ECO Mid term review

Figure 4-1 shows Arnold's demand curve for burritos. 42) Refer to Figure 4-1. If the market price is $2.00, what is Arnold's consumer surplus? A) $0.50 B) $1.00 C) $1.50 D) $3.00

A) $0.50

Figure 5-13 illustrates the market for gasoline before and after the government imposes a tax to bring about the efficient level of gasoline production. 83) Refer to Figure 5-13. The efficient equilibrium price of gasoline is ________ per gallon. A) $3.00 B) $3.75 C) $4.25 D) $5.00

A) $3.00

Table 2-7 shows the output per month of two people, Fred and Barney. They can either devote their time to making pogo sticks or making unicycles. 6) Refer to Table 2-7. What is Barney's opportunity cost of making a unicycle? A) 2 pogo sticks B) 1/2 of a pogo stick C) 1.75 unicycles D) 2.8 pogo sticks

A) 2 pogo sticks

Figure 2-10 shows the production possibilities frontiers for Tahiti and Bora Bora. Each country produces two goods, milk and honey. 1) Refer to Figure 2-10. What is the opportunity cost of producing one gallon of honey in Bora Bora? A) 2/3 of a gallon of milk B) 0.9 gallons of milk C) 1 1/3 gallons of milk D) 1.5 gallons of milk

A) 2/3 of a gallon of milk

Figure 2-9 shows the production possibilities frontiers for Pakistan and Indonesia. Each country produces two goods, cotton and cashews. 13) Refer to Figure 2-9. What is the opportunity cost of producing 1 bolt of cotton in Indonesia? A) 3/8 of a pound of cashews B) 5/8 of a pound of cashews C) 2 2/3 pounds of cashews D) 120 pounds of cashews

A) 3/8 of a pound of cashews

5) Sarita can bake either a combination of 25 cakes and 15 pies or a combination of 10 cakes and 20 pies. If she now bakes 10 cakes and 20 pies, what is the opportunity cost of baking an additional 15 cakes? A) 5 pies B) 10 pies C) 15 pies D) 20 pies

A) 5 pies

Suppose the U.S. government imposes a $0.40 per pound tariff on rice imports. Figure 9-2 shows the impact of this tariff. 98) Refer to Figure 9-2. Without the tariff in place, the United States produces A) 9 million pounds of rice. B) 15 million pounds of rice. C) 31 million pounds of rice. D) 42 million pounds of rice

A) 9 million pounds of rice.

17) If the production possibilities frontier is ________, then opportunity costs are constant as more of one good is produced. A) bowed out B) non-linear C) bowed in D) linear

A) Bowed out

84) Which of the following criteria should be used to evaluate if government intervention in a market for the purpose of environmental protection is justified? A) Is the intervention program economically efficient? B) Is the damage to the environment from government intervention as small as possible? C) Does the intervention program make the amount of economic surplus as large as possible? D) Does the intervention program reduce pollution to zero using the least costly method?

A) Is the intervention program economically efficient?

48) Economists have shown that the burden of a tax is the same whether the tax is collected from the buyer or the seller. Why, then, are gasoline and cigarette taxes imposed on sellers? A) It is more difficult for buyers to keep track of their purchases, and for the government to verify that the right of amount of tax revenue is collected. B) Sellers are more honest than buyers. C) The demand for both gasoline and cigarettes is very elastic. D) The Equal Protection Clause of the U.S. Constitution prohibits the government from imposing taxes like these on buyers

A) It is more difficult for buyers to keep track of their purchases, and for the government to verify that the right of amount of tax revenue is collected

Sarita and Gabriel own S&G Bakery. Table 9-2 lists the number of pies and cakes Sarita and Gabriel can each bake in one day. 97) Refer to Table 9-2. Select the statement that accurately interprets the data in the table. A) Sarita's opportunity cost for baking cakes is less than Gabriel's. B) Gabriel has a greater opportunity cost than Sarita for baking pies. C) Sarita has a greater opportunity cost than Gabriel for baking cakes. D) Gabriel's opportunity cost for baking cakes and baking pies are both greater than Sarita's.

A) Sarita's opportunity cost for baking cakes is less than Gabriel's.

