1) Henry can make a bird house in 3 hours and he can make a bird feeder in 1 hour. The
opportunity cost to Henry of making a bird house is 1/3 bird feeder.
a.True
b.False
2) If the demand curve for Good X shifts from
Da to Db, then
a.firms would be willing to supply less of Good X than before at each possible price.
b.people are willing to buy more of Good X than before at each possible price.
c.people’s incomes must have decreased.
d.the price of Good X has decreased.
3) In the circular-flow diagram, firms consume all the goods and services that they
produce.
a.True
b.False
4) Panel (a)
Panel (b)
Panel (c)
Panel (d)
Which of the four panels illustrates an increase in quantity supplied?
a.Panel (a)
b.Panel (b)
c.Panel (c)
d.Panel (d)
5) Taxes that are enacted to mitigate the effects of negative externalities are sometimes
called
a.control taxes.
b.command levies.
c.Pigovian taxes.
d.Marshallian taxes.
6) Raiman‘s Shoe Repair produces custom-made shoes. When Mr. Raiman produces 12
pairs per week, the marginal cost of the 12th pair is $84, and the marginal revenue of
the 12th pair is $70. What would you advise Mr. Raiman to do?
a.shut down the business
b.produce more custom-made shoes
c.decrease the price
d.produce fewer custom-made shoes
7) According to behavioral economics, an employee will likely
a.work harder if she is a satisficer and if she believes a coworker is overpaid.
b.work harder if she is a satisficer, but work less hard if she believes a coworker is
overpaid.
c.work harder if she believes a coworker is overpaid, but work less hard if she is a
satisficer.
d.work less hard if she is a satisficer and if she believes a coworker is overpaid.
8) A decrease in the price of peanut butter will increase both the equilibrium price and
quantity in the market for jelly.
a.True
b.False
9) A significant slowdown in the growth of productivity persisted in the U.S. economy
between
a.1959 and 1973
b.1973 and 1995
c.1973 and 2012
d.1995 and 2012
10) Holding all other things constant, a higher price for ski lift tickets would
a.increase the number of skiers.
b.increase the price of skis.
c.decrease the number of skis sold.
d.decrease the demand for other winter recreational activities.
11) Economists build economic models by
a.generating data.
b.conducting controlled experiments in a lab.
c.making assumptions.
d.reviewing statistical forecasts.
12) Since externalities tend to keep markets from reaching a socially optimal
equilibrium, government action
a.is always needed because private solutions can never be attained.
b.is needed when private solutions fail to arise.
c.will be needed only to correct for positive externalities.
d.will be needed only to correct for negative externalities.
13) The production function is
a.the increase in the amount of output from an additional unit of labor.
b.influenced by the productivity of workers.
c.the marginal revenue produce minus the wage rate paid to workers.
d.All of the above are correct.
14) The following table shows a portion of the demand schedule for a particular good at
various levels of income.
Using the midpoint method, at a price of $8, what is the income elasticity of demand
when income rises from $7,500 to $10,000?
a.0.00
b.0.41
c.1.00
d.2.45
15) Figure 21-7
Refer to Figure 21-7. Suppose a consumer has $500 in income, the price of a book is
$10, and the value of B is 50. What is the price of a DVD?
a. $5
b. $10
c. $50
d. $100
16) Scenario 16-9
Dean goes to the grocery store to buy chips and soda for a party. He purchases brand
name products even though generic versions are available at lower prices. His friend
John says he was irrational to spend more for a nearly identical product. His friend
Martina agreed with Dean’s decision to spend more for the brand name products.
If advertising were banned in these markets, what would likely happen to the prices of
chips and soda?
17) What are opportunity costs? How do explicit and implicit costs relate to opportunity
costs?
18) Economists use the term to refer to fluctuations in economic activity, such as
employment and production.
19) It costs a company $35,000 to produce 700 graphing calculators. The company’s
cost will be $35,070 if it produces an additional graphing calculator. The company is
currently producing 700 graphing calculators.
A customer is willing to pay $60 for the 701thcalculator. Should the company produce
and sell it? Explain.
20)
In this market for iPhones, the technology improves while all other factors remain
constant. Which curve(s) shift(s) and in which direction?