ECON FINAL
Refer to Figure 11-1. The marginal product of the 3rd worker is A. 57. B. 19. C. 15. D. 11.
C. 15.
Q4 Figure 5-2 shows a market with a negative externality.Refer to Figure 5-2. The efficient output level is A. Qa. B. Qb - Qd. C. Qb. D. Qd.
A. Qa.
Q6 Refer to Figure 10-9. Consider the budget constraint BC1. If the price of DVDs is $20 and the price of CDs is $10, what is the consumer's income? A. $120 B. $240 C. $360 D. $480
B. $240
A characteristic of the long run is A. plant capacity cannot be increased or decreased. B. there are fixed inputs. C. all inputs can be varied. D. there are both fixed and variable inputs
C. all inputs can be varied.
Common resources differ from public goods in that A. unlike public goods, common resources are rivalrous in consumption. B. common resources are collectively owned by a group of people while public goods are government owned. C. common resources are non-excludable while public goods are excludable to those who do not pay for the good. D. common resources are resources that cannot be renewed but the production of public goods can be increased any time.
A
Q1 Refer to Figure 3-1. A decrease in the price of the product would be represented by a movement from A. A to B. B. B to A. C. D1 to D2. D. D2 to D1.
A
Q1 Refer to Figure 3-3. The figure above shows the supply and demand curves for two markets: the market for an original Picasso painting and the market for designer jeans. Which graph most likely represents which market? A. Graph B represents the market for an original Picasso painting and Graph A represents the market for designer jeans. B.Graph B represents both the market for an original Picasso painting and designer jeans. C. Graph A represents both the market for an original Picasso painting and designer jeans. D. Graph A represents the market for an original Picasso painting and Graph B represents the market for designer jeans.
A
Refer to Figure 3-4. At a price of $10, how many units will be sold? A. 200 B. 400 C. 600 D. 800
A
What is the difference between an "increase in demand" and an "increase in quantity demanded"? A. An "increase in demand" is represented by a rightward shift of the demand curve while an "increase in quantity demanded" is represented by a movement along a given demand curve. B.An "increase in demand" is represented by a movement along a given demand curve, while an "increase in quantity demanded" is represented by a rightward shift of the demand curve. C.There is no difference between the two terms; they both refer to a shift of the demand curve. D.There is no difference between the two terms; they both refer to a movement downward along a given demand curve.
A
If four workers can produce 18 chairs a day and five can produce 20 chairs a day, the marginal product of the fifth worker is A. 2 chairs. B. 3 chairs. C. 4 chairs. D. 38 chairs
A. 2 chairs.
Q3 Figure 4-3 shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18. Refer to Figure 4-3. What is the value of the deadweight loss at the equilibrium price of $15? A. $0 B. $40 C. $60 D. $100
A. $0
Q3 Figure 4-3 shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18. Refer to Figure 4-3. What is the value of the deadweight loss at a price of $18? A. $100 B. $180 C. $660 D.$1,040
A. $100
Q3 Refer to Table 4-6. The equations above describe the demand and supply for Chef Ernie's Sushi-on-a-Stick. The equilibrium price and quantity for Chef Ernie's sushi are $60 and 20 thousand units. What is the value of producer surplus? A. $100 thousand B. $200 thousand C. $600 thousand D. $800 thousand
A. $100 thousand
Q5 Figure 9-1 shows the U.S. demand and supply for leather footwear. Refer to Figure 9-1. Under autarky, the consumer surplus is A. $195. B. $260. C. $300. D. $555.
A. $195.
Q3 Figure 4-3 shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18. Refer to Figure 4-3. What is the value of producer surplus at a price of $18? A. $240 B. $300 C. $340 D. $720
A. $240
Q3 Refer to Table 4-6. The equations above describe the demand and supply for Chef Ernie's Sushi-on-a-Stick. The equilibrium price and quantity for Chef Ernie's sushi are $60 and 20 thousand units. What is the value of the economic surplus in this market? A. $300 thousand B. $600 thousand C. $1,200 thousand D. $1,600 thousand
A. $300 thousand
Q3 Figure 4-5 shows the market for apartments in Springfield. Recently, the government imposed a rent ceiling of $1,000 per month.Refer to Figure 4-5. What is the value of producer surplus after the imposition of the ceiling? A. $40,000 B. $100,000 C. $300,000 D. $430,000
A. $40,000
Q3 Figure 4-5 shows the market for apartments in Springfield. Recently, the government imposed a rent ceiling of $1,000 per month.Refer to Figure 4-5. What is the value of the deadweight loss after the imposition of the ceiling? A. $50,000 B. $125,000 C. $175,000 D. $260,000
A. $50,000
Q3 Figure 4-3 shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18. Refer to Figure 4-3. What is the value of consumer surplus at a price of $18? A. $60 B. $120 C. $180 D. $240
A. $60
Q6 Refer to Figure 10-8. If the price of biscotti is $1.50 and the price of a cappuccino is $3.00, what is the slope of the budget constraint? A. -2 B. -1/2 C. -(3.00 - 1.50)/(3.00 + 1.50) = -1/3 D. The slope cannot be determined without the value of income.