73) Which of the following describes how a negative externality affects a competitive market? A) The externality causes a difference between the private cost of production and the social cost. B) The externality causes a difference between the private cost of production and the private benefit from consumption. C) The externality causes a difference between the private cost of production and the equilibrium price. D) The externality causes consumer surplus to exceed producer surplus

A) The externality causes a difference between the private cost of production and the social cost

53) Suppose an excise tax of $1 is imposed on every case of beer sold and sellers are responsible for paying this tax. How would the imposition of the tax be illustrated in a graph? A) The supply curve for cases of beer would shift to the left by $1. B) The supply curve for cases of beer would shift to the left by less than $1. C) The supply curve for cases of beer would shift to the right by $1. D) The supply curve for cases of beer would shift to the left by more than $1.

A) The supply curve for cases of beer would shift to the left by $1

Table 4-4 shows the demand and supply schedules for the labor market in the city of Pixley 46) Refer to Table 4-4. Suppose that the quantity of labor supplied decreases by 80,000 at each wage level. What are the new free market equilibrium hourly wage and the new equilibrium quantity of labor? A) W= $12.50;Q = 550,000 B) W= $8.50;Q = 630,000 C) W= $8.50;Q = 550,000 D) W= $11.50;Q = 610,000

A) W= $12.50;Q = 550,000

66) Marginal benefit is equal to the ________ benefit a consumer receives from consuming one more unit of a good or service. A) additional B) unintended C) surplus D) total

A) additional

50) A tax that imposes a small excess burden relative to the tax revenue that it raises is A) an efficient tax. B) a sin tax. C) a FICA tax. D) a payroll tax.

A) an efficient tax

70) When the federal government orders firms to use particular methods to reduce pollution, it is said to be using A) command-and-control policies. B) market-based policies. C) strong-arm tactics. D) global initiatives

A) command-and-control policies.

16) Refer to the Article Summary above. If the 12 nations that are a part of the TPP do agree to these stricter pharmaceutical patent laws as a way to increase intellectual property rights, all of the following would most likely occur except A) fewer dollars would be spent on the development of new medicines. B) pharmaceutical companies would consider expanding operations to these TPP nations. C) pharmaceutical companies would increase investment in the development of more experimental drugs. D) more patents would be issued to pharmaceutical companies.

A) fewer dollars would be spent on the development of new medicines

26) If a firm expects that the price of its product will be higher in the future than it is today, then A) the firm has an incentive to decrease supply now and increase supply in the future. B) the firm has an incentive to increase supply now and decrease supply in the future. C) the firm has an incentive to decrease quantity supplied now and increase quantity supplied in the future. D) the firm will go out of business.

A) the firm has an incentive to decrease supply now and increase supply in the future.

14) The attainable production points on a production possibilities curve are A) the points along and inside the production possibility frontier. B) the horizontal and vertical intercepts. C) the points outside the area enclosed by the production possibilities frontier. D) the points along the production possibilities frontier.

A) the points along and inside the production possibility frontier.

60) Refer to Figure 4-4. The figure above represents the market for pecans. Assume that this is a competitive market. If the price of pecans is $9 A) the quantity supplied is greater than the economically efficient quantity. B) the quantity demanded is economically efficient but the quantity supplied is economically inefficient. C) economic surplus is maximized. D) too many consumers want to buy pecans.

A) the quantity supplied is greater than the economically efficient quantity

38) If in the market for peaches the supply curve has shifted to the left, A) the supply of peaches has decreased. B) the supply of peaches has increased. C) the quantity of peaches supplied has decreased. D) the quantity of peaches supplied has increased

A) the supply of peaches has decreased

58) Refer to Figure 4-1. Arnold's marginal benefit from consuming the fourth burrito is A) $0. B) $1.00. C) $2.50. D) $3.00.

B) $1.00.

Suppose the U.S. government imposes a $0.40 per pound tariff on rice imports. Figure 9-2 shows the impact of this tariff. 100) Refer to Figure 9-2. If the tariff was replaced by a quota which limited rice imports to 16 million pounds, the amount of revenue received by rice importers would equal A) $19.8 million. B) $16 million. C) $9.6 million. D) $6.4 million.

B) $16 million.

57) Refer to Figure 4-1. What is the total amount that Arnold is willing to pay for 2 burritos? A) $2.00 B) $4.50 C) $7.50 D) $10.00

B) $4.50

Figure 9-1 shows the U.S. demand and supply for leather footwear.96) 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.

