Archives: Quiz

1) Oligopoly is characterized by a few sellers offering similar products, whereas monopolistic competition is characterized by many sellers offering differentiated products. a.True b.False 2) Table 17-15 This table shows a game played between two players, A and B. The […]

1) As a firm moves along its long-run average cost curve, it is adjusting the size of its factory to the quantity of production. a.True b.False 2) The externality associated with technology spillovers a.cannot be internalized by government. b.is a […]

1) Figure 15-14 If the monopoly operates at an output level less than Q0, then an increase in output toward (but not exceeding) Q0 would a.raise the price and raise total surplus. b.lower the price and raise total surplus. c.raise […]

1) The consumer’s optimum choice is represented by a.MUx/MUy = Px/Py. b.MUx/Px = MUy/Py. c.MRSxy = Px/Py. d.All of the above are correct. 2) Suppose that an MBA degree creates no externality because the benefits of an MBA are internalized […]

1) Which of the following is a characteristic of a natural monopoly? a.Fixed costs are typically a small portion of total costs. b.Average total cost declines over large regions of output. c.The product sold is a natural resource such as […]

1) Soup is an inferior good if the demand a.for soup falls when the price of a substitute for soup rises. b.for soup rises when the price of soup falls. c.curve for soup slopes upward. d.for soup falls when income […]

1) A manufacturer of light bulbs sells its products to retail stores and requires the stores to sell the bulbs to customers for $2 per bulb. This practice is known as tying. a.True b.False 2) Table 17-26 Two prescription drug […]

1) Figure 21-18 Refer to Figure 21-18. Bundle B represents a point where a.MRSxy > Py/Px. b.MRSxy = Px/Py. c.MRSxy < Px/Py. d.MRSxy > Px/Py. 2) Technology spillover is one type of a.negative externality. b.positive externality. c.subsidy. d.producer surplus. Answer: […]

1) “Trade raises the economic wellbeing of a nation in the sense that the gains of the winners exceed the losses of the losers.” This statement is correct for a nation that exports manufactured goods, but it is not correct […]

1) Which of the following policies is the government most inclined to use when faced with a positive externality? a.taxation b.permits c.subsidies d.usage fees 2) Which of the following is a plausible explanation for a firm paying above-equilibrium wages to […]

1) Economists sometimes give conflicting advice because a.graduate students in economics are encouraged to argue with each other. b.economists have different values and scientific judgment. c.economists acting as scientists do not like to agree with economists acting as policy advisers. […]

1) If the supply of a product decreases, then we would expect equilibrium price a.to increase and equilibrium quantity to decrease. b.to decrease and equilibrium quantity to increase. c.and equilibrium quantity to both increase. d.and equilibrium quantity to both decrease. […]

1) The laws governing patents and copyrights a.promote monopolies. b.are intended to serve private interests, not the public’s interest. c.have costs but not benefits. d.eliminate the need for firms to engage in research and development. 2) The difference between a […]

1) Hosne’s Production Possibilities FrontierMerve’s Production Possibilities Frontier If the production possibilities frontier shown for Merve is for 8 hours of work, then how long does it take Merve to make one purse? a.1/2 hour b.2 hours c.4 hours d.8 […]

1) A competitive firm sells its output for $50 per unit. Assume that labor is the only input that varies for the firm. The marginal product of the 10th worker is 10 units of output per day; the marginal product […]

1) Henry can make a bird house in 3 hours and he can make a bird feeder in 1 hour. The opportunity cost to Henry of making a bird house is 1/3 bird feeder. a.True b.False 2) If the demand […]

1) Which of the following statements is correct? a.The efficient provision of private goods is intrinsically more difficult than the efficient provision of public goods. b.The efficient provision of public goods is intrinsically more difficult than the efficient provision of […]

1) Suppose that Elmer’s hourly wage increases, and he decides to work fewer hours. For Elmer, the substitution effect of the wage change is a.only partially offset by the income effect. b.more than offset by the income effect. c.exactly offset […]

1) Table 20-6 Refer to Table 20-6. A person who is concerned that income inequality has worsened between 2011 and 2012 would cite which of the following statistics to support her position? a.The percentage of people earning less than $25,000 […]

1) Assume, for Japan, that the domestic price of automobiles without international trade is lower than the world price of automobiles. This suggests that, in the production of automobiles, a.Japan has a comparative advantage over other countries and Japan will […]

1) Deciding that A causes B when in fact B causes A is a mistake called omitted variable bias. a.True b.False 2) At a price of $1.20, a local coffee shop is willing to supply 100 cinnamon rolls per day. […]

1) Table 13-3 If the firm can sell its output for $1 per unit, what is the profit-maximizing level of output? a.240 units b.230 units c.190 units d.170 units 2) Consider a small town with only three families, the Greene […]

1) Which combination would produce a decrease in equilibrium quantity and an indeterminate change in equilibrium price? a.A b.B c.C d.D 2) Assume that the farmer and the rancher can switch between producing pork and producing tomatoes at a constant […]

1) Assume, for Mexico, that the domestic price of beets without international trade is higher than the world price of beets. This suggests that, in the production of beets, a.Mexico has a comparative advantage over other countries and Mexico will […]

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. Let Q represent the number of boxes of envelopes produced per week. […]