A. -2
Q5 Figure 2-10 shows the production possibilities frontiers for Tahiti and Bora Bora. Each country produces two goods, milk and honey. Refer to Figure 2-10. What is the opportunity cost of producing one gallon of milk in Tahiti? A. 1.2 gallons of honey B. 5/6 of a gallon of honey C. 1.5 gallons of honey D. 1/2 of a gallon of honey
A. 1.2 gallons of honey
Which of the following statements about the price elasticity of demand is correct? A. Demand is more elastic in the long run than it is in the short run. B. Demand is more elastic the smaller the percentage of the consumer's budget the item takes up. C. The elasticity of demand for a good in general is equal to the elasticity of demand for a specific brand of the good. D.The absolute value of the elasticity of demand ranges from zero to one
A. Demand is more elastic in the long run than it is in the short run.
Which of the following statements about the price elasticity of demand along a downward-sloping linear demand curve is true? A. It is elastic at high prices and inelastic at low prices. B.It is inelastic at high prices and elastic at low prices. C.It is unit elastic throughout the demand curve. D.It is perfectly elastic at very high prices and perfectly inelastic at very low prices.
A. It is elastic at high prices and inelastic at low prices.
Q8 Refer to Figure 12-2. Suppose the firm is currently producing Q2 units. What happens if it expands output to Q3 units? A. It makes less profit. B. It incurs a loss. C. It will be moving toward its profit maximizing output. D. Its profit increases by the size of the vertical distance df.
A. It makes less profit.
Q6 Refer to Figure 10-3. Best friends Laurel and Hardy, both enjoy watching romantic comedies and science fiction movies. Based on the diagrams above what can you conclude about their movie preferences? A. Laurel enjoys romantic comedies more than Hardy. B. They have identical movie preferences. C. Laurel enjoys science fiction movies more than Hardy. D. The diagrams do not provide any information about relative preferences.
A. Laurel enjoys romantic comedies more than Hardy.
Is a monopolistically competitive firm allocatively efficient? A. No, because price is greater than marginal cost. B. No, because it does not produce at minimum average total cost. C. Yes, because price equals average total cost. D. Yes, because it produces where marginal cost equals marginal revenue.
A. No, because price is greater than marginal cost.
Q5 Figure 2-10 shows the production possibilities frontiers for Tahiti and Bora Bora. Each country produces two goods, milk and honey. Refer to Figure 2-10. Which country has a comparative advantage in the production of milk? A. Tahiti B. Bora Bora C. They have equal productive abilities. D. neither country
A. Tahiti
Which of the following is the best example of a short-run adjustment? A. Your local Walmart hires two more associates. B. Toyota builds a new assembly plant in Texas. C. Smith University completed negotiations to acquire a large piece of land to build its new library. D. A local bakery purchases another commercial oven as part of its capacity expansion
A. Your local Walmart hires two more associates.
Consider the following pairs of items: a. shampoo and conditioner b. iPhones and earbuds c. a laptop computer and a desktop computer d. beef and pork e. air-travel and weed killer Which of the pairs listed will have a negative cross-price elasticity? A. a and b only B. c and d only C. e only D. a, b, and c only
A. a and b only
Q4 Figure 5-2 shows a market with a negative externality. Refer to Figure 5-2. The deadweight loss due to the externality is represented by the area A. abf. B. ade. C. abd. D. abc.
A. abf.
Marginal cost is the A. additional cost of producing an additional unit of output. B. the additional output when total cost is increased by one dollar. C. change in the price of inputs if a firm buys more inputs to produce an additional unit of output. D. change in average cost when an additional unit of output is produced.
A. additional cost of producing an additional unit of output.
Q7 Refer to Figure 11-5. The vertical difference between curves F and G measures A. average fixed costs. B. fixed costs. C. marginal costs. D. sunk costs.
A. average fixed costs.
Why do convex indifference curve have a negative slope? A. because to keep utility constant, a consumer must get more of one good if she is to give up some of the other B. because consumers take market prices as given C. because scarcity implies that it is not possible to consume more of one good without giving up some of the other D.because consumers face a budget constraint
A. because to keep utility constant, a consumer must get more of one good if she is to give up some of the other
If the cross-price elasticity of demand for computers and software is negative, this means the two goods are A. complements. B. substitutes. C. inferior. D. normal
A. complements.
Q5 Figure 2-4 shows various points on three different production possibilities frontiers for a nation. Refer to Figure 2-4. A movement from Y to Z A. is the result of advancements in plastic production technology. B. is the result of advancements in food production technology. C. is the result of a decrease in preference for food products. D. represents an increase in the demand for plastic products.
A. is the result of advancements in plastic production technology.
Which of the following activities create a negative externality? A. keeping a junked car parked on your front lawn B. repainting the house you live in to improve its appearance C. graduating from college D.cleaning up the sidewalk on your block
A. keeping a junked car parked on your front lawn
Q8 Figure 12-4 shows the cost and demand curves for a profit-maximizing firm in a perfectly competitive market. Refer to Figure 12-4. If the market price is $30 and the firm is producing output, what is the amount of the firm's profit or loss? A. loss of $1,080 B. profit of $1,300 C. profit of $1,440 D. loss of $2,520
A. loss of $1,080
Economists assume that the goal of consumers is to A. make themselves as well off as possible. B. consume as much as possible. C. do as little work as possible to survive. D. spend all their income.
A. make themselves as well off as possible.
In economics, the term "free rider" refers to A. one who waits for others to produce a good and then enjoys its benefits without paying for it. B. a person who evades taxes. C. one who volunteers her services. D. a supervisor who delegates menial time-consuming activities to others.
A. one who waits for others to produce a good and then enjoys its benefits without paying for it.
The "tragedy of the commons" refers to the phenomenon where A. people overuse a common resource. B. people do not internalize an externality. C.there is rivalry in consumption. D.individuals are free riders.
A. people overuse a common resource.
Cross-price elasticity of demand is calculated as the A. percentage change in quantity demanded of one good divided by percentage change in price of a different good. B. percentage change in quantity supplied divided by percentage change in price of a good. C. percentage change in quantity demanded divided by percentage change in price of a good. D. percentage change in quantity sold divided by percentage change in buyers' incomes.
