a related good
ii.a change in tastes
iii.a change in the number of buyers
iv.a change in price
v.a change in consumer expectations
vi.a change in income
5) In a competitive market, the actions of any single buyer or seller will
a.have a negligible impact on the market price.
b.have little effect on market equilibrium quantity but will affect market equilibrium
price.
c.affect marginal revenue and average revenue but not price.
d.adversely affect the profitability of more than one firm in the market.
6) Suppose medical research provides evidence that eating bananas provides far greater
health benefits than was previously thought. The resulting increase in the demand for
bananas
a.increases the marginal product of banana pickers for any given number of banana
pickers.
b.increases the value of the marginal product of banana pickers for any given number of
banana pickers.
c.increases the supply of banana pickers.
d.All of the above are correct.
7) Table 15-6
A monopolist faces the following demand curve:
What is the marginal revenue from the sale of the 4th unit?
a. -$3
b.$3
c.$9
d.$24
8) Which of the following would likely have the smallest deadweight loss relative to the
tax revenue?
a.a head tax (that is, a tax everyone must pay regardless of what one does or buys)
b.an income tax
c.a tax on compact discs
d.a tax on caviar
9) If two firms comprise the entire soft drink market, the market would be a(n)
a.Nash equilibrium.
b.monopolistically competitive market.
c.oligopolistically competitive market.
d.duopoly.
10) Figure 14-3
Suppose a firm operating in a competitive market has the following cost curves:
If the market price is $10, what is the firm‘s total revenue?
a.$15
b.$30
c.$35
d.$50
11) If leisure were an inferior good, then labor supply curves
a.would all be negatively sloped.
b.would all be positively sloped.
c.would all be vertical.
d.could still be positively or negatively sloped.
12) Figure 9-5
The figure illustrates the market for tricycles in a country.
Without trade, total surplus amounts to
a. $810.
b. $1,620.
c. $3,240.
d. $6,480.
13) Figure 8-15
a.True
b.False
18) The slow growth of U.S. incomes during the 1970s and 1980s can best be explained
by
a.unstable economic conditions in Eastern Europe.
b.increased competition from abroad.
c.a decline in the rate of increase in U.S. productivity.
d.a strong U.S. dollar abroad, hurting U.S. exports.