Archives: Quiz

1. A decrease in supply will cause the largest increase in price when a. both supply and demand are inelastic. b. both supply and demand are elastic. c. demand is elastic and supply is inelastic. d. demand is inelastic and […]

1. In general, elasticity is a measure of a. the extent to which advances in technology are adopted by producers. b. the extent to which a market is competitive. c. how firms’ profits respond to changes in market prices. d. […]

1. By definition, imports are a. people who work in foreign countries. b. goods in which a country has an absolute advantage. c. limits placed on the quantity of goods leaving a country. d. goods produced abroad and sold domestically. […]

Subjective Short Answer 1. Suppose in the country of Jumanji that the price of coffee with no trade allowed is below the world price of coffee. If Jumanji allows free trade, will Jumanji be an importer or an exporter of […]

1. In 2008, the Los Angeles Times asked members of the American public whether free international trade has helped or hurt the economy. Of those surveyed, a. 57 percent said free international trade helped the economy. b. 26 percent said […]

1. Congressman Smith cites the “jobs argument” when he argues in favor of restrictions on trade; he argues that everything can be produced at lower cost in other countries. The likely flaw in Congressman Smith’s reasoning is that he ignores […]

b. domestic producers of bicycles are worse off, domestic consumers of bicycles are better off, and the economic well-being of the country falls. c. domestic producers of bicycles are better off, domestic consumers of bicycles are worse off, and the […]

trade. TOPICS: International trade Exports KEYWORDS: BLOOM’S: Application CUSTOM ID: 237.09.2 – MC – MANK08 238. If Freedonia changes its laws to allow international trade in software and the world price is higher than its domestic price, then it must […]

177. Refer to Figure 9-16. Government revenue raised by the tariff is represented by the area a. E. b. B + E. c. D + E + F. d. B + D + E + F. ANSWER: a DIFFICULTY: Moderate […]

LEARNING OBJECTIVES: ECON.MANK.152 – Given a domestic supply and demand graph, indicate the change in consumer and producer surplus caused by international trade. TOPICS: International trade KEYWORDS: BLOOM’S: Analysis CUSTOM ID: 117.09.2 – MC – MANK08 118. Refer to Figure […]

DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.276 – Given data on world and domestic prices, determine whether a country will be an importer or exporter of a good if it opens up to international trade. TOPICS: International trade Imports KEYWORDS: BLOOM’S: Application […]

1. When a country that imported a particular good abandons a free-trade policy and adopts a no-trade policy, a. producer surplus increases and total surplus increases in the market for that good. b. producer surplus increases and total surplus decreases […]

1. What is the fundamental basis for trade among nations? a. shortages or surpluses in nations that do not trade b. misguided economic policies c. absolute advantage d. comparative advantage ANSWER: d DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.089 – Evaluate the […]

True / False 1. The history of the textile industry raises important questions for economic policy. a. True b. False ANSWER: False DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.089 – Evaluate the potential gains from trade using comparative and absolute advantage. TOPICS: […]

39. Refer to Figure 8-27. Suppose that Market A is characterized by Demand 1 and Supply 1, and Market B is characterized by Demand 2 and Supply 1. If an identical tax is imposed on each market, the tax will […]

1. When the government imposes taxes on buyers or sellers of a good, society a. loses some of the benefits of market efficiency. b. gains efficiency but loses equality. c. is better off because the government’s tax revenues exceed the […]

ANSWER: c DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.099 – Examine the effects of taxes on market outcomes. TOPICS: Taxes Laffer curve KEYWORDS: BLOOM’S: Knowledge CUSTOM ID: 036.08.3 – MC – MANK08 37. The view held by Arthur Laffer and Ronald Reagan […]

1. A decrease in the size of a tax is most likely to increase tax revenue in a market with a. elastic demand and elastic supply. b. elastic demand and inelastic supply. c. inelastic demand and elastic supply. d. inelastic […]

Taxes KEYWORDS: BLOOM’S: Application CUSTOM ID: 037.08.2 – MC – MANK08 38. Assume the price of gasoline is $2.00 per gallon, and the equilibrium quantity of gasoline is 10 million gallons per day with no tax on gasoline. Starting from […]

1. Suppose a tax is imposed on bananas. In which of the following cases will the tax cause the equilibrium quantity of bananas to shrink by the largest amount? a. The response of buyers to a change in the price […]

a. $20. b. $200. c. $300. d. $500. ANSWER: b DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.231 – Given a supply and demand graph, determine the impact of a tax on the price and quantity in a market. TOPICS: Taxes KEYWORDS: BLOOM’S: […]

c. $10. d. $16. ANSWER: d DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.231 – Given a supply and demand graph, determine the impact of a tax on the price and quantity in a market. TOPICS: Taxes KEYWORDS: BLOOM’S: Application CUSTOM ID: 134.08.1 […]

b. L+M+N+Y+B. c. L+M+Y. d. J. ANSWER: a DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.238 – Given a supply and demand graph, indicate the change in consumer and producer surplus caused by a tax. TOPICS: Welfare economics Producer surplus KEYWORDS: BLOOM’S: Analysis […]

1. When a tax is levied on a good, the buyers and sellers of the good share the burden, a. provided the tax is levied on the sellers. b. provided the tax is levied on the buyers. c. provided a […]

True / False 1. Total surplus is always equal to the sum of consumer surplus and producer surplus. a. True b. False ANSWER: False DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.014 – Assess a market’s efficiency. TOPICS: Welfare economics KEYWORDS: BLOOM’S: Comprehension […]

Subjective Short Answer 1. What do economists call the highest amount a consumer will pay to purchase a good? ANSWER: The (maximum) willingness to pay. DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.014 – Assess a market’s efficiency. TOPICS: Consumer surplus Welfare economics […]

