Refer to the graph shown. If consumers had to pay $7.50 per unit for this product
instead of $5.00 per unit (because of a price floor or a shift in supply), consumer
surplus would fall from:
A. 2,000 to 500.
B. 1,000 to 500.
C. 1,000 to 250.
D. 500 to 250.
Answer:
Which of the following models is best able to incorporate significant amounts of data?
A. Traditional
B. Heuristic
C. Regression
D. Butterfly effect
Answer:
If the world supply curve is SW0,
A. domestic quantity supplied is unrelated to domestic quantity demanded.
B. domestic quantity supplied is less than domestic quantity demanded.
C. domestic quantity supplied exceeds domestic quantity demanded.
D. domestic quantity supplied equals domestic quantity demanded.
Answer:
If the amount of land supplied remains the same even when the price of land increases,
the:
A. supply of land must be perfectly elastic.
B. supply of land must be perfectly inelastic.
C. demand for land must be perfectly elastic.
D. demand for land must be perfectly inelastic.
Answer:
A primary goal of the International Monetary Fund (IMF) is to:
A. promote economic negotiations and cooperation among industrialized countries.
B. work out repayment plans for developing countries with large international debts.
C. protect the interests of the United States abroad.
D. negotiate trade agreements between nations.
Answer:
The cost of running an electrical utility includes costs for fuel, labor, and capital. In
addition, there are sometimes costs associated with pollution from the utility, such an
increased health-care costs for people living near the utility. To an economist, the costs
associated with the pollution resulting from additional electricity are:
A. marginal private costs.
B. marginal social costs.
C. the difference between marginal social costs and marginal private costs.
D. the sum of marginal social costs and marginal private costs.
Answer:
Some kids wait until the school year begins to buy their back-to-school clothes so that
they are sure to fit in. Such follow-the-leader behavior is an example of what the text
calls:
A. conspicuous consumption.
B. focal point equilibrium.
C. bounded rationality.
D. rules of thumb.
Answer:
With a natural monopoly, the minimum price a single firm must charge to make a profit:
A. is lower than the price two or more firms would have to charge.
B. is always higher than the price two or more firms would have to charge.
C. is equal to the price two or more firms would have to charge.
D. is half the price two or more firms would have to charge.
Answer:
Refer to the graphs shown, which depict a perfectly competitive market and firm in a
constant-cost industry. If market demand increases from D0 to D1, in the long run:
A. new firms will enter this market and price will return to P0.
B. new firms will enter this market and price will remain at P1.
C. some firms will exit this market and price will return to P0.
D. some firms will exit this market and price will remain at P1.
Answer:
Refer to the graph shown. Assume that the market is initially in equilibrium at a price of
$6 and a quantity of 40 units. If the government imposes a $2 per-unit tax on this
product, the equilibrium price will change to:
A. $4.
B. $5.
C. $7.
D. $8.
Answer:
College students tend to eat more ramen noodles than do recent college graduates. A
primary reason for this is that:
A. ramen noodles are a normal good.
B. ramen noodles are an inferior good.
C. ramen noodles are a luxury good.
D. ramen noodles are scarce.
Answer:
Direct shipment of wine to individuals is illegal. Some wineries want the law revoked.
They argue that the ability to ship directly to consumers helps small wineries and that
shipping bans unfairly protect home-state wineries, raising prices to consumers. Others
argue that the bans allow states to collect tax revenues and to keep wine from being sold
to minors. What would most economists say about whether this ban should stay or be
eliminated?
A. Because there would be people harmed, lifting the ban would not be Pareto optimal.
Therefore, eliminating the ban is bad policy.
B. Economists would argue that competition is good and the ban prevents competition.
Therefore, the ban should be lifted.
C. Lifting the ban would make taxes less equitable. Therefore, the ban should remain.
D. There are benefits to lifting the ban but also costs, and unless we know these costs
and benefits, we cannot decide.
Answer:
Refer to the graph shown. A shift from S1 to S0 would most likely occur for what
reason?
A. An increase in the number of suppliers in the market
B. A decrease in taxes levied on producers of CDs
C. An increase in the price of CDs
D. An increase in the cost of producing CDs
Answer:
When the National Hockey League locked out the hockey players in an effort to
negotiate a salary cap with the players’ union, it was an example of conflict between:
A. bilateral monopolies.
B. monopolistic competition.
C. monopsony on the employers’ side and competition on the union side.
D. unions and hockey fans.
Answer:
If demand is highly inelastic and supply shifts to the right, price:
A. will rise significantly; quantity hardly changes at all.
B. hardly changes at all; quantity will rise significantly.
C. will rise significantly as will quantity.
D. will fall significantly; quantity hardly changes at all.
Answer:
Refer to the following table. Fill in the table and answer the following question: What is
the marginal utility of the ninth can of soda?