64) Refer to Table 4-3. The table above lists the marginal cost of cowboy hats by The Waco Kid, a firm that specializes in producing western wear. If the market price of cowboy hats is $35, The Waco Kid will produce A) 1 hat. B) 2 hats. C) 3 hats. D) 4 hats.

B) 2 hats.

Denmark and Belize can produce both clocks and hats. Each country has a total of 200 available labor hours for the production of clocks and hats. Table 9-6 shows the output per hour of work, the production and consumption quantities without trade, and the production numbers with trade. 93) Refer to Table 9 -6. If the actual terms of trade are 1 hat for 1.8 clocks and 150 hats are traded, how many clocks will Belize consume? A) 150 B) 270 C) 930 D) 1,200

B) 270

Figure 2-8 above shows the production possibilities frontier for Vidalia, a nation that produces two goods, roses and orchids. 10) Refer to Figure 2-8. Suppose Vidalia is currently producing 120 dozen roses per period. How many orchids is it also producing, assuming that resources are fully utilized? A) 20 dozen orchids B) 32 dozen orchids C) 44 dozen orchids D) 68 dozen orchids

B) 32 dozen orchids

Figure 2-8 above shows the production possibilities frontier for Vidalia, a nation that produces two goods, roses and orchids. 9) Refer to Figure 2-8. Suppose Vidalia is currently producing 60 dozen orchids per period. How many roses is it also producing, assuming that resources are fully utilized? A) 40 dozen roses B) 50 dozen roses C) 60 dozen roses D) 100 dozen roses

B) 50 dozen roses

55) Refer to Figure 4-2. What area represents producer surplus at a price ofP2? A) B +D B) A +B +C C) A +B +C +D +E D) A +B

B) A +B +C

40) What is the difference between an "increase in demand" and an "increase in quantity demanded"? A) There is no difference between the two terms; they both refer to a movement downward along a given demand curve. B) 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. C) There is no difference between the two terms; they both refer to a shift of the demand curve. D) 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.

B) 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.

18) Refer to Figure 3-8. The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection ofD2 andS1 (pointC). Which of the following changes would cause the equilibrium to change to pointB? A) A positive change in the technology used to produce apples and decrease in the price of oranges, a substitute for apples. B) An increase in the wages of apple workers and an increase in the price of oranges, a substitute for apples. C) An increase in the number of apple producers and a decrease in the number of apple trees as a result of disease. D) A decrease in the wages of apple workers and an increase in the price of oranges, a substitute for apples

B) An increase in the wages of apple workers and an increase in the price of oranges, a substitute for apples

27) The cost of producing cigarettes in the United States has increased and at the same time, more and more Americans are choosing to not smoke cigarettes. Which of the following best explains the effect of these events in the cigarette market? A) The supply curve has shifted to the right and the demand curve has shifted to the left. As a result, there has been an increase in the equilibrium price and an uncertain effect on the equilibrium quantity. B) Both the supply and demand curves have shifted to the left. As a result, there has been a decrease in the equilibrium quantity and an uncertain effect on the equilibrium price. C) The supply curve has shifted to the right and the demand curve has shifted to the left. As a result there has been an increase in the equilibrium quantity and an uncertain effect on the equilibrium price. D) Both the supply and demand curves have shifted to the right. As a result, there has been an increase in the equilibrium quantity and an uncertain effect on the equilibrium price.

B) Both the supply and demand curves have shifted to the left. As a result, there has been a decrease in the equilibrium quantity and an uncertain effect on the equilibrium price.

Suppose the U.S. government imposes a $0.40 per pound tariff on rice imports. Figure 9-2 shows the impact of this tariff 99) Refer to Figure 9-2. The increase in domestic producer surplus as a result of the tariff is equal to the area A) C +G. B) C. C) A +C +G. D) C +D +G +H +I.

B) C.