A. percentage change in quantity demanded of one good divided by percentage change in price of a different good.
Q6 Refer to Figure 10-5. The consumer can afford consumption bundles A. s, v, t, and u. B. r, s, t, and u. C. s, v, and u only. D. r, s, v, and u
A. s, v, t, and u.
Q5 Refer to Figure 2-1. Point B is A. technically efficient. B. unattainable with current resources. C. inefficient in that not all resources are being used. D. the equilibrium output combination
A. technically efficient.
A major difference between monopolistic competition and perfect competition is A. that products are not standardized in monopolistic competition unlike in perfect competition. B. the number of sellers in the markets. C. the degree by which the market demand curves slope downwards. D. the barriers to entry in the two markets.
A. that products are not standardized in monopolistic competition unlike in perfect competition.
Refer to Figure 11-1. Diminishing marginal productivity sets in after A. the 2nd worker is hired. B. the 3rd worker is hired. C. the 4th worker is hired. D. the 5th worker is hired
A. the 2nd worker is hired.
If a firm is in an antitrust court case being accused of monopolizing a product, the firm would hire an economist to show A. the cross-price elasticity of demand between the firm's good and another is positive. B.the price elasticity of demand for the firm's good is highly inelastic. C. the income elasticity of the firm's good is inferior. D.the cross-price elasticity of demand between the firm's good and another is negative.
A. the cross-price elasticity of demand between the firm's good and another is positive.
The law of diminishing marginal utility states that A. the extra satisfaction from consuming a good decreases as more of a good is consumed, other things constant. B. when the extra satisfaction from consuming a good becomes negative, total utility starts falling, other things constant. C. eventually total utility falls as more of a good is consumed, other things constant. D.the extra satisfaction from consuming a good increases slowly as more of a good is consumed, other things constant.
A. the extra satisfaction from consuming a good decreases as more of a good is consumed, other things constant.
When demand is elastic, a fall in price causes total revenue to rise because A. the increase in quantity sold is large enough to offset the lower price. B. the percentage increase in quantity demanded is less than the percentage fall in price. C. the demand curve shifts. D. when price falls, quantity sold increases so total revenue automatically rises.
A. the increase in quantity sold is large enough to offset the lower price.
Q6 The above panels show various combinations of indifference curves and budget constraints for two products: Popcorn and Candy. Refer to Figure 10-6. Which diagram demonstrates an increase in total utility following a decrease in the price of popcorn? A. the movement from d to e in Panel A B. the movement from f to g in Panel B C. the movement from h to k in Panel C D. none of the above
A. the movement from d to e in Panel A
Q4 Refer to Figure 5-3. In the absence of any government intervention, the private market A. underproduces by Qn - Qm units. B. overproduces by Qn - Qm units. C.overproduces by Qo - Qm units. D. underproduces by Qo - Qm units
A. underproduces by Qn - Qm units.
A product is considered to be rivalrous if A. your consumption of the product reduces the quantity available for others to consume. B. it is jointly owned by all members of a community. C. you can keep those who did not pay for the item from enjoying its benefits. D. you cannot keep those who did not pay for the item from enjoying its benefits.
A. your consumption of the product reduces the quantity available for others to consume.
Which of the following products comes closest to having a perfectly inelastic demand? A.cholesterol medication in general B.gasoline C.iPhones D.bus rides
A.cholesterol medication in general
If a demand curve shifts to the right, then A.quantity demanded has increased. B.demand has increased. C.demand has decreased. D.quantity demanded has decreased.
B
If in the market for peaches the supply curve has shifted to the left, A.the quantity of peaches supplied has decreased. B. the supply of peaches has decreased. C. the quantity of peaches supplied has increased. D. the supply of peaches has increased.
B
Q1 Refer to Figure 3-2. A decrease in the price of the product would be represented by a movement from A. A to B. B. B to A. C. S1 to S2. D. S2 to S1
B
Q1 Refer to Figure 3-4. If the current market price is $10, the market will achieve equilibrium by A. a price decrease, decreasing the supply and increasing the demand. B. a price increase, increasing the quantity supplied and decreasing the quantity demanded. C. a price decrease, decreasing the quantity supplied and increasing the quantity demanded. D. a price increase, increasing the supply and decreasing the demand.
B
Q1 Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for women's clothing. Which panel best describes what happens in this market when the wages of seamstresses rise? A. Panel (a) B. Panel (b) C. Panel (c) D. Panel (d)
B
The following equations represent the demand and supply for silver pendants.QD = 50 - 2PQS = -10 + 2PWhat is the equilibrium price (P) and quantity (Q - in thousands) of pendants? A. P = $20; Q = 15 thousand B. P = $15; Q = 20 thousand C. P = $10; Q = 30 thousand D. P = $50; Q = 10 thousan
B
Q7 Table 11-7 shows cost data for Lotus Lanterns, a producer of whimsical night lights. Refer to Table 11-7. What is the variable cost of production when the firm produces 115 lanterns? A. $1,556 B. $1,157 C. $956 D. $10.05
B. $1,157
Q3 Figure 4-5 shows the market for apartments in Springfield. Recently, the government imposed a rent ceiling of $1,000 per month.Refer to Figure 4-5. What is the value of the portion of producer surplus transferred to consumers as a result of the rent ceiling? A. $40,000 B. $100,000 C. $125,000 D. $140,000
B. $100,000
Q5 Figure 9-1 shows the U.S. demand and supply for leather footwear. Refer to Figure 9-1. Under autarky, the producer surplus is A. $40. B. $105. C. $195. D. $285.