1) About four out of five millionaires in the United States earned their money rather than inherited it. a.True b.False 2) The Social Security tax, and to a large extent, the federal income tax, are labor taxes. a.True b.False Answer: […]

1) The largest budgetary expense for a typical state or local government is a.public order and safety. b.welfare. c.highways. d.education. 2) The imposition of a tariff on imported wine will increase the domestic price of wine, decrease the quantity of […]

1) Two countries can achieve gains from trade even if one country has an absolute advantage in the production of both goods. a.True b.False 2) Television advertisements aired during major sporting events are very expensive. A theory asserting that people […]

1) Figure 10-11 Which of the following statements is correct? a.The private value of the 420th unit of output is $15. b.The social value of the 420th unit of output is $42. c.The external benefit of the 420th unit of […]

1) If the demand for movies increases at the same time as the movie industry adopts labor-saving technology for producing movies, the equilibrium price for movies will increase, but the effect on the equilibrium quantity of movies is ambiguous. a.True […]

1) Figure 18-9 Refer to Figure 18-9. If the price of apples decreases, the equilibrium wage will a.increase, and more apple pickers will be hired. b.decrease, and more apple pickers will be hired. c.increase, and fewer apple pickers will be […]

1) Figure 8-3 The vertical distance between points A and C represents a tax in the market. The amount of the tax on each unit of the good is a.P3 – P1. b.P3 – P2. c.P2 – P1. d.P4 – […]

1) Which of the following statements is not correct? a.Critics of advertising argue that firms advertise to manipulate consumers’ tastes. b.Defenders of advertising argue that advertising provides valuable product information to consumers. c.An industry with many brand name products will […]

1) In the employer-worker relationship, the employer is regarded as the “principal” and the worker is regarded as the “agent.” a.True b.False 2) When a relevant variable that is not named on either axis changes, a.there will be a movement […]

1) The U.S. federal government collects taxes in a number of ways. Rank the following sources of revenue from the largest to the smallest. a.corporate income taxes, individual income taxes, social insurance taxes b.social insurance taxes, individual income taxes, corporate […]

1) Which of the following statements is correct regarding a tax on a good and the resulting deadweight loss? a.The greater are the price elasticities of supply and demand, the greater is the deadweight loss. b.The greater is the price […]

1) Suppose that Australia imposes a tariff on imported beef. If the increase in producer surplus is $100 million, the increase in tariff revenue is $200 million, and the reduction in consumer surplus is $500 million, the deadweight loss of […]

1) One method used to control the ability of firms to capture monopoly profit in the United States is through a.government purchase of products produced by monopolists. b.government distribution of a monopolist’s excess production. c.enforcement of antitrust laws. d.regulation of […]

1) Energy drinks and granola bars are normal goods. When the price of energy drinks decreases, the income effect causes a a.shift to a lower indifference curve, and the consumer buys fewer granola bars. b.shift to a higher indifference curve, […]

1) Economists and accountants both include forgone income as a cost to a small business owner. a.True b.False 2) To achieve the optimal provision of public goods, the a.market should be allowed to arrive at an equilibrium without government intervention. […]

1) If people can be prevented from using a certain good, then that good is called a.rival in consumption. b.excludable. c.a common resource. d.a public good. 2) An example of an information asymmetry is when a worker knows more than […]

1) Which of the following is an example of an implicit cost? (i) the owner of a firm forgoing an opportunity to earn a large salary working for a Wall Street brokerage firm (ii) interest paid on the firm’s debt […]

1) Figure 16-9 The figure is drawn for a monopolistically-competitive firm. The quantity of output at which the MC and ATC curves cross is the a.efficient scale of the firm. b.short-run equilibrium quantity of output for the firm. c.long-run equilibrium […]

1) In the circular-flow diagram, firms produce a.goods and services using factors of production. b.output using inputs. c.factors of production using goods and services. d.Both (a) and (b) are correct. 2) Table 16-4 This table shows the demand schedule, marginal […]

1) Consumer surplus is equal to the a.Value to buyers – Amount paid by buyers. b.Amount paid by buyers – Costs of sellers. c.Value to buyers – Costs of sellers. d.Value to buyers – Willingness to pay of buyers. 2) […]

1) Figure 7-16 Suppose the price of the good is $450. Then, on the first unit of the good that is sold, producer surplus is a.$250, and on the second unit of the good that is sold, producer surplus is […]

1) Which of the following is not generally regarded by economists as a legitimate reason for the government to intervene in a market? a.to promote efficiency b.to promote equality c.to enforce property rights d.to protect an industry from foreign competition […]

1) Table 12-10 If Willie has $170,000 in taxable income, his tax liability will be a. $16,781. b. $41,309. c. $41,827. d. $47,600. 2) Studies that compare the wages of more risky and less risky occupations estimate the value of […]

1) The Occupational Safety and Health Administration (OSHA) has determined that the probability of a worker dying from exposure to a hazardous chemical used in the production of fertilizer is 0.008. The cost of imposing a regulation that would ban […]

1) What happens to the price and quantity sold of a drug when its patent runs out? (i)The price will fall. (ii)The quantity sold will fall. (iii)The marginal cost of producing the drug will rise. a.(i) only b.(i) and (ii) […]