1) Answer the question below on the basis of the following demand and cost data for a
pure monopolist.
Refer to the above table. The profit-maximizing price for the monopolist will be:
A.$2.50
B.$2.25
C.$2.00
D.$1.75
2) The stronger the product differentiation in monopolistic competition, the:
A.Less elastic the demand curve, and production will take place further to the left of
minimum average costs
B.Less elastic the demand curve, and production will take place further to the right of
minimum average costs
C.More elastic the demand curve, and production will take place further to the left of
minimum average costs
D.More elastic the demand curve, and production will take place further to the right of
minimum average costs
3) Sometimes, public goods whose benefits are less than their costs still get produced
because:
A.The marginal benefit is still larger than the marginal cost
B.Of externalities in production
C.The benefits accrue to politically powerful government officials and their constituents
D.Of market failures
4) (Consider This) From an economist’s perspective, when is government too big?
A.Government is always too big.
B.When government activity exceeds 10 percent of gross domestic product.
C.When the marginal costs from additional government spending exceed marginal
benefits.
D.When the marginal benefits from additional government spending exceed marginal
costs.
5) Suppose that a $0.75-tax is placed on gasoline. Under what circumstances will
gasoline sellers end up shouldering the full burden of the tax?
A.If supply is perfectly inelastic, and demand is downward-sloping
B.If demand is perfectly inelastic, and supply is upward-sloping
C.If supply is upward-sloping and demand is perfectly elastic
D.The consumer and the seller always share the burden of the tax
6) Which of the following supermarket strategies to increase sales would be most
consistent with a neoclassical economics (versus behavioral economics) approach?
A.Holding posted prices constant but reducing package sizes.
B.Providing discounts for buying in bulk.
C.Placing the most frequently purchased items at the back of the store.
D.Positioning high-profit kids cereals on the lower shelves of the cereal aisle.
7) The growing importance of export demand for American agriculture has:
A.reduced the international value of the dollar.
B.had no significant effect on the stability of the demand for farm products.
C.destabilized the total demand for farm products.
D.stabilized the total demand for farm products.
8) According to behavioral economists, people’s preferences toward a particular
outcome:
A.depend heavily on the contextual information that defines whether that outcome is a
gain or a loss.
B.are context independent because the same state of being is created regardless of one’s
previous circumstances.
C.differ across people but are fixed for any given individual.
D.depend primarily on genetics rather than environmental or contextual forces.
9) Answer the question on the basis of the following data:
Refer to the given data. This firm is selling its product in:
A.an imperfectly competitive market at prices that decline as sales increase.
B.a purely competitive market at $3 per unit.
C.a purely competitive market at $2 per unit.
D.an imperfectly competitive market at $3 per unit.
10) Supply-side market failures occur when:
A.the demand and supply curves don’t reflect consumers’ full willingness to pay for a
good or service.
B.the demand and supply curves don’t reflect the full cost of producing a good or
service.
C.government regulates production of a good or service.
D.a good or service is not supplied because no one wants it.