Archives: Quiz

1) The opportunity cost of moving from point B to point D is 15 doghouses. a.True b.False 2) A monopoly creates a deadweight loss to society because it produces less output than the socially efficient level. a.True b.False Answer: True […]

1) The essence of an oligopolistic market is that there are only a few sellers. a.True b.False 2) Inefficiency exists in an economy when a good is a.not being consumed by buyers who value it most highly. b.not distributed fairly […]

1) The value of the marginal product of labor can be calculated as the price of the final good minus the marginal product of labor. a.True b.False 2) The market for ice cream is a a.monopolistic market. b.highly competitive market. […]

1) Pollution is a negative externality, but it is not appropriate to view the problem of pollution as a common-resource problem. a.True b.False 2) Table 15-17 A monopolist faces the following demand curve: Which of the following statements best describes […]

1) Suppose that a worker in Cornland can grow either 40 bushels of corn or 10 bushels of oats per year, and a worker in Oatland can grow either 5 bushels of corn or 50 bushels of oats per year. […]

1) A pair of jeans is rival but non-excludable. a.True b.False 2) Connie can clean windows in large office buildings at a cost of $1 per window. The market price for window- cleaning services is $3 per window. If Connie […]

1) Which of the following is a determinant of the market supply curve but not a determinant of an individual seller’s supply? a.production technology b.expectations c.input prices d.the number of sellers 2) Suppose the cost of operating a 100 room […]

1) Karen, Tara, and Chelsea each buy ice cream and paperback novels to enjoy on hot summer days. Ice cream costs $5 per gallon, and paperback novels cost $8 each. Karen has a budget of $80, Tara has a budget […]

1) In which of the following market structures is(are) there a large number of sellers? (i)monopolistic competition (ii)perfect competition (iii)oligopoly a.(i) and (ii) only b.(ii) and (iii) only c.(ii) only d.(i), (ii), and (iii) 2) An increase in demand will […]

1) Scenario 13-10 Jessica makes photo frames. She spends $5 on the materials for each photo frame. She can create one photo frame in an hour. She earns $10 per hour at a part-time job at the local coffee shop. […]

1) Which of the following events always would increase the size of the deadweight loss that arises from the tax on gasoline? a.The demand for gasoline becomes more inelastic. b.The slope of the supply curve for gasoline becomes steeper. c.The […]

1) Which of the following is true of markets characterized by positive externalities? a.Social value exceeds private value, and market quantity exceeds the socially optimal quantity. b.Social value is less than private value, and market quantity exceeds the socially optimal […]

1) A monopolistically competitive firm’s choice of output level is virtually identical to the choice made by a.a perfectly competitive firm. b.a duopolist. c.a monopolist. d.an oligopolist. 2) Table 2-5 shows one set of production possibilities. Which of the following […]

1) Store clerks are known to have low wages. This is likely to reflect the fact that a.store clerk jobs are perceived to be relatively easy, thus attracting low-skill workers. b.store clerk jobs are perceived to be relatively difficult, thus […]

1) Anthony and Addie are playing the ultimatum game, starting with $100. The coin flip results in Anthony being the one to propose a division of the $100. Anthony proposes that he gets $99 and Addie gets $1. Which of […]

1) Table 13-1 What is total output when 3 workers are hired? a.15 b.60 c.105 d.135 2) Table 18-12 The table displays data for a small, competitive, profit-maximizing firm that produces and sells envelopes. The time frame is one week. […]

1) Figure 18-7 Refer to Figure 18-7. Which of the following would shift the labor supply curve from S1 to S2? a.a change in workers’ attitudes toward the work-leisure tradeoff b.decreases in wages in other labor markets c.immigration of workers […]

1) Perry’s Production Possibilities FrontierJordan’s Production Possibilities Frontier revenue will be equal to zero at a. Q = 10. b. Q = 15. c. Q = 20. d. Q = 30. 7) Assume that Falda and Varick can switch between […]

1) Scenario 13-14 If Farmer Brown plants no seeds on his farm, he gets no harvest. If he plants 1 bag of seeds, he gets 5 bushels of wheat. If he plants 2 bags, he gets 9 bushels. If he […]

1) Assume the market for handkerchiefs is competitive. A decrease in the market price of handkerchiefs a.decreases the demand for workers who make handkerchiefs and decreases their equilibrium wage. b.decreases the demand for workers who make handkerchiefs and increases their […]

1) Figure 10-11 The graph represents a market in which a.there is no externality. b.there is a positive externality. c.there is a negative externality. d.The answer cannot be determined from inspection of the graph. 2) Assume that Zimbabwe and Portugal […]

1) DeShawn has spent $600 purchasing and repairing an old fishing boat, which he expects to sell for $900 once the repairs are complete. DeShawn discovers that, in addition to the $600 he has already spent, he needs to make […]

1) When a tax is justified on the basis that the taxpayers who pay the tax receive specific government services from payment of the tax, the tax a.is considered horizontally equitable. b.burden is minimized. c.satisfies the benefits principle. d.is considered […]

1) Suppose a firm in each of the two markets listed below were to increase its price by 25 percent. In which pair would the firm in the first market listed experience a dramatic decline in sales, but the firm […]

