Archives: Quiz

1) Education and on-the-job training are sources of human capital. a.True b.False 2) If Ernie’s individual labor supply curve is upward sloping, then Ernie responds to an increase in the a.wage by working more hours per week. b.opportunity cost of […]

1) When a certain nation abandoned a policy of prohibiting international trade in automobiles in favor of a free-tree policy, the result was that the country began to import automobiles. The change in policy improved the well-being of that nation […]

1) Chile’s Production Possibilities Frontier Colombia’s Production Possibilities Frontier Chi le and Colombia would not be able to gain from trade if Colombia’s opportunity cost of one pound of soybeans changed to a.1/2 pound of coffee. b.3/4 pound of coffee. […]

1) With no price discrimination, the monopolist sells every unit at the same price. Therefore a.marginal revenue is equal to price. b.marginal revenue is equal to average revenue. c.price is greater than marginal revenue. d.Both a and b are correct. […]

1) If a country allows free trade and its domestic price for a given good is lower than the world price, then it will import that good. a.True b.False 2) The idea that people in equal conditions should pay equal […]

1) Which of the following problems can not be alleviated by a gasoline tax? a.traffic congestion b.traffic accidents c.the undersupply of goods that produce positive externalities d.air pollution 2) The argument that consumers will not be willing to pay any […]

1) A monopolistically competitive firm has the following cost structure: The firm faces the following demand curve: If the government forces this firm to produce at its efficient scale, it will a.produce 3 units and make $9. b.produce 4 units […]

1) Boxes A and B of this circular-flow diagram represent a.firms and households. b.households and government. c.the markets for goods and services and the markets for financial assets. d.the markets for goods and the markets for services. 2) A reduction […]

1) The purchase price of capital is a.the value of the capital to the firm. b.always less than the rental price. c.the price received from the flow of some capital services. d.the price a person pays to own that factor […]

1) Brazil’s Production Possibilities Frontier The fact that the line slopes downward reflects the fact that a.for Brazil, it is more costly to produce peanuts than it is to produce cashews. b.Brazil will produce more peanuts and fewer cashews as […]

1) Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate. We could use the information in the table to draw a production possibilities frontier for Maya and a second production possibilities frontier […]

1) The “unfaircompetition” argument might be cited by an American who believes that a.almost every country has a comparative advantage, relative to the United States, in producing almost all goods. b.young industries should be protected against foreign competition until they […]

1) You have driven 800 miles on a vacation and then you notice that you are only 15 miles from an attraction you hadn’t known about, but would really like to see. In computing the opportunity cost of visiting this […]

1) According to the Hamermesh and Biddle study, people deemed more attractive than average earn a.30-40 percent more than unattractive people. b.about 5 percent more than average looking people. c.the same as average looking people and 15-20 percent more than […]

1) To maximize its profit, a monopolistically competitive firm a.takes the price as given and chooses its quantity, just as a competitive firm does. b.takes the price as given and chooses its quantity, just as a colluding oligopolist does. c.chooses […]

1) To be successful, a cartel must a.find a way to encourage members to produce more than they would otherwise produce. b.agree on the total level of production for the cartel, but they need not agree on the amount produced […]

1) Figure 7-24 Refer to Figure 7-24. If 6 units of the good are produced and sold, then a.efficiency is achieved in this market. b.the marginal value to buyers equals the marginal cost to sellers. c.the sum of consumer surplus […]

1) Using the midpoint method, the between point X and point Y is a. 0.4 b.1 c.2 d.2.5 2) Economists think that the best way to determine the value of a human life is to a.evaluate the value of a […]

1) As a result of a fire, a small business owner loses some of her computers and other equipment. If the property of diminishing returns applies to all factors of production, she should expect to see a.an increase in the […]

1) Majority rule will produce the outcome most preferred by the median voter. a.True b.False 2) Which of the following is not an example of in-kind transfers? a.food stamps b.Medicaid c.the Earned Income Tax Credit d.housing vouchers Answer: c 3) […]

1) Which of these activities will most likely impose an external cost? a.An athlete works out at a gym. b.A secretary smokes a cigarette in a crowded break room. c.A young mother pushes her baby in a stroller. d.A construction […]

1) All of the following are transfer payments except a.welfare payments. b.unemployment compensation. c.personal income taxes. d.Social Security. 2) An increase in the overall level of prices in an economy is referred to as a.the income effect. b.inflation. c.deflation. d.the […]

1) Table 17-9 The table shows the demand schedule for a particular product. Refer to Table 17-9. Suppose the market for this product is served by two firms that have formed a cartel. If the marginal cost of production is […]

1) In the field of study called political economy, economists make use of insights from the field of psychology. a.True b.False 2) An increase in price from $15 to $20 would a.increase total revenue by $500 b.decrease total revenue by […]

1) A ‘satisficer” is a person who a.always chooses the best course of action. b.often chooses the worst course of action. c.makes decisions that are merely good enough. d.studies both economics and psychology. 2) Government intervention is necessary to correct […]