B. $105.
Q3 Figure 4-3 shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18. Refer to Figure 4-3. What is the value of producer surplus at the equilibrium price of $15? A. $80 B. $160 C. $240 D. $400
B. $160
Q5 Figure 9-1 shows the U.S. demand and supply for leather footwear. Refer to Figure 9-1. Suppose the government allows imports of leather footwear into the United States. What will the market price be? A. $10 B. $18 C. $24 D. >$24
B. $18
Q6 Refer to Figure 10-9. If the consumer has $240 to spend on DVDs and CDs, what is the price of a DVD if the budget constraint is BC1? A. $10 B. $20 C. $24 D. $40
B. $20
Q3 Refer to Table 4-6. The equations above describe the demand and supply for Chef Ernie's Sushi-on-a-Stick. The equilibrium price and quantity for Chef Ernie's sushi are $60 and 20 thousand units. What is the value of consumer surplus? A. $100 thousand B. $200 thousand C. $600 thousand D. $800 thousand
B. $200 thousand
Q3 Figure 4-5 shows the market for apartments in Springfield. Recently, the government imposed a rent ceiling of $1,000 per month.Refer to Figure 4-5. What is the value of consumer surplus after the imposition of the ceiling? A. $120,000 B. $230,000 C. $270,000 D. $430,000
B. $230,000
Q7 Table 11-7 shows cost data for Lotus Lanterns, a producer of whimsical night lights. Refer to Table 11-7. What is the marginal cost per unit of production when the firm produces 100 lanterns? A. $420 B. $32 C. $11.1 D. $8.
B. $32
Q5 Figure 9-1 shows the U.S. demand and supply for leather footwear. Refer to Figure 9-1. Suppose the government allows imports of leather footwear into the United States. The market price falls to $18. What is the value of domestic producer surplus? A. $0. B. $40. C. $320. D. $360.
B. $40.
Q3 Figure 4-8 shows the market for beer. The government plans to impose a unit tax in this market. Refer to Figure 4-8. How much of the tax is paid by buyers? A. $2 B. $5 C. $7 D. $12
B. $5
Q3 Refer to Table 4-6. The equations above describe the demand and supply for Chef Ernie's Sushi-on-a-Stick. What are the equilibrium price and quantity (in thousands) for Chef Ernie's sushi? A. $40 and 50 thousand B. $60 and 20 thousand C. $50 and 100 thousand D. $80 and 80 thousand
B. $60 and 20 thousand
Q8 Figure 13-4 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches. Refer to Figure 13-4. What is the area that represents the total revenue made by the firm? A. 0P3dQa B. 0P2cQa C. 0P0aQa D. 0P1bQa
B. 0P2cQa
Q5 Figure 9-1 shows the U.S. demand and supply for leather footwear. Refer to Figure 9-1. Suppose the government allows imports of leather footwear into the United States. What will be the quantity of imports? A. 5 units B. 10 units C. 15 units D. 20 units
B. 10 units
Q5 Figure 2-10 shows the production possibilities frontiers for Tahiti and Bora Bora. Each country produces two goods, milk and honey. Refer to Figure 2-10. Which country has a comparative advantage in the production of honey? A. They have equal productive abilities. B. Bora Bora C. Tahiti D. neither country
B. Bora Bora
What is a market failure? A. It refers to a situation where an entire sector of the economy (for example, the airline industry) collapses because of some unforeseen event. B. It refers to the inability of the market to allocate resources efficiently up to the point where marginal social benefit equals marginal social cost. C. It refers to a breakdown in a market economy because of widespread corruption in government. D. It refers to the inability of the market to allocate resources efficiently up to the point where marginal social benefit equals marginal private cost.
B. It refers to the inability of the market to allocate resources efficiently up to the point where marginal social benefit equals marginal social cost.
Q8 Figure 13-4 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches. Refer to Figure 13-4.What is the area that represents the total fixed cost of production? A. 0P1aQa B. P1bdP3 C. P0adP3 D. That information cannot be determined from the graph.
B. P1bdP3
When demand is unit elastic, a change in price causes total revenue to stay the same because A. buyers are buying the same quantity. B. The percentage change in quantity demanded exactly offsets the percentage change in price. C. total revenue never changes with price changes. D. the change in profit is offset by the change in production cost.
B. The percentage change in quantity demanded exactly offsets the percentage change in price.
According to a study of the price elasticities of products sold in supermarkets, the price elasticity of demand for toothpaste is estimated at -0.45. Which of the following could explain why the price elasticity of demand for toothpaste is so low? A. The toothpaste industry is highly competitive. B. There are few close substitutes for toothpaste. C. Toothpaste is heavily endorsed by dentists. D. Toothpaste is relatively inexpensive.
B. There are few close substitutes for toothpaste.
Which of the following is an example of a long-run adjustment? A. A soybean farmer turns on the irrigation system after a month long dry spell. B. Walmart builds another Supercenter. C. Your university offers Saturday morning classes next fall. D. Ford Motor Company lays off 2,000 assembly line workers.