A. -6 units of utility
B. 0 units of utility
C. 2 units of utility
D. 54 units of utility
Answer:
Refer to the table shown. When average product is 8, total output is:
A. 4.
B. 8.
C. 32.
D. 48.
Answer:
Technological advance:
A. raises the costs of production and makes economies more efficient.
B. lowers the costs of production and makes economies more efficient.
C. raises the costs of production and makes economies less efficient.
D. lowers the costs of production and makes economies less efficient.
Answer:
Which of the following pairs of equations describes the supply and demand curves
given in the accompanying demand and supply tables?
A. Qs = P – 40; Qd = 40P, respectively
B. Qs = P – 20; Qd = 40, respectively
C. Qs = 2P – 40; Qd = 40, respectively
D. cannot be determined
Answer:
Elasticity of demand for bus services is 0.23 for the peak hours and 0.42 for off-peak
hours. The same percentage increase in price would:
A. lower revenues for both, but more for peak hours.
B. raise revenues for both, but more for peak hours.
C. raise revenue for peak hours but lower revenue for off-peak hours.
D. lower revenue for peak hours but raise revenue for off-peak hours.
Answer:
Accounting profit is equal to:
A. total revenue minus implicit costs.
B. total revenue minus explicit measurable costs.
C. total revenue minus implicit and explicit costs.
D. implicit and explicit revenues minus implicit costs.
Answer:
Suppose a firm finds that an additional dollar spent on labor increases output more than
does an additional dollar spent on machines. Under these conditions, the firm:
A. is technically efficient.
B. is economically efficient.
C. should substitute labor for machines if it wants to increase economic efficiency.
D. should substitute machines for labor if it wants to increase economic efficiency.
Answer:
England has a relatively cool and cloudy climate that is ill suited for grape growing. It
can produce 200 units of wine for every 400 units of cloth. Portugal, in contrast, has a
relatively warm and sunny climate that is good for growing grapes. It can produce 200
units of wine for every 100 units of cloth. Which country has the higher opportunity
cost of producing cloth?
A. Portugal: 2 units of wine for every unit of cloth
B. England: 2 units of wine for every unit of cloth
C. Portugal: ½ unit of wine for every unit of cloth
D. England: ½ unit of cloth for every unit of wine
Answer:
Refer to the graph shown. If a firm wants to produce 300 units of output, it should use
the plant size represented by:
A. SATC1.
B. SATC2.
C. SATC3.
D. SATC4.
Answer:
Monopoly is a market structure in which:
A. one firm makes up the entire market.
B. a few firms dominate the market.
C. many firms produce differentiated products.
D. many firms produce identical products.
Answer:
The morel is a prized mushroom that is often abundant in the Western United States in
years after forest fires. Suppose two companies are buying morels from workers willing
to find them. One company offers to pay workers $5.00 per pound, and the other
company will pay workers only $4.00 per pound. Economists would say that:
A. the company willing to pay only $4.00 has a comparative advantage in selling
morels.
B. the higher-paying company will attract the more creative and innovative pickers and
the lower-paying company will attract the others.
C. the lower-paying company will attract the more creative and innovative pickers and
the higher-paying company will attract the others.
D. this situation violates the law of one price and is not likely to persist.
Answer:
Refer to the following graph.
Marginal utility is:
A. negative between A and B.
B. negative between B and C.
C. negative between C and D.
D. not negative anywhere along the total utility curve.
Answer:
Refer to the graph shown. If a competitive industry producing hamburger dinners is
taken over by a pure monopoly firm that maximizes profit:
A. output will remain at 100 but price will rise to $6.
B. price will remain at $6 but output will fall by 100.
C. price will remain at $4 but output will fall by 100.
D. price will rise to $6 and output will fall by 100.
Answer:
If the world supply curve is SW1, and the country’s exchange rate depreciates,
A. the trade surplus will move toward balance.
B. the trade surplus will become greater.
C. the trade deficit will move toward balance.
D. the trade deficit will become greater.
Answer:
In the late 1990s “mad cow” disease caused people to buy less beef. It also caused the
EU to ban imported British beef and the British government to ban the sale of older
cattle. What is the effect of the following on price and quantity of British beef sold
worldwide?
A. Price of British beef falls and quantity sold also falls
B. Price of British beef rises and quantity sold falls
C. Price of British beef falls initially, but regains some of its losses; quantity sold
initially rises, then falls
D. Price of British beef falls initially, but regains some of its losses; quantity sold falls
Answer:
Refer to the graphs shown. Suppose the price of a good that is a substitute in both
consumption and production for the good depicted in the graph falls. The expected
shifts in supply and demand are shown in:
A. a.
B. b.
C. c.
D. d.
Answer:
Discrimination based on institutional factors occurs when:
A. employers pay women less than men for doing the same job.
B. women remain in low-paying jobs because of family responsibilities.
C. employers hire a man who is more qualified than a woman.
D. women postpone having children in order to succeed professionally.
Answer: