Archives: Quiz

1) An efficient tax system is one that imposes small deadweight losses and small administrative burdens. a.True b.False 2) Suppose that when the price of ginger ale is $2 per bottle, firms can sell 4 million bottles. When the price […]

1) Which of the following would shift a market labor supply curve to the left? a.a decrease in the price of output b.an increase in the price of output c.a labor-augmenting technological change d.better employment opportunities in a closely-related job […]

1) The relationship between advertising and product differentiation is a.positive; the more differentiated the product, the more a firm is likely to spend on advertising. b.negative; the more differentiated the product, the less a firm is likely to spend on […]

1) The outer loop of the circular-flow diagram represents the flows of dollars in the economy. Which of the following does not appear on the outer loop? a.wages b.income c.capital d.rent 2) Discrimination is usually not a profit-maximizing strategy. a.True […]

1) Suppose the between peanut butter and jelly is -2.50. This implies that a 20 percent increase in the price of peanut butter will cause the quantity of jelly purchased to a.fall by 8 percent. b.fall by 50 percent. c.rise […]

1) A family’s income tax liability is a.a standard percentage of all income earned. b.determined by wage income rather than dividend and interest income. c.based on total income. d.constant from year to year. 2) When total revenue is less than […]

1) The invisible hand ensures that economic prosperity is distributed equally. a.True b.False 2) Assume that Bart’s Batteries has entered into a resale price maintenance agreement with Radio Shanty but not with Prime Purchase. In this case, a.the wholesale price […]

1) Figure 9-9 Total surplus in this market after trade is a.A + B. b.A + B + C. c.A + B + C + D. d.B + C + D. 2) Which of the following statements is true for […]

1) Figure 18-9 Refer to Figure 18-9. If the apple pickers start working fewer hours because they are taking more vacation time, the equilibrium wage will a.fall below w1 due to a shift in demand. b.fall below w1 due to […]

1) The value of the for a good will be relatively large when a.there are no good substitutes available for the good. b.the time period in question is relatively short. c.the good is a luxury rather than a necessity. d.All […]

1) Which of the following is not an example of a compensating differential? Job A pays more than Job B because Job A requires a.more international travel to dangerous locations. b.two night shifts per month. c.careful handling of toxic chemicals. […]

1) Figure 16-13 What is the first step in this industry’s adjustment to long run equilibrium? 2) Table 18-10 Refer to Table 18-10. This table describes the number of baseballs a manufacturer can produce per day with different quantities of […]

1) Table 17-27 Each year the United States considers renewal of Most Favored Nation (MFN) trading status with Farland (a mythical nation). Historically, legislators have made threats of not renewing MFN status because of human rights abuses in Farland. The […]

1) Boxes C and D of this circular-flow diagram represent a.households and government. b.firms and government. c.the markets for goods and services and the markets for financial assets. d.the markets for goods and services and the markets for factors of […]

1) Carolyn’s Pottery Shop produces vases that sell for $15 each. Assume that labor is the only input that varies for the firm. If Carolyn hires 10 workers, she can produce and sell 500 vases per week. If she hires […]

1) Figure 8-4 The vertical distance between points A and B represents a tax in the market. The equilibrium price before the tax is imposed is a.$12, and the equilibrium quantity is 35. b.$8, and the equilibrium quantity is 50. […]

1) Economists at the U.S. Department of Justice help enforce the nation’s antitrust laws. a.True b.False 2) Figure 14-14 Suppose a firm in a competitive market, like the one depicted in panel (a), observes market price rising from P1 to […]

1) A good that is excludable but not rival is known as a club good. a.True b.False 2) Which of the following theories explains why increased education translates into higher wages? a.human-capital theory b.the theory of compensating differentials c.the theory […]

1) Wages of doctors tend to be higher than wages of bankers. Which of the following is a compensating differential explaining the difference in wages? a.Doctors have the stress of being responsible for other peoples’ lives while bankers do not. […]

1) When a firm decides to retain its earnings instead of paying dividends, the stockholders necessarily suffer. a.True b.False 2) When the marginal product of an input declines as the quantity of that input increases, the production function exhibits a.increasing […]

1) In conducting their research, economists face an obstacle that not all scientists face; specifically, in economics, it is often impractical to a.make use of theory and observation. b.rely upon the scientific method. c.conduct laboratory experiments. d.find articles or books […]

1) Which of the following statements is true of the tax on gasoline? a.The cost of collecting a gasoline tax outweighs the revenues raised by the tax. b.It is preferred to tolls as the best solution to road congestion. c.It […]

1) One reason why better-looking workers may have higher earnings is that physical attractiveness may enhance a worker’s productivity for certain jobs, especially for those workers who deal with the public. a.True b.False 2) Refer to Figure 9-17. Relative to […]

1) The mainstream view among economists is that a.society faces a tradeoff between unemployment and inflation, but only in the short run. b.society faces a tradeoff between unemployment and inflation, but only in the long run. c.society faces a tradeoff […]

1) Which of the following events must cause equilibrium price to fall? a.demand increases and supply decreases b.demand and supply both decrease c.demand decreases and supply increases d.demand and supply both increase 2) Table 14-2 The table represents a demand […]