1) When a country allows trade and becomes an importer of a good, a.domestic producers become better off, and domestic consumers become worse off. b.domestic producers become worse off, and domestic consumers become better off. c.domestic consumers become better off, […]

1) A normative economic statement such as The minimum wage should be abolished a.would likely be made by an economist acting as a scientist. b.would require values and data to be evaluated. c.would require data but not values to be […]

1) Of the following countries, which country’s government collects the largest amount of tax revenue as a percentage of that country’s total income? a.Denmark b.United States c.Canada d.Greece 2) Table 12-7 The following table shows the marginal tax rates for […]

1) In the prisoners’ dilemma game, one prisoner is always better off confessing, no matter what the other prisoner does. a.True b.False 2) Bill is restoring a car and has already spent $4,000 on the restoration. He expects to be […]

1) The nation of Cranolia used to prohibit international trade, but now trade is allowed, and Cranolia is exporting furniture. Relative to the previous no-trade situation, buyers of furniture in Cranolia are now better off. a.True b.False 2) A new […]

1) Table 18-12 The table displays data for a small, competitive, profit-maximizing firm that produces and sells envelopes. The time frame is one week. Refer to Table 18-12. Suppose the firm sells each box of envelopes that it produces for […]

1) The theory of efficiency wages suggests that firms may pay above-equilibrium wages a.to reduce employee turnover. b.to prevent unions from recruiting members. c.to reduce the need for minimum wage laws. d.to increase the demand for better-skilled workers. 2) The […]

1) What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts went up, the price of jelly fell, fewer firms decided to produce peanut butter, and health officials announced that eating peanut butter […]

1) Table 17-24 Two firms are considering going out of business and selling their assets. Each considers what happens if the other goes out of business. The payoff matrix below shows the net gain or loss to each firm. Refer […]

1) Figure 13-2 As the number of workers increases, a.total output increases but at a decreasing rate. b.marginal product increases but at a decreasing rate. c.marginal product increases at an increasing rate. d.total output decreases. 2) Along which of these […]

1) The decisions of buyers and sellers that affect people who are not participants in the market create a.market power. b.externalities. c.profiteering. d.market equilibrium. 2) A local manufacturing plant that emitted sulfur dioxide was forced to stop production because it […]

1) For a monopolist, when the output effect is greater than the price effect, marginal revenue is a.positive. b.negative. c.zero. d.maximized. 2) The table below shows the marginal tax rates for an unmarried taxpayer for various levels of taxable income. […]

1) Goods with close substitutes tend to have more elastic demands than do goods without close substitutes. a.True b.False 2) Economists say that a market where goods are not consumed by those valuing the goods most highly is a.laissez-faire.. b.unequal. […]

1) Demand for a good is said to be inelastic if the quantity demanded increases substantially when the price falls by a small amount. a.True b.False 2) Which of the following statements accurately explains the superstar phenomenon in wages? a.Better […]

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

1) When two variables have a negative correlation, a.when the x-variable decreases, the y-variable decreases. b.when the x-variable decreases, the y-variable increases. c.when the x-variable increases, the y-variable increases. d.More than one of the above is correct. 2) A monopolist […]

1) When it comes to people’s tastes, economists generally believe that a.tastes are based on forces that are well within the realm of economics. b.tastes are based on historical and psychological forces that are beyond the realm of economics. c.tastes […]

1) Assume, for the good in question, two specific points on the demand curve are (Q = 2,000, P= $15) and (Q = 2,400, P = $12). Then which of the following scenarios is possible? a.Both of these points lie […]

1) Which of the following is a characteristic of a monopoly? a.low fixed costs as a portion of total costs b.free entry and exit c.barriers to entry d.declining marginal cost 2) Table 17-14 This table shows a game played between […]

1) Adibok knows that it produces and sells high quality athletic shoes. Wurkout knows that it produces and sells low quality athletic shoes. According to the signaling theory of advertising, a.both Adibok and Wurkout have incentives to spend large amounts […]

1) State and local governments generate revenue from all of the following sources except a.sales taxes. b.the federal government. c.corporate income taxes. d.customs duties. 2) Suppose a tax of $4 per unit is imposed on a good, and the tax […]

1) The classic example of adverse selection is the a.market for used cars. b.market for new cars. c.relationship between shareholders and managers. d.relationship between a coach and an athlete. 2) Figure 10-1 This graph represents the tobacco industry. The socially […]

1) The local bakery makes such great cinnamon rolls that consumers do not respond much at all to a change in the price. If the owner is only interested in increasing revenue, she should a.lower the price of the cinnamon […]

1) Assume that Zimbabwe and Portugal can switch between producing toothbrushes and producing hairbrushes at a constant rate. Which of the following combinations of toothbrushes and hairbrushes could Portugal produce in 30 minutes? a.1 toothbrush and 4 hairbrushes b.4 toothbrushes […]

1) When the value of a human life is calculated according to the economic contribution a person makes to society (as reflected in her income-earning potential), the troubling implication is that a.it is possible for a retired or disabled person […]

1) Suppose there is an increase in supply that reduces market price. Consumer surplus increases because (1) consumer surplus received by existing buyers increases and (2) new buyers enter the market. a.True b.False 2) Duties of the Council of Economic […]