76) Ronald Coase was awarded the 1991 Nobel Prize in Economics primarily for addressing problems related to externalities. Which of the following describes Coase's work? A) Coase argued that government intervention is necessary to achieve economic efficiency in markets that are affected by externalities. B) Coase argued that under some circumstances private solutions to the problems of externalities will occur. C) Coase proved that a competitive market achieved a greater degree of economic efficiency than a non-competitive market when externalities occur. D) Coase proved that economic efficiency cannot be achieved in a market that is affected by positive or negative externalities

B) Coase argued that under some circumstances private solutions to the problems of externalities will occur

61) Refer to the Article Summary above. The additional tax of $2 per pack of cigarettes being proposed by Senator Pan would have which of the following effects on the market for cigarettes in California? A) Consumer surplus will increase. B) Deadweight loss will increase. C) Market efficiency will increase. D) Producer surplus will increase

B) Deadweight loss will increase

Bryce and Tina are artisans who produce homemade candles and soap. Table 9-3 lists the number of candles and bars of soap Bryce and Tina can each produce in one month. 91) Refer to Table 9-3. Select the statement that accurately interprets the data in the table. A) Bryce has an absolute advantage in making candles and soap. B) Neither Bryce nor Tina has an absolute advantage in making soap. C) Tina has an absolute advantage in making candles and soap. D) Neither Bryce nor Tina has an absolute advantage in making candles.

B) Neither Bryce nor Tina has an absolute advantage in making soap.

Figure 5-2 shows a market with a negative externality. 68) Refer to Figure 5-2. The size of marginal external costs can be determined by A) the supply curve S1. B) S2- S1at each output level. C) the supply curve S2. D) S2+S1at each output level.

B) S2- S1at each output level.

39) How does the increasing use of MP3 players affect the market for compact discs? A) The demand curve for compact discs shifts to the right. B) The demand curve for compact discs shifts to the left. C) The supply curve for compact discs shifts to the left. D) The supply curve for compact discs shifts to the right.

B) The demand curve for compact discs shifts to the left.

19) Refer to Figure 3-8. The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection ofD1 andS1 (pointA). If there is a shortage of apples, how will the equilibrium point change? A) The equilibrium point will move fromA toB. B) The equilibrium point will move fromA toE. C) There will be no change in the equilibrium point. D) The equilibrium point will move fromA toC.

B) The equilibrium point will move fromA toE.

92) Refer to Table 9-3. Select the statement that accurately interprets the data in the table. A) Bryce has a comparative advantage in making candles and making soap. B) Tina has a comparative advantage in making candles. C) Bryce has an absolute advantage in making soap. D) Bryce has a comparative advantage in making candles.

B) Tina has a comparative advantage in making candles.

Table 4-4 shows the demand and supply schedules for the labor market in the city of Pixley. 45) Refer to Table 4-4. Suppose that the quantity of labor demanded decreases by 80,000 at each wage level. What are the new free market equilibrium hourly wage and the new equilibrium quantity of labor? A) W= $9.50;Q = 590,000 B) W= $8.50;Q = 550,000 C) W= $12.50;Q = 630,000 D) W= $9.50;Q = 570,000

B) W= $8.50;Q = 550,000

32) Which of the following will shift the demand curve for a good? A) a decrease in the price of the good B) a decrease in the price of a complementary good C) an increase in the price of the good D) a change in the technology used to produce the good

B) a decrease in the price of a complementary good

Suppose there are several paper mills producing paper for a market. These mills, located upstream from a fishing village, discharge a large amount of wastewater into the river. The waste material affects the number of fish in the river and the use of the river for recreation and as a public water supply source. Figure 5-4 shows the paper market. Use this Figure to answer the following question(s). 72) Refer to Figure 5-4. Why is there a deadweight loss? A) because the marginal private benefit of producing each additional unit in excess ofQ2 exceeds the social cost B) because the marginal social cost of producing each additional unit in excess ofQ2 exceeds the marginal benefit C) because the marginal private cost of producing each additional unit in excess ofQ2 exceeds the marginal benefit D) because the marginal social benefit of producing each additional unit in excess ofQ2 exceeds the private cost

B) because the marginal social cost of producing each additional unit in excess ofQ2 exceeds the marginal benefit

12) You have an absolute advantage whenever you A) can produce something at a lower opportunity cost than others. B) can produce more of something than others with the same resources. C) are better educated than someone else. D) prefer to do one particular activity.

B) can produce more of something than others with the same resources

77) If policymakers use a pollution tax to control pollution, the tax per unit of pollution should be set A) at a level low enough so that producers can pass along a portion of the additional cost onto consumers without significantly reducing demand for the product. B) equal to the marginal external cost at the economically efficient level of pollution. C) equal to the marginal private cost of production at the economically efficient level of pollution. D) equal to the amount of the deadweight loss created in the absence of a pollution tax.

B) equal to the marginal external cost at the economically efficient level of pollution.

30) Because new plastic and recycled plastic are substitutes, as the price of newly produced plastic decreases, A) there is a movement up along the demand curve for recycled plastic. B) the demand curve for recycled plastic shifts to the left. C) there is a movement down along the demand curve for recycled plastic. D) the demand curve for recycled plastic shifts to the right

B) the demand curve for recycled plastic shifts to the left.

59) Refer to Figure 4-4. The figure above represents the market for pecans. Assume that this is a competitive market. At a quantity of 4,000 pounds A) the marginal benefit of pecans is greater than the marginal cost; therefore, output is inefficiently high. B) the marginal benefit of pecans is greater than the marginal cost; therefore, output is inefficiently low. C) producers should raise the price to $9 in order to sell the quantity demanded of 4,000. D) the marginal cost of pecans is greater than the marginal benefit; therefore, output is inefficiently low.

B) the marginal benefit of pecans is greater than the marginal cost; therefore, output is inefficiently low.

25) The law of demand implies, holding everything else constant, that as the price of bagels increases, A) the demand for bagels will increase. B) the quantity of bagels demanded will decrease. C) the demand for bagels will decrease. D) the quantity of bagels demanded will increase.

B) the quantity of bagels demanded will decrease.

81) Refer to Figure 5-7. What is the incremental benefit of increasing the quantity of pollution reduction from QBtoQE units? A) PF ×QE B) the value of the areaQBBFQE C) the value of the areaBEF D) PF

B) the value of the areaQBBFQE

87) If Japanese workers are more productive than French workers then trade between Japan and France A) cannot take place because Japanese goods and services will be less expensive than French goods and services. B) will take place so long as each country has a comparative advantage in a good or service that buyers in the other country want. C) can take place only if France has an absolute advantage in producing a good or service Japanese buyers want. D) cannot take place until French workers become more productive.

B) will take place so long as each country has a comparative advantage in a good or service that buyers in the other country want.

75) Assume that air pollution from a copper smelter imposes external costs on people who live near the smelter. If the victims of the pollution could not legally enforce the right of their property not to be damaged, the amount of pollution reduction A) would be less than the amount at which the marginal benefit of pollution reduction equaled the marginal cost. B) would be the same as if it would be if the owners of the smelter were legally liable. C) would be significantly less than if the owners of the smelter were legally liable for damages. D) would be too small; the government would have to intervene to bring about an efficient outcome.

B) would be the same as if it would be if the owners of the smelter were legally liable.

8) Refer to Figure 2-5. If the economy is currently producing at pointW, what is the opportunity cost of moving to pointX? A) 19 million tons of steel B) 3 million tons of steel C) 5 million tons of paper D) 9 million tons of paper

C) 5 million tons of paper

Table 4-4 shows the demand and supply schedules for the labor market in the city of Pixley 47) Refer to Table 4-4. If a minimum wage of $12.50 an hour is mandated, what is the quantity of labor supplied? A) 80,000 B) 550,000 C) 630,000 D) 1,180,000

C) 630,000

51) Refer to Table 4-2. The table above lists the highest prices five consumers are willing to pay for a theater ticket. If the price of one of the tickets is $18, A) Celeste, Dralon, and Esther will receive a total of $34 of consumer surplus since they will buy no tickets. B) Anya and Basil will each buy two tickets. C) Basil will receive $2 of consumer surplus from buying one ticket. D) Anya and Basil receive a total of $26 of consumer surplus from buying one ticket each. No one else will buy a ticket.

C) Basil will receive $2 of consumer surplus from buying one ticket

23) Refer to Figure 3-1. An increase in population would be represented by a movement from A) A toB. B) B toA. C) D1 toD2. D) D2 toD1

C) D1 toD2.

Companies producing toilet paper bleach the paper to make it white. The bleach is discharged into rivers and lakes and causes substantial environmental damage. Figure 5-9 illustrates the situation in the toilet paper market. 67) Refer to Figure 5-9. The private profit-maximizing output level is A) Q1. B) Q2. C) Q3. D) Q4.

C) Q3.