B. Walmart builds another Supercenter
An externality is A. a benefit realized by the purchaser of a good or service. B. a benefit or cost experienced by someone who is not a producer or consumer of a good or service. C. anything that is external or not relevant to the production of a good or service. D.a cost paid for by the producer of a good or service
B. a benefit or cost experienced by someone who is not a producer or consumer of a good or service.
A consumer's utility-maximizing combination of goods is given by the bundle that corresponds to the point on A. the indifference curve that intersects the vertical axis. B. an indifference curve that is tangent to the budget constraint. C. the budget constraint where it intersects one of the axes. D. the indifference curve that intersects the horizontal axis
B. an indifference curve that is tangent to the budget constraint.
Which of the following is not an example of a monopolistically competitive market? A. gas stations B. automobile producers C. makers of women's clothing D. supermarkets
B. automobile producers
Q2 Refer to Table 6-3. Over what range of prices is the demand elastic? A. between $2 and $8 B.between $14 and $16 C. over the entire range of prices D. between $8 and $16
B. between $14 and $16
Q6 Refer to Figure 10-5. Suppose the price of pizza increases while the price of hamburger remains constant. Then, the consumer's A. indifference curve becomes straighter. B. budget constraint moves inward toward the origin on the pizza axis while the hamburger intercept remains the same. C. indifference curve becomes more concave away from the origin. D. budget constraint moves outward away from the origin on the pizza axis while the hamburger intercept remains the same.
B. budget constraint moves inward toward the origin on the pizza axis while the hamburger intercept remains the same.
Q5 Figure 2-4 shows various points on three different production possibilities frontiers for a nation. Refer to Figure 2-4. A movement from X to Y A. is the result of advancements in plastic production technology only, with no change in food production technology. B. could occur because of an influx of immigrant labor. C. could be due to a change in consumers' tastes and preferences. D. is the result of advancements in food production technology only, with no change in the technology for plastic production.
B. could occur because of an influx of immigrant labor.
The demand curve for each seller's product in perfect competition is horizontal at the market price because A. the price is set by the government. B. each seller is too small to affect market price. C. all the demanders get together and set the price. D. all the sellers get together and set the price.
B. each seller is too small to affect market price.
Average fixed costs of production A. remain constant. B. fall as long as output is increased. C. graph as a U-shaped curve. D. will rise at a fixed rate as more is produced.
B. fall as long as output is increased.
The production possibilities frontier model shows that A. economic growth can only be achieved by free market economies. B. if all resources are fully and efficiently utilized, more of one good can be produced only by producing less of another good. C. if consumers decide to buy more of a product its price will increase. D. a market economy is more efficient in producing goods and services than is a centrally planned economy.
B. if all resources are fully and efficiently utilized, more of one good can be produced only by producing less of another good.
Refer to Figure 11-1. The average product of the 4th worker A. is 68. B. is 17. C. is 11. D. cannot be determined
B. is 17.
Total utility A. cannot decrease as a person consumes more and more of a good. B. is equal to the sum of the marginal utilities of all units consumed. C.has a constant rate of increase as a person consumes more and more of a good. D. is negative when marginal utility is declining
B. is equal to the sum of the marginal utilities of all units consumed.
In the short run, if marginal product is at its maximum, then A. average cost is at its minimum. B. marginal cost is at its minimum. C. total cost is at its maximum. D. average variable cost is at its minimum.
B. marginal cost is at its minimum.
The slope of an indifference curve A. is calculated by dividing the quantity of the good on the vertical axis by the quantity of the good on the horizontal axis. B. measures the marginal rate of substitution between the two goods in question. C. measures total utility. D.is calculated by dividing the price of good on the vertical axis by price of the good on the horizontal axis.
B. measures the marginal rate of substitution between the two goods in question.
The shape of the average total cost curve is determined by the shape of A. the average product curve. B. the marginal cost curve. C. the firm's production function. D.the average fixed cost curve
B. the marginal cost curve.
A positive externality causes A. the marginal social benefit to be equal to the marginal private cost of the last unit produced. B. the marginal social benefit to exceed the marginal private cost of the last unit produced. C. the marginal social benefit to be less than the marginal private cost of the last unit produced. D. the marginal private benefit to exceed the marginal social cost of the last unit produced.
B. the marginal social benefit to exceed the marginal private cost of the last unit produced.
Q5 Refer to Figure 2-1. Point C is A. technically efficient. B. unattainable with current resources. C. inefficient in that not all resources are being used. D. is the equilibrium output combination.
B. unattainable with current resources.
A product is considered to be nonexcludable if A. your consumption of the product reduces the quantity available for others to consume. B. you cannot keep those who did not pay for the item from enjoying its benefits. C. it is jointly owned by all members of a community. D. you can keep those who did not pay for the item from enjoying its benefits.
B. you cannot keep those who did not pay for the item from enjoying its benefits.
If demand is perfectly inelastic, the absolute value of the price elasticity of demand is A. more than one. B. zero. C. less than one. D.equal to the absolute value of the slope of the demand curve
B. zero.
Q1 Refer to Figure 3-1. An increase in population would be represented by a movement from A. A to B. B. B to A. C. D1 to D2. D. D2 to D1.
C
Q1 Refer to Figure 3-2. An increase in the number of firms in the market would be represented by a movement from A. A to B. B. B to A. C. S1 to S2. D. S2 to S1.
C
Q1 Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for used clothing, an inferior good. Which panel describes what happens in this market as a result of a decrease in income? A. Panel (a) B. Panel (b) C. Panel (c) D. Panel (d)
C
What is the difference between an "increase in supply" and an "increase in quantity supplied"? A.There is no difference between the two terms; they both refer to a movement along a given supply curve. B.An "increase in supply" means the supply curve has shifted to the right while an "increase in quantity supplied" means at any given price supply has increased. C.An "increase in supply" means the supply curve has shifted to the right while an "increase in quantity supplied" refers to a movement along a given supply curve in response to an increase in price. D.There is no difference between the two terms; they both refer to a shift of the supply curve.
C
Which of the following is the correct way to describe equilibrium in a market? A. At equilibrium, demand equals supply. B. At equilibrium, market forces no longer apply. C. At equilibrium, quantity demanded equals quantity supplied. D. At equilibrium, scarcity is eliminated.
C
Q7 Table 11-7 shows cost data for Lotus Lanterns, a producer of whimsical night lights. Refer to Table 11-7. What is the average total cost of production when the firm produces 120 lanterns? A. $1,680 B. $72 C. $14 D. $12.3
C. $14
Q3 Figure 4-8 shows the market for beer. The government plans to impose a unit tax in this market. Refer to Figure 4-8. What is the size of the unit tax? A. $2 B. $5 C. $7 D. $12
C. $7
Q6 Keegan has $30 to spend on Pita Wraps and Bubble Tea. The price of a Pita Wrap is $6 and the price of a glass of Bubble Tea is $3. Table 10-1 shows his total utility from different quantities of the two items. Refer to Table 10-1. If Keegan can drink all the bubble tea he wants for free, how many glasses will he consume? A. 4 glasses B. 5 glasses C. 6 glasses D. 7 glasseS
C. 6 glasses
Q3 Refer to Figure 4-2. What area represents the increase in producer surplus when the market price rises from P1 to P2? A. A + C + E B. B + D C. A + B D. C + E
C. A + B
Q4 Refer to Figure 5-3. The size of marginal external benefits can be determined by A. the demand curve D1. B. the demand curve D2. C. D2 - D1 at each output level. D. D2 + D1 at each output leve
C. D2 - D1 at each output level.
Q8 Figure 13-4 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches. Refer to Figure 13-4. If the firm represented in the diagram is currently producing and selling Qa units, what is the price charged? A. P0 B. P1 C. P2 D. P3
C. P2
Q5 Figure 2-10 shows the production possibilities frontiers for Tahiti and Bora Bora. Each country produces two goods, milk and honey. Refer to Figure 2-10. If the two countries have the same amount of resources and the same technological knowledge, which country has an absolute advantage in the production of milk? A. They have the same advantage. B. Bora Bora C. Tahiti D. cannot be determined
C. Tahiti
Q6 Refer to Figure 10-8. Given the budget constraint in the diagram, which of the following statements is false? A. Consumption bundles b and c yield the same level of utility, which is higher than the utility represented by bundle a. B. The consumer receives the same level of utility from consumption bundles d, e, and f. C. The consumer's optimal bundle could be bundle d, e, or f. D. Although the consumer receives the same level of utility from bundles d and e, she cannot afford to purchase bundle d.
C. The consumer's optimal bundle could be bundle d, e, or f.
Q8 Figure 12-4 shows the cost and demand curves for a profit-maximizing firm in a perfectly competitive market. Refer to Figure 12-4. If the market price is $30, should the firm represented in the diagram continue to stay in business? A. Yes, because it is making a profit. B. No, it should shut down because it cannot cover its variable cost. C. Yes, because it is covering part of its fixed cost. D. No, it should shut down because it is making a loss.
C. Yes, because it is covering part of its fixed cost.
Q8 Figure 13-4 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches. Refer to Figure 13-4. Should the firm represented in the diagram continue to stay in business despite its losses? A. No, it should shut down. B. No, it is not able to cover its fixed cost. C. Yes, its total revenue covers its variable cost. D. Yes, it should increase its revenue by raising its price.
C. Yes, its total revenue covers its variable cost.
Q7 Refer to Figure 11-5. Curve G approaches curve F because A. total cost falls as more and more is produced. B.fixed cost falls as capacity rises. C. average fixed cost falls as output rises. D. marginal cost is above average variable costs.
C. average fixed cost falls as output rises.
Q8 Refer to Figure 12-2. Why is the total revenue curve a ray from the origin? A. because revenue increases at a decreasing rate B. because the firm must lower its price to sell more C. because the firm can sell its product at a constant price because revenue increases at an increasing rate
C. because the firm can sell its product at a constant price because revenue increases at an increasing rate
Consider the following pairs of items: a. shampoo and conditioner b. iPhones and earbuds c. a laptop computer and a desktop computer d. beef and pork e. air-travel and weed killer Which of the pairs listed will have cross-price elasticity of zero? A. a and b only B. c only since most people cannot do without computers C. e only D. none of the pairs listed
C. e only
Which of the following is a source of market failure? A. unforeseen circumstances which leads to the bankruptcy of many firms B. an inequitable income distribution C. incomplete property rights or inability to enforce property rights D. a lack of government intervention in a market
C. incomplete property rights or inability to enforce property rights
Q5 Refer to Figure 2-1. Point A is A. technically efficient. B. unattainable with current resources. C. inefficient in that not all resources are being used. D. the equilibrium output combination.
C. inefficient in that not all resources are being used.
The demand for all carbonated beverages is likely to be ________ the demand for Dr. Pepper. A. perfectly inelastic compared to B. more elastic than C. less elastic than D. perfectly elastic compared to
C. less elastic than
When a negative externality exists, the private market produces A. less than the economically efficient output level. B. products at a high opportunity cost. C. more than the economically efficient output level. D.products at a low opportunity cost
C. more than the economically efficient output level.
The marginal product of labor is defined as A. the cost of hiring one more worker. B. the additional sales revenue that results when one more worker is hired. C. the additional output that results when one more worker is hired, holding all other resources constant. D. the additional number of workers required to produce one more unit of output.
