Archives: Quiz

1) According to utilitarians, the ultimate objective of public actions should be to a.ensure the poor can afford an adequate diet. b.distribute income uniformly. c.maximize the sum of individual utility. d.prevent all people from experiencing diminishing marginal utility. 2) Who […]

1) Refer to Figure 7-23. Figure 7-23 The equilibrium price is a.P1. b.P2. c.P3. d.P4. 2) In the simple circular flow diagram, the flow of money from the firms to the markets for factors of production is called a.spending. b.revenue. […]

1) Kari downloads 7 songs per month when the price is $1.29 per song and 10 songs per month when the price is $0.99 per song. Kari’s behavior demonstrates the law of a.price. b.supply. c.demand. d.income. 2) Suppose that a […]

1) “The government should punish crimes and enforce voluntary agreements but not redistribute income.” This statement is most closely associated with which political philosophy? a.liberalism b.utilitarianism c.libertarianism d.welfarism 2) Scenario 13-8 Wanda owns a lemonade stand. She produces lemonade using […]

1) A competitive firm‘s short-run supply curve is part of which of the following curves? a.marginal revenue b.average variable cost c.average total cost d.marginal cost 2) Suppose that policymakers are doing cost-benefit analysis on a proposal to add traffic barriers […]

1) Figure 9-6 The figure illustrates the market for roses in a country. The imposition of a tariff on roses a.increases the number of roses imported by 100. b.increases the number of roses imported by 200. c.decreases the number of […]

1) Suppose that an industrial accident at a factory destroys a significant number of high-speed blenders that bartenders use to mix frozen drinks. What will happen in the labor market for bartenders? a.Both wages and employment will increase. b.Both wages […]

1) If the for a good is 6, then a 3 percent decrease in price results in a.a 20 percent increase in the quantity demanded. b.an 18 percent increase in the quantity demanded. c.a 2 percent increase in the quantity […]

1) Table 12-11 If Bud has taxable income of $78,000, his marginal tax rate is a. 19.3%. b. 24.0%. c. 26.8%. d. 34.0%. 2) Scenario 22-3 At issue in a particular city vote is how much to spend, per person, […]

1) If Shawn can produce donuts at a lower opportunity cost than Sue, then a.Shawn has a comparative advantage in the production of donuts. b.Sue has a comparative advantage in the production of donuts. c.Shawn should not produce donuts. d.Shawn […]

1) Currently you purchase ten frozen pizza per month. You will graduate from college in December, and you will start a new job in January. You have no plans to purchase frozen pizzas in January. For you, frozen pizzas are […]

1) Figure 8-10 Suppose the government imposes a tax that reduces the quantity sold in the market after the tax to Q2. Without the tax, the consumer surplus is a.(P0-P2) x Q2. b. 1/2 x (P0-P2) x Q2. c. (P0-P5) […]

1) Which of the following programs is not included in the federal income security spending? a.Social Security b.welfare c.education d.unemployment compensation 2) Perry’s Production Possibilities FrontierJordan’s Production Possibilities Frontier a.Dave’s job is less dangerous. b.of efficiency wages. c.of education as […]

1) Which of the following industries is least likely to exhibit the characteristic of free entry? a.ethnic restaurants b.municipal water and sewer c.corn farming d.grocery stores 2) If the price of walnuts rises, many people would switch from consuming walnuts […]

1) Table 15-1 Assume this monopolist’s marginal cost is constant at $12. What quantity of output (Q) will it produce and what price (P) will it charge? a. Q = 4, P = $29 b. Q = 4, P = […]

1) Which of the following is not an example of signaling? a.screening b.advertising c.getting an education d.gift giving 2) Table 7-3 The only four consumers in a market have the following willingness to pay for a good: If the price […]

1) The average tax rate measures the a.fraction of spending paid in taxes. b.fraction of income paid in taxes. c.incremental rate of tax on income. d.average deadweight loss from all taxes. 2) Table 22-5 The citizens of Anytown will decide […]

1) The U.S. income tax a.discourages saving. b.encourages saving. c.has no effect on saving. d.will reduce the administrative burden of taxation. 2) In 2009, the lowest quintile of income earners paid about a.1 percent of income as taxes and paid […]

1) If the price of natural gas rises, when is the likely to be the highest? a.immediately after the price increase b.one month after the price increase c.three months after the price increase d.one year after the price increase 2) […]

1) Which of the following is not an example of the principle that trade can make everyone better off? a.Americans buy tube socks from China. b.Residents of Maine drink orange juice from Florida. c.A homeowner hires the kid next door […]

1) Research into new technologies conveys neither negative externalities nor positive externalities. a.True b.False 2) 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 consumption. […]

1) We must be knowledgeable of how people behave in strategic situations if we are to understand a.perfectly competitive markets. b.monopolistically competitive markets. c.oligopolistic markets. d.All of the above are correct. 2) Trade can make everybody better off because it […]

1) Table 10-3 Taking into account private and external costs, the maximum total surplus that can be achieved in this market is a.$18. b.$38. c.$46. d.$55. 2) A yard sale is an example of a market. a.True b.False Answer: True […]

1) Figure 14-14 Assume that the market starts in equilibrium at point W in panel (b) and that panel (a) illustrates the cost curves facing individual firms. Suppose that demand increases from D0 to D1. Which of the following statements […]