78) Refer to Figure 5-3. The efficient output level is A) Qm. B) Qo. C) Qn. D) Qo -Qm.

C) Qn.

36) Refer to Figure 3-2. A decrease in the expected future price of the product would be represented by a movement from A) A toB. B) B toA. C) S1 toS2. D) S2 toS1

C) S1 toS2.

41) Studies have shown links between calcium consumption and a reduction in osteoporosis. How does this affect the market for calcium? A) The calcium supply curve shifts to the right because of a change in tastes in favor of calcium. B) The calcium demand curve shifts to the left because this new information will increase the price of calcium. C) The calcium demand curve shifts to the right because of a change in tastes in favor of calcium. D) The calcium supply curve shifts to the left because this new information will increase the price of calcium.

C) The calcium demand curve shifts to the right because of a change in tastes in favor of calcium

31) Which of the following would cause both the equilibrium price and equilibrium quantity of potatoes (assume that potatoes are an inferior good) to decrease? A) a freeze that sharply reduces potato output B) a technological advancement that results in a bumper crop of potatoes C) an increase in consumer income D) a decrease in consumer income

C) an increase in consumer income

28) Assume that both the demand curve and the supply curve for MP3 players shift to the right but the demand curve shifts more than the supply curve. As a result A) the equilibrium price of MP3 players will increase; the equilibrium quantity may increase or decrease. B) the equilibrium price of MP3 players will decrease; the equilibrium quantity may increase or decrease. C) both the equilibrium price and quantity of MP3 players will increase. D) the equilibrium price of MP3 players may increase or decrease; the equilibrium quantity will increase

C) both the equilibrium price and quantity of MP3 players will increase

90) The concept of ________ explains how trade between two countries can make each better off. A) absolute advantage B) autarky C) comparative advantage D) trade barriers

C) comparative advantage

82) Parents who do not have their children immunized and attempt to benefit from other parents who did have their own children immunized are exhibiting an economic behavior known as A) public rivalry. B) internalizing an external cost. C) free riding. D) excludability

C) free riding.

74) If the marginal benefit of reducing emissions of some air pollutant is less than the marginal cost A) further reductions will make society better off. B) economic efficiency will be increased if further reductions are made. C) further reduction will make society worse off. D) pollution taxes should be imposed on producers to pay for further reductions.

C) further reduction will make society worse off.

33) Suppose that when the price of hamburgers decreases, the Ruiz family increases their purchases of ketchup. To the Ruiz family, A) hamburgers are normal goods and ketchup is an inferior good. B) hamburgers and ketchup and substitutes. C) hamburgers and ketchup are complements. D) hamburgers and ketchup are normal goods.

C) hamburgers and ketchup are complements.

7) Rayburn Reed is a highly talented photographer. He has chosen to specialize in photography because of all of the followingexcept A) for him, this is the most lucrative way to purchase the products that he wants to consume. B) his photographs are highly esteemed by art lovers who are willing to pay very high prices. C) his opportunity cost of pursuing another career is very low. D) he obviously has a comparative advantage in photography

C) his opportunity cost of pursuing another career is very low

15) Refer to Table 2-2. Assume Billie's Bedroom Shop only produces pillows and blankets. A combination of 27 pillows and 14 blankets would appear A) along Billie's production possibilities frontier. B) inside Billie's production possibilities frontier. C) outside Billie's production possibilities frontier. D) at the vertical intercept of Billie's production possibilities frontier.

C) outside Billie's production possibilities frontier

79) Which of the following displays these two characteristics: nonrivalry and excludability? A) public goods B) private goods C) quasi-public goods D) common resources

C) quasi-public goods

88) The main purpose of most tariffs and quotas is to A) improve the quality of goods and services imported into the country. B) reduce the prices consumers pay for goods and services. C) reduce the foreign competition that domestic firms face. D) raise revenue for the government.

C) reduce the foreign competition that domestic firms face.

43) Consumers are willing to purchase a product up to the point where A) the marginal benefit of consuming the product is equal to the marginal cost of consuming it. B) the marginal benefit of consuming the product equals the area below the supply curve and above the market price. C) the marginal benefit of consuming a product is equal to its price. D) the consumer surplus is equal to the producer surplus.

C) the marginal benefit of consuming a product is equal to its price.

