Archives: Quiz

1. One assumption that distinguishes short-run cost analysis from long-run cost analysis for a profit-maximizing firm is that in the short run, a. output is not variable. b. the number of workers used to produce the firm’s product is fixed. […]

TOPICS: Producer theory Production costs KEYWORDS: BLOOM’S: Comprehension CUSTOM ID: 170.13.3 – MC – MANK08 171. Refer to Figure 13-5. Curve D is increasing because a. of diminishing marginal product. b. of increasing marginal product. c. marginal product first increases, […]

a. upward sloping b. downward sloping c. U-shaped d. constant ANSWER: a DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.252 – Given data on a firm’s cost structure, calculate the firm’s marginal cost at different quantities. TOPICS: Marginal product Production costs KEYWORDS: BLOOM’S: […]

d. $360 ANSWER: c DIFFICULTY: Difficult LEARNING OBJECTIVES: ECON.MANK.253 – Given data on a firm’s cost structure, calculate the firm’s various average costs at different quantities. TOPICS: Producer theory Production costs KEYWORDS: BLOOM’S: Application CUSTOM ID: 066.13.3 – MC – […]

Subjective Short Answer 1. Define profit. ANSWER: Profit = Total revenue – Total cost. DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.275 – Given data on total revenue, implicit costs, and explicit costs, compare economic profit and accounting profit. TOPICS: Producer theory KEYWORDS: […]

47. Refer to Figure 13–2. The graph illustrates a typical a. total-cost curve. b. production function. c. production possibilities frontier. d. marginal product of labor curve. ANSWER: b DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.174 – Given a graph of the production […]

1. Which of these assumptions is often realistic for a firm in the short run? a. The firm can vary both the size of its factory and the number of workers it employs. b. The firm can vary the size […]

ANSWER: b DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.275 – Given data on total revenue, implicit costs, and explicit costs, compare economic profit and accounting profit. TOPICS: Producer theory Production costs KEYWORDS: BLOOM’S: Knowledge CUSTOM ID: 065.13.1 – MC – MANK08 66. […]

1. Economists assume that the typical person who starts her own business does so with the intention of a. donating the profits from her business to charity. b. capturing the highest number of sales in her industry. c. maximizing profits. […]

1. Analyzing the behavior of the firm enhances our understanding of a. what decisions lie behind the market supply curve. b. how consumers allocate their income to purchase scarce resources. c. how financial institutions set interest rates. d. whether resources […]

average total-cost curve at its minimum. TOPICS: Producer theory Production costs KEYWORDS: BLOOM’S: Comprehension CUSTOM ID: 044.13 – TF – MANK08 45. Average total cost and marginal cost express information that is already contained in a firm’s total cost. a. […]

True / False 1. The economic field of industrial organization examines how firms’ decisions about prices and quantities depend on the market conditions they face. a. True b. False ANSWER: True DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.012 – Apply basic, economic […]

Subjective Short Answer 1. What has been the relationship over the past century between the U.S. economy’s income and the percentage of that income that the government collects in revenues? ANSWER: Both have increased over time, but the percentage of […]

1. Goals of efficiency and equity in tax policy are a. complementary in most countries. b. necessary for application of the ability–to-pay principle. c. often in conflict with each other. d. easier to achieve when tax codes are complex. ANSWER: […]

TOPICS: Taxes KEYWORDS: BLOOM’S: Analysis CUSTOM ID: 055.12.3 – MC – MANK08 56. You are trying to design a tax system that will simultaneously achieve both of the following goals: 1) a person with no income would pay no taxes, […]

1. The concept that people should pay taxes based on the benefits they receive from government services is called a. the ability-to-pay principle. b. the benefits principle. c. horizontal equity. d. vertical equity. ANSWER: b DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.095 […]

ANSWER: b DIFFICULTY: Difficult LEARNING OBJECTIVES: ECON.MANK.095 – Examine the design of the U.S. tax system. TOPICS: Taxes KEYWORDS: BLOOM’S: Analysis CUSTOM ID: 176.12.2 – MC – MANK08 177. Refer to Table 12–10. If Miss Kay has $80,000 in taxable […]

b. His average tax rate is 50.23 percent, and the marginal tax rate on his salary is 70.3 percent. c. His average tax rate is 53.63 percent, and the marginal tax rate on his salary is 70.3 percent. d. His […]

LEARNING OBJECTIVES: ECON.MANK.193 – Given a scenario describing buyers’ willingness to pay, compute consumer surplus in a market. TOPICS: Consumer surplus Welfare economics Taxes KEYWORDS: BLOOM’S: Analysis CUSTOM ID: 065.12.2 – MC – MANK08 66. The deadweight loss associated with […]

1. In designing a tax system, policymakers have two objectives that are often conflicting. They are a. maximizing revenue and minimizing costs to taxpayers. b. efficiency and minimizing costs to taxpayers. c. efficiency and equity. d. maximizing revenue and reducing […]

1. Who observed that “in this world nothing is certain but death and taxes”? a. Mark Twain b. P.T. Barnum c. Ben Franklin d. Richard Nixon ANSWER: c DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.095 – Examine the design of the U.S. […]

True / False 1. The average American pays a higher percent of his income in taxes today than he would have in the late 18th century. a. True b. False ANSWER: True DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.095 – Examine the […]

Subjective Short Answer 1. When a good does not have a __________ attached to it, private markets fail to ensure that the good is produced and consumed in the proper amounts. ANSWER: price DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.100 – Examine […]