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 it is congested, […]

1) For a competitive, profit-maximizing firm, the labor demand curve is the same as the a.marginal cost curve. b.value of marginal product curve. c.production function. d.profit function. 2) Barb and Jim run a business that sets up and tests computers. […]

1) Using the midpoint method, what is the price elasticity of supply between points C and D? a. 0.21 b.0.29 c.0.73 d.1.36 2) Gwen has decided to start her own photography studio. To purchase the necessary equipment, Gwen withdrew $2,000 […]

1) If the current allocation of resources in the market for hammers is inefficient, then it must be the case that a.producer surplus exceeds consumer surplus in the market for hammers. b.consumer surplus exceeds producer surplus in the market for […]

1) An example of a firm with market power is a a.delicatessen in New York. b.cable TV provider in Tulsa. c.clothing store in Chicago. d.family farm in Kansas. 2) Figure 9-9 Total surplus in this market before trade is a.A […]

1) To fully understand how taxes affect economic well-being, we must a.assume that economic well-being is not affected if all tax revenue is spent on goods and services for the people who are being taxed. b.compare the taxes raised in […]

1) Which of the following movements would illustrate the effect in the market for chocolate chip cookies of an improved high-speed mixer that allows bakers to produce cookies in less time? a.Point A to Point B b.Point C to Point […]

1) A firm operating in a perfectly competitive industry will continue to operate if it earns zero economic profits because it is likely to be earning positive accounting profits. a.True b.False 2) The following table contains some production possibilities for […]

1) Consider a good for which the number of people who benefit from the good is large and the exclusion of any one those people is impossible. In this case, the market for this good will likely a.be provided by […]

1) In a game, a dominant strategy is a.the best strategy for a player to follow only if other players are cooperative. b.the best strategy for a player to follow, regardless of the strategies followed by other players. c.a strategy […]

1) If a firm experiences constant returns to scale at all output levels, then its long-run average total cost curve would a.slope downward. b.be horizontal. c.slope upward. d.slope downward for low output levels and upward for high output levels. 2) […]

1) If marginal cost exceeds marginal revenue, the firm a.is most likely to be at a profit-maximizing level of output. b.should increase the level of production to maximize its profit. c.should reduce its average fixed cost in order to lower […]

1) A movement along a supply curve is called a change in supply while a shift of the supply curve is called a change in quantity supplied. a.True b.False 2) Answer the following questions based on the table. A consumer […]

1) Which of the following statements is correct? a.The more similar Firm A’s product is to Firm B’s product, the more likely Firm A is to advertise. b.Monopolistically competitive firms advertise in order to increase the elasticity of the demand […]

1) Suppose planting flowering shrubs creates a positive externality equal to $7 per shrub. Further suppose that the local government offers a $7 per-shrub subsidy to planters. The number of shrubs that are planted is then a.less than the socially […]

1) Which of the following is not an explanation for why better educated workers earn more, on average, than less educated workers? a.The higher wages may be a compensating differential for the cost of acquiring the education. b.Workers with a […]

1) An increase in price causes an increase in total revenue when demand is a.elastic. b.inelastic. c.unit elastic. d.All of the above are possible. 2) The distribution of income for Dismal is as follows: If the poverty rate in Dismal […]

1) Figure 10-10 Taking into account private and external costs, the maximum total surplus that can be achieved in this market is a. $760. b. $1,080. c. $1,440. d. $1,920. 2) Demand is inelastic if the is greater than 1. […]

1) Panel (a) Panel (b) The graphs show the demand for cigarettes. In Panel (a), the arrows are consistent with which of the following events? a.The price of marijuana, a complement to cigarettes, increased. b.Mandatory health warnings were placed on […]

1) Figure 21-8 Refer to Figure 21-8. If the price of good X is $3, and your budget constraint is BC, what is the price of good Y? a. $3.33 b. $5 c. $15 d. $30 2) Table 12-20 The […]

1) Table 18-7 Refer to Table 18-7. What is the value of the cell labeled II? a.-$100 b.$100 c.$200 d.$300 2) College-age athletes who drop out of college to play professional sports a.are not rational decision makers. b.are well aware […]

1) In general, less productive workers are paid less than more productive workers. a.True b.False 2) Using the midpoint method, what is the price elasticity of supply between $100 and $220? a. 0.58 b.0.67 c.1.00 d.1.73 Answer: a Price Elasticity […]

1) The government enforces property rights by a.requiring property owners to pay property taxes. b.providing police and courts. c.forcing people to own property. d.providing public parks and recreation facilities. 2) Using the midpoint method, between prices of $50 and $60, […]

1) A tit-for-tat strategy, in a repeated game, is one in which a player starts by cooperating and then does whatever the other player did last time. a.True b.False 2) A production function is a relationship between inputs and a.quantity […]

1) Assume that the farmer and the rancher can switch between producing pork and producing tomatoes at a constant rate. The opportunity cost of 1 pound of tomatoes for the farmer is a.1/2 pound of pork. b.2 hours of labor. […]

1) Which of the following is an example of government intervention to solve a Tragedy of the Commons problem? a.subsidizing basic research b.building lighthouses c.toll charges on congested roads d.cost-benefit analysis 2) Table 17-20 Nadia and Maddie are two college […]