C. the additional output that results when one more worker is hired, holding all other resources constant.
What is the marginal rate of substitution? A. the rate at which the consumer must give up one good to purchase an additional unit of the other goods in the market B. the rate at which the consumer is willing to trade one good for another so that she increases her utility C. the rate at which the consumer is willing to trade one good for another without any loss in utility D. the price ratio
C. the rate at which the consumer is willing to trade one good for another without any loss in utility
Which of the following is the best example of a perfectly competitive industry? A. steel production B. electricity production C. wheat production D. airplane production
C. wheat production
Q8 Figure 12-4 shows the cost and demand curves for a profit-maximizing firm in a perfectly competitive market. Refer to Figure 12-4. What is the amount of its total fixed cost? A. $1,080 B. $1,440 C.$2,520 D. It cannot be determined.
C.$2,520
Q8 Figure 12-4 shows the cost and demand curves for a profit-maximizing firm in a perfectly competitive market. Refer to Figure 12-4. If the market price is $30, the firm's profit-maximizing output level is A. 0. B. 130. C.180. D. 240
C.180.
Economists estimated that the price elasticity of beer is -0.30 and the income elasticity of beer is 0.09. This means that A, a decrease in the price of beer will lead to an increase in revenue for beer sellers and beer is an inferior good. B.an increase in the price of beer will lead to a decrease in the quantity demanded of beer and beer is a luxury. C.an increase in the price of beer will lead to an increase in revenue for beer sellers and beer is a normal good. D.an increase in the price of beer will increase the quantity demanded of beer and beer is a normal good.
C.an increase in the price of beer will lead to an increase in revenue for beer sellers and beer is a normal good.
Price elasticity of demand measures A.how responsive sales are to a change in buyers' incomes. B.how responsive sales are to changes in the price of a related good. C.how responsive quantity demanded is to a change in price. D.how responsive suppliers are to price changes.
C.how responsive quantity demanded is to a change in price.
If demand is inelastic, the absolute value of the price elasticity of demand is A.one. B.greater than one. C.less than one. D.greater than the absolute value of the slope of the demand curve
C.less than one.
Q1 Refer to Figure 3-1. A decrease in taste or preference would be represented by a movement from A. A to B. B. B to A. C. D1 to D2. D. D2 to D1.
D
Q1 Refer to Figure 3-2. An increase in price of inputs would be represented by a movement from A. A to B. B. B to A. C. S1 to S2. D. S2 to S1.
D
Q1 Refer to Figure 3-4. If the price is $10, A. there would be a surplus of 200 units. B. there would be a surplus of 600 units. C. there would be a shortage of 200 units. D. there would be a shortage of 600 units.
D
Q1 Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for bicycle helmets. Which panel best describes what happens in this market if there is a substantial increase in the price of bicycles? A. Panel (a) B. Panel (b) C. Panel (c) D. Panel (d)
D
The law of demand implies, holding everything else constant, that as the price of bagels increases, A.the demand for bagels will decrease. B.the quantity of bagels demanded will increase. C.the demand for bagels will increase. D.the quantity of bagels demanded will decrease.
D
Q3 Figure 4-3 shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18. Refer to Figure 4-3. What is the value of consumer surplus at the equilibrium price of $15? A. $60 B. $120 C. $180 D. $240
D. $240
Q3 Figure 4-8 shows the market for beer. The government plans to impose a unit tax in this market. Refer to Figure 4-8. The price buyers pay after the tax is A. $7. B. $20. C. $22. D. $27.
D. $27.
Q5 Figure 9-1 shows the U.S. demand and supply for leather footwear. Refer to Figure 9-1. Suppose the government allows imports of leather footwear into the United States. The market price falls to $18. What is the value of consumer surplus? A. $0 B. $270 C. $305 D. $320
D. $320
Q7 Refer to Table 11-7. What is the average variable cost per unit of production when the firm produces 90 lanterns? A. $490 B. $33.67 C. $7.67 D. $5.44
D. $5.44
iQ5 FIgure 2-10 shows the production possibilities frontiers for Tahiti and Bora Bora. Each country produces two goods, milk and honey. Refer to Figure 2-10. What is the opportunity cost of producing one gallon of milk in Bora Bora? A. 1.125 gallons of honey B. 2/3 of a gallon of honey C. 0.8 gallons of honey D. 1.5 gallons of honey
D. 1.5 gallons of honey
Q6 Keegan has $30 to spend on Pita Wraps and Bubble Tea. The price of a Pita Wrap is $6 and the price of a glass of Bubble Tea is $3. Table 10-1 shows his total utility from different quantities of the two items. Refer to Table 10-1. What is Keegan's optimal consumption bundle? A. 4 pita wraps and 2 bubble teas B. 3 pita wraps and 3 bubble teas C. 5 pita wraps and 0 bubble teas D. 3 pita wraps and 4 bubble teas
D. 3 pita wraps and 4 bubble teas
Q2 Refer to Figure 6-3. Using the midpoint formula, calculate the absolute value of the price elasticity of demand between e and f. A .0.32 B. 0.4 C. 2.5 D. 3.125
D. 3.125
Q3 Refer to Figure 4-2. What area represents producer surplus at a price of P2? A. B + D B. A + B + C + D + E C. A + B D. A + B + C
D. A + B + C
Q7 Refer to Figure 11-5. Identify the curves in the diagram. A. E = marginal cost curve; F = total cost curve; G =variable cost curve, H = average fixed cost curve B. E = average fixed cost curve; F = variable cost curve; G = total cost curve, H = marginal cost curve C. E = average fixed cost curve; F = average total cost curve; G = average variable cost curve, H = marginal cost curve D. E = marginal cost curve; F = average total cost curve; G = average variable cost curve; H = average fixed cost curve.