80) Conceptually, the efficient level of carbon emissions is the level for which A) the marginal benefit of reducing carbon emissions is maximized. B) the marginal benefit of reducing carbon emissions is minimized and the marginal cost of reducing carbon emissions is maximized. C) the marginal benefit of reducing carbon emissions is equal to the marginal cost of reducing carbon emissions. D) the marginal cost of reducing carbon emissions is minimized.

C) the marginal benefit of reducing carbon emissions is equal to the marginal cost of reducing carbon emissions

62) Willingness to pay measures A) the maximum price a buyer is willing to pay minus the minimum price a seller is willing to accept. B) the amount a seller actually receives for a good minus the minimum amount the seller is willing to accept for the good. C) the maximum price that a buyer is willing to pay for a good or service. D) the maximum price a buyer is willing to pay for a product minus the amount the buyer actually pays for it.

C) the maximum price that a buyer is willing to pay for a good or service

37) The income effect of a price change refers to the impact of a change in A) income on the price of a good. B) demand when income changes. C) the price of a good on a consumer's purchasing power. D) the quantity demanded when income changes.

C) the price of a good on a consumer's purchasing power.

49) Frieda is at her local florist to buy a dozen roses. She is willing to pay $75 for the roses, and buys them for $75. Frieda's consumer surplus from the purchase is A) $150. B) $75. C) $37.50. D) $0.

D) $0.

95) 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

44) Lucinda buys a new GPS system for $250. She receives consumer surplus of $75 from the purchase. What value does Lucinda place on her GPS system? A) $75 B) $175 C) $250 D) $325

D) $325

Table 2-8 shows the number of labor hours required to produce a digital camera and a pound of wheat in China and South Korea. 11) Refer to Table 2-8. What is South Korea's opportunity cost of producing one pound of wheat? A) 60 digital cameras B) 20 digital cameras C) 5 digital cameras D) 0.05 units of a digital camera

D) 0.05 units of a digital camera

94) Refer to Table 9 -6. All of the following are terms of trade that could possibly benefit both countries except A) 1 hat : 2 clocks B) 1 hat : 5 clocks C) 1 hat : 4 clocks D) 1 hat : 8 clocks

D) 1 hat : 8 clocks

Figure 2-10 shows the production possibilities frontiers for Tahiti and Bora Bora. Each country produces two goods, milk and honey 2) Refer to Figure 2-10. What is the opportunity cost of producing one gallon of milk in Tahiti? A) 1.5 gallons of honey B) 1/2 of a gallon of honey C) 5/6 of a gallon of honey D) 1.2 gallons of honey

D) 1.2 gallons of honey

21) Refer to Figure 3-1. A decrease in the price of a substitute good would be represented by a movement from A) A toB. B) B toA. C) D1 toD2. D) D2 toD1.

D) D2 toD1.

22) Refer to Figure 3-1. If the product represented is an inferior good, an increase in income would be represented by a movement from A) A toB. B) B toA. C) D1 toD2. D) D2 toD1.

D) D2 toD1.

34) What would happen in the market for laser eye surgery if insurance companies started to cover a portion of the price of voluntary procedures? A) Demand and supply will both increase. B) Demand will increase and supply will decrease. C) Supply will increase, but this will not shift the demand curve. D) Demand will increase, but this will not shift the supply curve

D) Demand will increase, but this will not shift the supply curve.

65) The following equations represent the demand and supply for silver pendants. QD = 50 - 2P QS = -10 + 2P What is the equilibrium price (P) and quantity (Q - in thousands) of pendants? A) P = $50;Q = 10 thousand B) P = $20;Q = 15 thousand C) P = $10;Q = 30 thousand D) P = $15;Q = 20 thousand

D) P = $15;Q = 20 thousand

Table 2-10 shows the output per day of two pet groomers, Tammi and Horace. They can either devote their time to grooming dogs or bathing cats.4) Refer to Table 2-10. Which of the following statements is true? A) Horace has an absolute advantage in dog grooming and Tammi in cat bathing. B) Horace has an absolute advantage in both tasks. C) Horace has an absolute advantage in cat bathing and Tammi in dog grooming. D) Tammi has an absolute advantage in both tasks.

D) Tammi has an absolute advantage in both tasks.