1) Which of the following events must result in a higher price in the market for cigars? a.Demand for cigars increases, and supply of cigars decreases. b.Demand for cigars and supply of cigars both decrease. c.Demand for cigars decreases, and […]

1) Which of the following is an example of a factor of production? a.rent b.interest c.land d.Social Security payments 2) Which market structure would likely have the highest concentration ratio? a.Monopoly b.Oligopoly c.Monopolistic competition d.Perfect competition Answer: a 3) In […]

1) Table 18-5 Refer to Table 18-5. The price of output is a.$1 b.$2. c.$3. d.$4. 2) Table 15-13 The following table gives information on the price, quantity, and total cost of production for a monopolist. How much profit will […]

1) Predatory pricing refers to a.a firm selling certain products together rather than separately. b.a monopoly firm reducing its price in an attempt to maintain its monopoly. c.firms colluding to set prices. d.All of the above are examples of predatory […]

1) Which of the following statements is not correct? a.The percentage of the population that suffers from long-term poverty is far smaller than the percentage of the population that suffers from short-term poverty because there is a high level of […]

1) The Coase theorem asserts that the private market will always solve the problem of externalities and allocate resources efficiently a.even if private parties experience substantial costs of bargaining. b.even if the initial distribution of legal rights is skewed in […]

1) Economists try to address their subject with a scientist’s objectivity. a.True b.False 2) If a consumer experiences a decrease in income, the new budget constraint will have the same slope as the old budget constraint. a.True b.False Answer: True […]

1) John is an athlete. He has $120 to spend and wants to buy either a heart rate monitor or new running shoes. Both the heart rate monitor and running shoes cost $120, so he can only buy one. This […]

1) At which point is this economy producing its maximum possible quantity of doors? a.R b.S c.T d.U 2) Figure 21-2 The downwardsloping line on the figure represents a consumer’s budget constraint. Refer to Figure 21-2. Which of the following […]

1) If a market is allowed to move freely to its equilibrium price and quantity, then an increase in supply will a.increase consumer surplus. b.reduce consumer surplus. c.not affect consumer surplus. d.Any of the above are possible. 2) Table 17-9 […]

1) In the short run, a firm operating in a competitive industry will shut down if price is a.less than average total cost. b.less than average variable cost. c.greater than average variable cost but less than average total cost. d.greater […]

1) Assume that Falda and Varick can switch between producing wheat and producing cloth at a constant rate. Varick has a comparative advantage in the production of a.wheat. b.cloth. c.both goods. d.neither good. 2) You purchase a $30, nonrefundable ticket […]

1) The optimal tax is difficult to determine because although revenues rise and fall as the size of the tax increases, deadweight loss continues to increase. a.True b.False 2) Scenario 17-3. Consider two countries, Kinglandia and Rovinastan, that are engaged […]

1) Economists generally agree that the most important tax in the U.S. economy is the a.investment tax. b.sales tax. c.property tax. d.labor tax. 2) Suppose a profit-maximizing firm in a competitive market produces rubber bands. When the market price for […]

1) The Arrow impossibility theorem shows that a.democracy should be abandoned as a form of government. b.it is impossible to improve upon democratic voting methods as a mechanism for social choice. c.all voting systems are flawed as a mechanism for […]

1) In a perfectly competitive market, the market supply curve is a.the marginal cost curve above average total cost for a representative firm. b.the horizontal sum of all the individual firms‘ supply curves. c.the vertical sum of all the individual […]

1) As the number of concrete workers in the United States falls, the wage paid to the remaining concrete workers will necessarily fall as well. a.True b.False 2) Figure 21-21 Refer to Figure 21-21. Suppose that a consumer is originally […]

1) Frank owns a dog-grooming business. Which of the following costs would be implicit costs? (i)dog shampoo (ii)rent on the storefront (iii)wages Frank could earn as a substitute elementary-school teacher (iv)interest that Frank’s money was earning before he spent his […]

1) The Laffer curve illustrates that a.deadweight loss rises by the square of the increase in a tax. b.deadweight loss rises exponentially as a tax increases. c.tax revenue first rises, then falls as a tax increases. d.Both a) and b) […]

1) When the market price is below the equilibrium price, suppliers are unable to sell all they want to sell. a.True b.False 2) Patent protection is one way to deal with technology spillovers. a.True b.False Answer: True 3) A firm […]

1) If soybean farmers know that the demand for soybeans is inelastic, in order to increase their total revenues they should a.use more fertilizers and weed killers to increase their yields. b.plant additional acres to increase their output. c.reduce the […]

1) When goods do not have a price, which of the following primarily ensures that the good is produced? a.buyers b.sellers c.government d.the market 2) Which arrow represents the flow of land, labor, and capital? a.A b.B c.C d.D Answer: […]

1) A firm operating in a perfectly competitive industry will shut down in the short run if its economic profits fall to zero because it is likely to be earning negative accounting profits. a.True b.False 2) In the simple circular-flow […]

1) For a typical worker, her income will be lower when she is younger, peak around age 50, and decrease drastically when she retires. This pattern of changes in income for a typical worker is called a.the life cycle. b.permanent […]

1) Your professor loves her work, teaching economics. She has been offered other positions in the corporate world that would increase her income by 25 percent, but she has decided to continue working as a professor. Her decision would not […]