D. E = marginal cost curve; F = average total cost curve; G = average variable cost curve; H = average fixed cost curve.
What is an indifference curve? A. It is a curve that ranks a consumer's preference for various consumption bundles. B. It is a curve that shows the total utility and the marginal utility derived from consuming a bundle of goods. C. It is a curve that shows the tradeoff a consumer faces among different combinations of consumption bundles. D. It is a curve that shows the combinations of consumption bundles that give the consumer the same utility.
D. It is a curve that shows the combinations of consumption bundles that give the consumer the same utility.
Q8 Refer to Figure 12-2. What happens if the firm produces more than Q4 units? A. Its total revenue is increasing faster than its total cost. B. Its profit increases. C. It could make a profit or a loss depending on what happens to demand. D. It makes a loss
D. It makes a loss
Refer to Figure 12-2. The firm breaks even at an output level of A. Q1 units. B. Q2 units. C. Q3 units. D. Q4 units
D. Q4 units
Q4 Figure 5-2 shows a market with a negative externality.Refer to Figure 5-2. The private profit-maximizing quantity for the firm is A. Qa. B. Qb - Qd. C. Qd. D. Qb.
D. Qb.
Q4 Refer to Figure 5-3. The private profit-maximizing output level is A. Qo - Qm. B. Qn. C. Qo. D. Qm.
D. Qm.
Q4. Refer to Figure 5-3. The efficient output level is A. Qm. B. Qo - Qm. C. Qo. D. Qn.
D. Qn.
Which of the following items is likely to have the highest income elasticity of demand? C. a meal at Taco Bell A. a bus ride B. a tank of gasoline D. a vacation home in the Swiss Alps
D. a vacation home in the Swiss Alps
The price of a seller's product in perfect competition is determined by A. the individual seller. B. the individual demander. C. a few of the sellers. D. market demand and market supply.
D. market demand and market supply.
The production possibilities frontier shows the ________ combinations of two products that can be produced in a particular time period with available resources. A. minimum attainable B. only C. equitable D. maximum attainable
D. maximum attainable
Which of the following is an example of a positive externality? A. forbidding the use of cell phones in public B. prohibiting street parking in all residential neighborhoods C. banning the sale of candy in elementary schools D. planting trees along a sidewalk which add beauty and create shade
D. planting trees along a sidewalk which add beauty and create shade
The principle of opportunity cost is that A. the cost of production varies depending on the opportunity for technological application. B. taking advantage of investment opportunities involves costs. C. in a market economy, taking advantage of profitable opportunities involves some money cost. D. the economic cost of using a factor of production is the alternative use of that factor that is given up.
D. the economic cost of using a factor of production is the alternative use of that factor that is given up.
A consumer's budget constraint is A. the rate at which the consumer must give up one good to purchase an additional unit of the other goods in the market. B. the extent to which one's preferences are limited by one's income. C. the price ratio a consumer faces in the marketplace. D. the limited income that a consumer has to spend on goods and services.
D. the limited income that a consumer has to spend on goods and services.
What are property rights? A. the title to ownership of any physical asset B. the right of the government to appropriate private assets for the good of society C. a legal document verifying ownership of intangible assets D. the rights individuals or firms have to the exclusive use of their property, including the right to buy or sell it
D. the rights individuals or firms have to the exclusive use of their property, including the right to buy or sell it
Which of the following statements best describes the concept of consumer surplus? A. "I paid $130 for a printer last week. This week the same store is selling the same printer for $110." B. "I sold my Blu-ray copy of Ben-Hur for $18 at a garage sale even though I was willing to sell it for $10." C. "Safeway was having a sale on Dreyer's ice cream so I bought 3 quarts." D."I was all ready to pay $300 for a new leather jacket that I had seen in Macy's but I ended up paying only $180 for the same jacket."
D."I was all ready to pay $300 for a new leather jacket that I had seen in Macy's but I ended up paying only $180 for the same jacket."
Q8 Figure 13-4 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches. Refer to Figure 13-4.What is the area that represents the total variable cost of production? A. 0P0aQa B. P0abP1 C. P1bdP3 D.0P1bQa
D.0P1bQa
Q8 Refer to Figure 12-2. What is the amount of profit if the firm produces Q2 units? A. It is equal to the vertical distance g to Q2. B. It is equal to the vertical distance c to g multiplied by Q2 units. C. It is equal to the vertical distance c to Q2. D. It is equal to the vertical distance c to g.
D.It is equal to the vertical distance c to g.
Q6 Refer to Figure 10-2. Which of the following statements is true? A. Points a and b may not necessarily be the utility-maximizing quantities of ice cream cones at two different prices because we have no information on the consumer's budget or the price of other goods. B. Points a and b are derived independently of the utility-maximizing model. C.Point a could be a utility-maximizing choice if the price is $3 but point b may not be because we have no information on the marginal utility per dollar when price changes. D.Points a and b are the utility-maximizing quantities of ice cream cones at two different prices of ice cream.
D.Points a and b are the utility-maximizing quantities of ice cream cones at two different prices of ice cream.
Income elasticity measures how a good's quantity demanded responds to A. change in the price of another good. B. producers' incomes. C. change in the goods price. D.change in buyers' incomes
D.change in buyers' incomes
Q5 Figure 2-4 shows various points on three different production possibilities frontiers for a nation. Refer to Figure 2-4. Consider the following events: a. an increase in the unemployment rate b. a decrease in a nation's money supply c. a war that kills a significant portion of a nation's population Which of the events listed above could cause a movement from Y to W? A. a, b, and c B. a and b only C. a and c only D. a only E. c only
E. c only
Which of the following costs will not change as output changes? A. average variable cost B. total variable cost C. average fixed cost D.marginal cost E.total fixed cost
E.total fixed cost