20) Technological advances have resulted in lower prices for digital cameras. What is the impact of this on the market for traditional (non-digital) cameras? A) The supply curve for traditional cameras shifts to the left. B) The demand curve for traditional cameras shifts to the right. C) The supply curve for traditional cameras shifts to the right. D) The demand curve for traditional cameras shifts to the left.

D) The demand curve for traditional cameras shifts to the left.

35) If a decrease in income leads to a decrease in the demand for mac and cheese, then mac and cheese is A) a neutral good. B) a necessity. C) a complement. D) a normal good.

D) a normal good.

56) Which term refers to a legally established minimum price that firms may charge? A) a price ceiling B) a subsidy C) a tariff D) a price floor

D) a price floor

85) Suppose a tax equal to the value of the marginal external cost at the optimal output is imposed on a pollution generating good. All of the following will result from the taxexcept A) a decrease in the equilibrium quantity produced and consumed. B) an increase in the equilibrium market price. C) a decrease in market supply of the good. D) an increase in demand for the good.

D) an increase in demand for the good.

Suppose there are several paper mills producing paper for a market. These mills, located upstream from a fishing village, discharge a large amount of wastewater into the river. The waste material affects the number of fish in the river and the use of the river for recreation and as a public water supply source. Figure 5-4 shows the paper market. Use this Figure to answer the following question(s). 71) Refer to Figure 5-4. What is the deadweight loss from producing at the market equilibrium? A) areaC B) areaD C) area F D) areaE

D) area E

89) The "Buy American" provision in the 2009 stimulus package required that stimulus money be spent only on U.S.-made goods, effectively acting as a quota of zero imports when stimulus money was being spent. In the U.S. steel market, the "Buy American" provision in the 2009 stimulus package would A) transfer some producer surplus to consumer surplus. B) transfer some deadweight loss to producer surplus. C) reduce the producer surplus received by foreign manufacturers. D) convert some consumer surplus to deadweight loss.

D) convert some consumer surplus to deadweight loss.

86) A tariff A) makes everyone better off. B) makes both domestic producers and consumers worse off. C) makes domestic producers worse off. D) makes domestic consumers worse off.

D) makes domestic consumers worse off.

63) In New York City, about 1 million apartments are subject to rent control by the local government. Rent control A) is a price floor which sets a minimum rent for apartments. B) only applies to those apartments which are owned and rented out by the local government. C) is a government policy which limits apartment rental to those people whose incomes are less than $50,000 per year. D) puts a legal limit on the rent that landlords can charge for an apartment.

D) puts a legal limit on the rent that landlords can charge for an apartment.

69) The European Union established a cap-and-trade system which was designed to A) remove all taxes from polluting industries. B) provide fast growing developing countries with the technology to reduce their carbon emissions. C) eliminate air pollution and greenhouse gases by the year 2020. D) reduce carbon dioxide emissions.

D) reduce carbon dioxide emissions.

52) When Congress passed a law that imposed a tax designed to fund its Social Security and Medicare programs it wanted employers and workers to share the burden of the tax equally. Most economists who have studied the incidence of the tax have concluded A) the tax rate should be greater for high-income workers than for low-income workers. B) the tax on employers is too high because it reduces the employment of low-skilled workers. C) the tax is not high enough to cover the future costs of Social Security and Medicare. D) the burden of the tax falls almost entirely on workers.

D) the burden of the tax falls almost entirely on workers.

54) When a competitive equilibrium is achieved in a market A) the total benefits to consumers are equal to the total benefits to producers. B) all individuals are better off than they would be if a price ceiling or price floor was imposed by government. C) economic surplus equals the deadweight loss. D) the total net benefit to society is maximized.

D) the total net benefit to society is maximized.

24) 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) there would be a shortage of 600 units.

29) Refer to Figure 3-5. At a price of $20 A) there would be a surplus of 0 units. B) there would be a shortage of 4 units. C) there would be a shortage of 8 units. D) there would be a surplus of 8 units.

D) there would be a surplus of 8 units.

Table 2-10 shows the output per day of two pet groomers, Tammi and Horace. They can either devote their time to grooming dogs or bathing cats.3) Refer to Table 2-10. What is Horace's opportunity cost of grooming a dog? A) half a bathed cat B) two bathed cats C) one and a half bathed cats D) two-thirds of a bathed cat

D) two-thirds of a bathed cat