1) If Shawn can produce donuts at a lower opportunity cost than Sue, then
a.Shawn has a comparative advantage in the production of donuts.
b.Sue has a comparative advantage in the production of donuts.
c.Shawn should not produce donuts.
d.Shawn is capable of producing more donuts than Sue in a given amount of time.
2) Table 22-12
The following table shows the preferences for the five voters in a city regarding how to
deal with the city’s diseased trees.
A = do nothing
B = follow the expert’s advice to remove every tree
C = remove every 4th tree now and perhaps more later D = use an untested spraying
alternative
Refer to Table 22-12. Consider the public policy for dealing with the diseased trees.
Using a Borda count with 4 points assigned to the first choice, 3 points assigned to the
second choice, 2 points assigned to the third choice, and 1 point assigned to the fourth
choice, which policy wins?
a.A
b.B
c.C
d.D
3) Table 16-1
The following table shows the percentage of output supplied by the top eight firms in
four different industries.
What is the concentration ratio in Industry B? a. 18%
b.34%
c.61%
d.95%
4) A benevolent social planner would prefer that the output of good x be decreased from
its current level if, at the current level of output of good x,
a.social value = private value = private cost < social cost.
b.private cost < social cost = private value = social value.
c.social cost = private cost = private value < social value.
d.social cost = private cost = private value = social value.
5) Suppose that when the price of wheat is $2 per bushel, farmers can sell 10 million
bushels. When the price of wheat is $3 per bushel, farmers can sell 8 million bushels.
Which of the following statements is true? The demand for wheat is
a.income inelastic, so an increase in the price of wheat will increase the total revenue of
wheat farmers.
b.income elastic, so an increase in the price of wheat will increase the total revenue of
wheat farmers.
c.price inelastic, so an increase in the price of wheat will increase the total revenue of
wheat farmers.
d.price elastic, so an increase in the price of wheat will increase the total revenue of
wheat farmers.
6) Table 16-2
The following table shows the total output produced by the top six firms as well as the
total industry output for each industry.
Which industry is the least competitive?
a.Industry J
b.Industry K
c.Industry L
d.Industry M
7) Competitive firms that earn a loss in the short run should
a.shut down if P < AVC.
b.raise their price.
c.lower their output.
d.All of the above are correct.
8) You lose your job and, as a result, you buy more frozen pizzas. For you, frozen pizza
are a(n)
a.luxury good.
b.inferior good.
c.normal good.
d.complementary good.
9) Assume that the farmer and the rancher can switch between producing pork and
producing tomatoes at a constant rate.
The rancher has an absolute advantage in the production of
a.pork.
b.tomatoes.
c.both goods.
d.neither good.
10) OPEC successfully raised the world price of oil in the 1970s and early 1980s,
primarily due to
a.an inelastic demand for oil and a reduction in the amount of oil supplied.
b.a reduction in the amount of oil supplied and a world-wide oil embargo.
c.a world-wide oil embargo and an elastic demand for oil.
d.a reduction in the amount of oil supplied and an elastic demand for oil.