Archives: Quiz

1) A lump-sum tax would take different amounts from the poor and the rich. a.True b.False 2) The poverty line is based on the percentage of people who cannot afford an adequate diet. a.True b.False Answer: False 3) Figure 14-7 […]

1) Table 17-13 Two home-improvement stores (Lopes and HomeMax) in a growing urban area are interested in expanding their market share. Both are interested in expanding the size of their store and parking lot to accommodate potential growth in their […]

1) At a price of $24, there is a a.surplus of 4 units. b.surplus of 8 units. c.shortage of 4 units. d.shortage of 8 units. 2) A popular resort restaurant will maximize profits if it chooses to stay open during […]

1) According to one survey 76 percent of Americans said they were not saving enough for retirement. This example of inconsistency over time a.is rational behavior. b.likely occurs because saving requires a sacrifice in the present for a reward in […]

1) Suppose that the market for labor is initially in equilibrium. Suppose that workers’ tastes change so that they choose to retire at age 55 rather than age 67. Then the equilibrium wage a.and the equilibrium quantity of labor will […]

1) If a poor family has three children in public school and a rich family has two children in private school, the benefits principle would suggest that a.the poor family should pay more in taxes to pay for public education […]

1) An example of asymmetric information is when a seller of a house knows more than the buyer about the house’s condition. a.True b.False 2) An increase in a consumer’s income a.increases the slope of the consumer’s budget constraint. b.has […]

1) Which of the following events best exemplifies the concept of signaling? a.A college student’s parents, having learned that their child is short of money, send her a check for $1,000. b.A new company making high quality bicycles at a […]

1) The movement from point W to point Y could be caused by a.economic growth. b.unemployment. c.an improvement in efficiency. d.an advance in production technology. 2) Inefficient production is represented by which point(s)? a.Q, S b.Q, S, T c.R, U […]

1) Table 18-9 The following table shows the production function for a particular business. The numbers represent the various labor and output combinations the firm may choose for its output on a daily basis. Refer to Table 18-9. Suppose this […]

1) In economics, a difference in access to relevant knowledge is called a(n) a.relevancy frontier. b.knowledge gap. c.information asymmetry. d.information equilibrium. 2) Table 13-2 What is the marginal product of the second worker? a.300 units b.200 units c.100 units d.50 […]

1) Figure 14-9 In the figure below, panel (a) depicts the linear marginal cost of a firm in a competitive market, and panel (b) depicts the linear market supply curve for a market with a fixed number of identical firms. […]

1) When buyers in a competitive market take the selling price as given, they are said to be a.market entrants. b.monopolists. c.free riders. d.price takers. 2) Figure 16-2. The figure is drawn for a monopolistically competitive firm. If the average […]

1) Table 10-5 The following table shows the marginal costs for each of four firms (A, B, C, and D) to eliminate units of pollution from their production processes. For example, for Firm A to eliminate one unit of pollution, […]

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. What is the marginal profit of the sixth […]

1) A monopoly firm can sell 150 units of output for $10 per unit. Alternatively, it can sell 151 units of output for $9.90 per unit. The marginal revenue of the 151st unit of output is a. -$5.10. b. -$0.10. […]

1) Suppose France subsidizes French wheat farmers, while Germany offers no subsidy to German wheat farmers. As a result of the French subsidy, sales of French wheat to Germany a.may prompt German farmers to invoke the unfair-competition argument. b.increase the […]

1) Scenario 20-6 Zooey is a single mother of two young children whose husband died in a tragic car accident. She earns $20,000 per year working as a cashier at a grocery store. The government uses a negative income tax […]

1) The debate over the efficiency of markets in which products with brand names are sold a.is framed by the role of regulation in advertising. b.is likely to be resolved by reference to anecdotal evidence. c.hinges on whether consumers are […]

1) Assume that a college student spends her income on books and pizza. The price of a pizza is $8, and the price of a book is $15. If she has $120 in income, she could choose to consume a.8 […]

1) Which of the following events would cause the price of oranges to fall? a.There is a shortage of oranges. b.The FDA announces that bananas cause strokes, and oranges and bananas are substitutes. c.The price of land throughout Florida decreases, […]

1) Which of the following statements is correct? a.If the monopolist’s marginal revenue is greater than its marginal cost, the monopolist can increase profit by selling more units at a lower price per unit. b.If the monopolist’s marginal revenue is […]

1) If a market is allowed to adjust freely to its equilibrium price and quantity, then an increase in demand will a.increase producer surplus. b.reduce producer surplus. c.not affect producer surplus. d.Any of the above are possible. 2) Suppose Abby, […]

1) A firm’s opportunity costs of production are equal to its a.explicit costs only. b.implicit costs only. c.explicit costs + implicit costs. d.explicit costs + implicit costs + total revenue. 2) Caroline earns more than John. Under a new tax […]

1) Evidence from a 1988 study of the market for professional basketball players a.found no evidence of consumer-driven wage discrimination. b.found some evidence of consumer-driven wage discrimination. c.found that measurement of marginal productivity was very difficult for basketball players. d.indicated […]