1) After a country goes from disallowing trade in coffee with other countries to allowing trade in coffee with other countries, a.the domestic price of coffee will be greater than the world price of coffee. b.the domestic price of coffee […]

1) Consider a profit-maximizing monopoly pricing under the following conditions. The profit-maximizing price charged for goods produced is $12.The intersection of the marginal revenue and marginal cost curves occurs where output is 10 units and marginal cost is $6. The […]

1) Discrimination by a manager in the hiring process a.decreases the firm’s costs. b.increases the firm’s costs. c.is evident if a white manager refuses to hire a certain black applicant. d.is evident if a male manager fails to hire a […]

1) Table 13-16 Listed in the table are the long-run total costs for three different firms. Which firm is experiencing constant returns to scale? a.Firm A only b.Firm B only c.Firm C only d.Firm A and Firm B only 2) […]

1) The supply of labor in any one market depends on the opportunities available in other markets. a.True b.False 2) Figure 10-19 Note that the lines labeled €Demand€ and €Social Value€are parallel. Also, the slopes of the lines on the […]

1) The diagram below pertains to the demand for turkey in the United States. All else equal, sellers expecting the price of turkey to rise in the future would cause a current move from a.DA to DB. b.DB to DA. […]

1) According to evidence provided by the U.S. government, the median black a.woman is paid roughly the same as the median white woman. b.woman is paid roughly the same as the median black man. c.man is paid 21 percent less […]

1) Peter was recently hired as a salesman for a national consulting firm. His job involves spending a significant portion of his time out of the office visiting prospects and attending conferences. His firm is paying him a wage that […]

1) Economics is the study of a.production methods. b.how society manages its scarce resources. c.how households decide who performs which tasks. d.the interaction of business and government. 2) Normative conclusions a.come from positive analysis alone. b.are based on ignorance of […]

1) Bill would like to buy a gift for Ann to convey his love for her. Which of the following areas of economics would most likely study this type of decision? a.asymmetric information b.political economy c.behavioral economics d.industrial organization 2) […]

1) A discovery that increases wheat yields per acre helps farmers by increasing both supply and total revenues. a.True b.False 2) Suppose the incomes of buyers in a market for a particular normal good decrease and there is also a […]

1) Bob’s Butcher Shop is the only place within 100 miles that sells bison burgers. Assuming that Bob is maximizing his profit, which of the following statements is true? a.The price of Bob’s bison burgers will be less than Bob’s […]

1) Production Possibilities for Picnicland What is the opportunity cost to Picnicland of increasing the production of hotdogs from 450 to 900? a.150 burgers b.225 burgers c.300 burgers d.450 burgers 2) Table 22-10 The town of Franklin is facing a […]

1) The indifference curves for perfect substitutes are straight lines. a.True b.False 2) Unemployment could cause this economy to produce at which point(s)? a.L, M b.N, O, P, Q c.N, O, P d.Q Answer: c 3) The consumer’s optimum is […]

1) Table 18-11 Consider the following daily production data for MadeFromScratch, Inc. MadeFromScratch sells cupcakes for $2 each and pays the workers a wage of $325 per day. Refer to Table 18-11. The marginal product of labor begins to diminish […]

1) Figure 8-9 The vertical distance between points A and C represents a tax in the market. The per-unit burden of the tax on sellers is a. $20. b. $200. c. $300. d. $500. 2) When a market experiences a […]

1) Although economists and accountants treat many costs differently, they both treat the cost of capital the same. a.True b.False 2) Which of the following statements is not correct? a.Medical research can be an example of a public good. b.The […]

1) Which of the following types of goods are rival in consumption? a.private goods and club goods b.private goods and common resources c.public goods and club goods d.public goods and common resources 2) A monopolist produces a.more than the socially […]

1) Why do some policymakers support a consumption tax rather than an earnings tax? a.The average tax rate would be lower under a consumption tax. b.A consumption tax would encourage people to save earned income. c.A consumption tax would raise […]

1) In 2012, the total income of all U.S. residents was approximately $120 billion. a.True b.False 2) Table 15-3 Consider the following demand and cost information for a monopoly. To maximize profit, the monopolist sets price at a. $10. b.$15. […]

1) When, in our analysis of the gains and losses from international trade, we assume that a country is small, we are in effect assuming that the country a.cannot experience significant gains or losses by trading with other countries. b.cannot […]

1) Efficiency in a market is achieved when a.a social planner intervenes and sets the quantity of output after evaluating buyers’ willingness to pay and sellers’ costs. b.the sum of producer surplus and consumer surplus is maximized. c.all firms are […]

1) Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate. Maya has an absolute advantage in the production of a.both goods and a comparative advantage in the production of mixers. b.both goods […]

1) Table 17-6 Imagine a small town in which only two residents, Kunal and Naj, own wells that produce safe drinking water. Each week Kunal and Naj work together to decide how many gallons of water to pump, to bring […]

1) Sellers’ total revenue would increase if the price a.increased from $12 to $15. b.decreased from $39 to $36. c.decreased from $27 to $24. d.All of the above are correct. 2) Human capital is a.an important determinant of wages, but […]