1. Markets do not ensure that the air we breathe is clean because a. clean air has no value. b. the government prevents markets from doing so. c. property rights are not well established for clean air. d. clean air […]

d. improved valuation of a common resource ANSWER: b DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.191 – Given a scenario describing an externality, identify the appropriate public policy to internalize that externality. TOPICS: Public economics Pigouvian taxes KEYWORDS: BLOOM’S: Comprehension CUSTOM ID: […]

1. It would always be a mistake to view a. many species of animals as common resources. b. a road as a public good. c. national defense as a common resource. d. a fireworks display as a public good. ANSWER: […]

CUSTOM ID: 102.11.2 – MC – MANK08 103. Suppose that the Town of Mapledale is considering hiring an additional firefighter. The expected benefit is estimated to be worth $5 for each of Mapledale’s 15,000 residents. What should the city do? […]

cost of building the park equally. If the residents vote to determine the size of park to build, basing their decision solely on their own willingness to pay (and trying to maximize their own surplus), what is the largest park […]

1. Because public goods are a. excludable, people have an incentive to be free riders. b. excludable, people do not have an incentive to be free riders. c. not excludable, people have an incentive to be free riders. d. not […]

Public goods KEYWORDS: BLOOM’S: Application CUSTOM ID: 047.11.1 – MC – MANK08 48. A congested side street in your neighborhood is a. excludable and rival in consumption. b. excludable and not rival in consumption. c. not excludable and rival in […]

1. A city street is a. always a public good, whether or not it is congested. b. a public good when it is congested, but it is a common resource when it is not congested. c. a common resource when […]

1. For private goods allocated in markets, a. prices guide the decisions of buyers and sellers and these decisions lead to an efficient allocation of resources. b. prices guide the decisions of buyers and sellers and these decisions lead to […]

True / False 1. When goods are available free of charge, the market forces that normally allocate resources in our economy are absent. a. True b. False ANSWER: True DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.100 – Examine the implications of excludability […]

Subjective Short Answer 1. Does research into new technologies create a positive externality or does it create a negative externality? ANSWER: Research into new technologies creates a positive externality. DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.022 – Classify an externality as either […]

1. In markets, the invisible hand allocates resources efficiently a. in all cases. b. when the buyers and sellers are the only interested parties. c. when there are positive externalities, but not when there are negative externalities. d. when there […]

and Jane bears a cost of Dick’s ownership of the dog. Assuming Jane has the legal right to peace and quiet, which of the following statements is correct? a. If Dick‘s benefit exceeds Jane’s cost, government intervention is necessary. b. […]

1. Externalities can be corrected by each of the following except a. self-interest. b. moral codes and social sanctions. c. charity. d. normal market adjustments. ANSWER: d DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.097 – Examine the effects of an externality on […]

Public economics KEYWORDS: BLOOM’S: Knowledge CUSTOM ID: 092.10.2 – MC – MANK08 93. 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. ANSWER: […]

because a. it is hard to estimate the market demand curve and thus charge the “right” corrective tax. b. selling pollution permits create a net increase in pollution. c. Corrective taxes distort incentives. d. Corrective taxes provide greater flexibility to […]

Figure 10-13. On the graph, Q represents the quantity of plastics and P represents the price of plastics. 1. Refer to Figure 10–13. Each unit of plastics that is produced results in an external a. cost of $6. b. cost […]

Positive externalities KEYWORDS: BLOOM’S: Application CUSTOM ID: 164.10.1 – MC – MANK08 165. Refer to Figure 10-11. Taking only private value and private cost into account, total surplus at the market equilibrium amounts to a. $3,850. b. $4,320. c. $4,980. […]

a. reduce pollution by requiring factories to reduce their pollution by a certain number of tons per year. b. reduce pollution by levying a tax on factories of a certain number of dollars for every ton of pollution that the […]

decrease the price of the good produced. d. Internalizing a negative externality will cause an industry to increase the quantity it supplies to the market and increase the price of the good produced. ANSWER: b DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.097 […]

1. If an externality is present in a market, economic efficiency may be enhanced by a. increased competition. b. weakening property rights. c. better informed market participants. d. government intervention. ANSWER: d DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.097 – Examine the […]

1. In a market economy, government intervention a. will always improve market outcomes. b. reduces efficiency in the presence of externalities. c. may improve market outcomes in the presence of externalities. d. is necessary to control individual greed. ANSWER: c […]

True / False 1. Markets sometimes fail to allocate resources efficiently. a. True b. False ANSWER: True DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.097 – Examine the effects of an externality on a market. TOPICS: Externalities Public economics KEYWORDS: BLOOM’S: Knowledge CUSTOM […]

Labor supply KEYWORDS: BLOOM’S: Analysis CUSTOM ID: 039.21.4 – MC – MANK08 40. A consumer has preferences over consumption and leisure, both of which are normal goods. When the wage decreases, the consumer chooses to consume less leisure. For this […]

1. We can use the theory of consumer choice to analyze a. why most demand curves slope downward. b. the tradeoff between work and leisure c. how interest rates affect household saving. d. All of the above are correct. ANSWER: […]

1. An important factor in the decline of the U.S. textile industry over the past 100 or so years is a. foreign competitors that can produce quality textile goods at low cost. b. lower prices of goods that are substitutes […]

1. In 1776, the American Revolution was sparked by anger over a. the extravagant lifestyle of British royalty. b. the crimes of British soldiers stationed in the American colonies. c. British taxes imposed on the American colonies. d. the failure […]