1) The nation of Spritzland used to prohibit international trade, but now trade is allowed, and Spritzland is exporting wristwatches. Relative to the previous no-trade situation, total surplus in the market for wristwatches in Spritzland has increased. a.True b.False 2) […]

1) Figure 8-2 The vertical distance between points A and B represents a tax in the market. The loss of consumer surplus as a result of the tax is a. $1.50. b. $3. c. $4.50. d. $6. 2) Table 15-18 […]

1) Figure 14-4 Suppose a firm operating in a competitive market has the following cost curves: When price falls from P3 to P1, the firm finds that it a.decreases its fixed costs. b.should produce Q1 units of output. c.should produce […]

1) Which of the following frontier fields of economics identifies that people do not always act rationally? a.asymmetric information b.political economy c.behavioral economics d.existential economics 2) Suppose when a monopolist produces 75 units its average revenue is $10 per unit, […]

1) Scenario 15-5 An airline knows that there are two types of travelers: business travelers and vacationers. For a particular flight, there are 100 business travelers who will pay $600 for a ticket while there are 50 vacationers who will […]

1) If the income effect counteracts the substitution effect, we know that the good in question is a(n) a.complementary good. b.inferior good. c.luxury good. d.normal good. 2) Table 12-13 The table below provides information on the 4 households that make […]

1) Figure 8-1 Suppose the government imposes a tax of P’ – P”’. The deadweight loss due to the tax is measured by the area a.J+K+L+M. b.J+K+L+M+N. c.I+Y. d.I+Y+B. 2) On holiday weekends thousands of people picnic in state parks. […]

1) A competitive firm is currently producing a quantity of output at which marginal revenue exceeds marginal cost. In order to increase its profit, the firm should a.increase the price of the good that it produces and sells. b.increase its […]

1) Some companies merge in order to lower costs through efficient joint production. a.True b.False 2) Suppose that the country of Xenophobia chose to isolate itself from the rest of the world. Its ruler proclaimed that Xenophobia should become self-sufficient, […]

1) By driving onto a congested road for which no toll is charged, a driver a.contributes to the overuse of a common resource. b.contributes to a negative-externality problem. c.is inflicting additional time cost on all of the other drivers. d.All […]

1) If the number of buyers in a market decreases, then a.demand will increase. b.demand will decrease. c.supply will increase. d.supply will decrease. 2) If the income elasticity of demand for a good is negative, then the good must be […]

1) Which of the following would cause the demand curve to shift from Demand B to Demand C in the market for mattresses? a.a decrease in the price of mattresses b.a decrease in the price of custom wooden sleigh bed […]

1) Knowledge that is patented is a a.public good, whereas knowledge that is not patented is a common resource. b.private good, whereas knowledge that is not patented is a club good. c.common resource, whereas knowledge that is not patented is […]

1) Which of the following transactions takes place in the markets for the factors of production in the circular-flow diagram? a.Dylan receives a salary for his work as a financial analyst for an investment firm. b.Kristin buys two business suits […]

1) Table 22-10 The town of Franklin is facing a severe budget shortage. The town administrator has proposed four options to balance the budget: increase property taxes (taxes), cut the school arts budget (arts), turn off half of the streetlights […]

1) Home is a country that produces two goods, pears and cellular phones. Last year, Home produced 450 bushels of pears and 1050 cellular phones. This year it produced 450 bushels of pears and 2000 cellular phones. Given no other […]

1) Suppose the price of a bag of tortilla chips decreases from $3.00 to $2.50 and, as a result, the quantity of tortilla chips demanded increases from 200 bags to 300 bags. Using the midpoint method, the for tortilla chips […]

1) A growth company is one that has the ability to a. Acquire capital at a low cost and is able to invest in projects that yield an average return. b. Acquire capital at a low cost and is able […]

1) Exhibit 22.1 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) If the spot rate at expiration is $0.85 and the put option was purchased, what is the dollar gain or loss? a. $340 loss b. $125 gain c. $750 […]

1) The P/E ratio is determined by a. The required rate of return. b. The expected dividend payout ratio. c. The expected growth rate of dividends. d. Choices a and b e. All of the above 2) Exhibit 10.1 USE […]

1) In the absence of arbitrage opportunities, the forward contract price should be equal to the current price plus a. Contract price. b. The cost of carry. c. Margin requirement. d. The price discovery rate. e. The convenience return. 2) […]

1) Exhibit 22.1 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) If the spot rate at expiration is $0.75 and the put option was purchased, what is the dollar gain or loss? a. $0 b. $200 loss c. $200 gain […]

1) In a defined contribution pension plan, a. The plan does not promise to pay the retiree a specific income stream after retirement. b. The plan does promise to pay the retiree a specific income stream after retirement. c. The […]

1) Exhibit 13.1 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) Assume that you are an analyst for the U.S. Autoparts Industry. Consider the following information that you propose to use to obtain an estimate of year 2002 EPS for […]

1) Based on Stock Z’s beta of 0.9 the normal return is 9%. However, the actual return for Stock Z was 8%. What is Stock Z’s abnormal rate of return? a.-1.0% b.-0.1% c.0.1% d.1.0% e.1.1% 2) The 12b-1 plan permits […]