1. Which of the following statements is not correct? a. An invisible hand leads buyers and sellers to an equilibrium that maximizes total surplus. b. Market power can cause markets to be inefficient. c. Externalities can cause markets to be […]

TOPICS: Welfare economics Efficiency KEYWORDS: BLOOM’S: Comprehension CUSTOM ID: 098.07.3 – MC – MANK08 99. The “invisible hand” refers to a. the marketplace guiding the self-interests of market participants into promoting general economic well-being. b. the fact that social planners […]

Rent control KEYWORDS: BLOOM’S: Comprehension CUSTOM ID: 177.06.1 – MC – MANK08 178. One economist has argued that rent control is “the best way to destroy a city, other than bombing.” Why would an economist say this? a. He fears […]

b. False ANSWER: False DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.162 – Given a graph of a production possibilities frontier, determine the opportunity cost for producing each commodity. TOPICS: Production possibilities model Opportunity cost KEYWORDS: BLOOM’S: Comprehension CUSTOM ID: 071.02 – TF […]

True / False 1. Economists try to address their subject with a scientist’s objectivity. a. True b. False ANSWER: True DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.024 – Classify the different functions an economist may serve. TOPICS: Economic thinking KEYWORDS: BLOOM’S: Knowledge […]

DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.012 – Apply basic, economic principles of individual decision making that determine how an economy generally works. TOPICS: Circular flow model Economic thinking KEYWORDS: BLOOM’S: Comprehension CUSTOM ID: 075.02.1 – MC – MANK08 76. In the […]

1. Economists, like mathematicians, physicists, and biologists, a. make use of the scientific method. b. try to address their subject with a scientist’s objectivity. c. devise theories, collect data, and then analyze these data in an attempt to verify or […]

1. John Maynard Keynes referred to economics as an easy subject, a. at which very few excel. b. but not as easy as philosophy or the pure sciences. c. which very few can enjoy. d. which deals primarily with common […]

True / False 1. Scarcity means that there is less of a good or resource available than people wish to have. a. True b. False ANSWER: True DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.012 – Apply basic, economic principles of individual decision […]

Subjective Short Answer 1. Economics is the study of ______ . ANSWER: how society manages its scarce resources. DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.012 – Apply basic, economic principles of individual decision making that determine how an economy generally works. TOPICS: […]

a. the 1970’s and the 1990’s b. the 1970’s but not the 1990’s c. the 1990’s but not the 1970’s d. neither the 1970’s nor the 1990’s ANSWER: b DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.010 – Analyze the relationship between money […]

1. In 2011, the average American earned about $48,000 while the average Nigerian earned about $1,200. Which of the following statements is likely? a. The average American purchases more televisions than the average Nigerian. b. The average American has better […]

ANSWER: c DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.218 – Given a scenario, identify the distribution system being used. TOPICS: Invisible hand principle Economic systems KEYWORDS: BLOOM’S: Knowledge CUSTOM ID: 056.01.2 – MC – MANK08 57. For markets to work well, there […]

1. Which of the following is a principle concerning how people interact? a. Markets are usually a good way to organize economic activity. b. Rational people think at the margin. c. People respond to incentives. d. All of the above […]

LEARNING OBJECTIVES: ECON.MANK.012 – Apply basic, economic principles of individual decision making that determine how an economy generally works. TOPICS: Economic thinking Marginal thinking KEYWORDS: BLOOM’S: Analysis CUSTOM ID: 105.01.1 – MC – MANK08 106. A bagel shop sells fresh […]

LEARNING OBJECTIVES: ECON.MANK.012 – Apply basic, economic principles of individual decision making that determine how an economy generally works. TOPICS: Economic thinking Opportunity cost KEYWORDS: BLOOM’S: Comprehension CUSTOM ID: 064.01.1 – MC – MANK08 65. When calculating the cost of […]

1. The adage, “There is no such thing as a free lunch,” means a. even people on welfare have to pay for food. b. the cost of living is always increasing. c. people face tradeoffs. d. all costs are included […]

1. The English word that comes from the Greek word for “one who manages a household” is a. market. b. consumer. c. producer. d. economy. ANSWER: d DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.012 – Apply basic, economic principles of individual decision […]

c. fall and shift the short-run Phillips curve right. d. fall and shift the short-run Phillips curve left. ANSWER: d DIFFICULTY: Moderate REFERENCES: Shifts in the Phillips Curve: The Role of Supply Shocks LEARNING OBJECTIVES: ECON.MANK.198 – Given a scenario […]

1. An event that directly affects firms’ costs of production and thus the prices they charge is called a. a Phillips contraction. b. an inflationary spiral. c. a demand shock. d. a supply shock. ANSWER: d DIFFICULTY: Easy REFERENCES: Shifts […]

a. the quantity of aggregate goods and services supplied falls, which is shown by a shift of the short-run aggregate supply curve to the left. b. the quantity of aggregate goods and services supplied falls, as shown by a movement […]

1. Which of the following is not a determinant of the long-run level of real GDP? a. the price level. b. the amount of capital used by firms. c. available stock of human capital. d. available technology ANSWER: a DIFFICULTY: […]

1. Which of the following explains why production rises in most years? a. increases in the labor force b. increases in the capital stock c. advances in technological knowledge d. All of the above are correct. ANSWER: d DIFFICULTY: Easy […]

KEYWORDS: BLOOM’S: Comprehension CUSTOM ID: 103.32.1 – MC – MANK08 104. If at a given exchange rate foreign citizens want to buy fewer U.S bonds, then the a. supply of dollars in the market for foreign-currency exchange shifts right. b. […]