Econ Final Exam
26) Based on the table, what is Barry's marginal benefit from the 40th slice of pizza? A) $3B) $12C) $5.50 D) $0.50
A) $3
8) The above figure shows the demand curve for movie rentals from Redbox. At which of the following prices does Redbox have the maximum total revenue?A) $5.00 B) $2.50 C) $3.50 D) $0.00
B) $2.50
2) The demand for ________ is more elastic than the demand for ________.A) Pepsi; all soft beverages B) food; exotic vacations C) all personal computers; Dell computers D) chewing gum; cars
A) Pepsi; all soft beverages
16) Currently tire producers must receive a price of $50 per tire to produce 5000 tires. If the supply curve of tires is upward sloping, then to produce one additional tire, tire producers will need to receive a price ofA) $0.B) $50. C) more than $50. D) less than $50.
) more than $50.
38) In the above figure, if output is 10 units, then the total deadweight loss isA) $10. B) $20. C) $60. D) $5.
A) $10.
28) Nick can purchase each milkshake for $2. For the first milkshake purchased Nick is willing to pay $4, for the second milkshake $3, for the third milkshake $2 and for the fourth milkshake $1. What is the value of Nick's consumer surplus for the milkshakes he buys?A) $3 B) $10 C) $9 D) $2
A) $3
32) Tom spends $20 a month on CDs and magazines. The price of a CD is $6 and the price of a magazine is $4. When Tom maximizes his utility, the marginal utility from CDs is ________ the marginal utility from magazines.A) 1 1/2 times B) 1/2 C) the same as D) 20 times
A) 1 1/2 times
30) Betty and Ann live on a desert island. With a day's labor, Ann can produce 8 fish or 4 coconuts; Betty can produce 6 fish or 2 coconuts. Ann's opportunity cost of producing 1 coconut is ________ and she should specialize in the production of ________. A) 2 fish per coconut; coconutsB) 8 fish per coconut; fish C) 6 fish per coconut; coconuts D) 0 fish per coconut; coconuts
A) 2 fish per coconut; coconuts
4) The money price of a pizza is $12 per pizza and the money price of a taco is $2 per taco. The relative price of a pizza is A) 6 tacos per pizza. B) $24 per pizza. C) $12 per pizza.
A) 6 tacos per pizza
16) The figure above shows the demand for and supply of labor of students in Smallville. If the minimum wage is set at $4 per hour, how many hours do students work?A) 9,000 hours B) 6,000 hoursC) 12,000 hours D) None of the above answers is correct.
A) 9,000 hours
42) The above figure shows the market for pizza. Which figure shows the effect of a new report by the U.S. Surgeon General that eating pizza lowers cholesterol levels, an outcome many people want?A) Figure A C) Figure CB) Figure B D) Figure D
A) Figure
6) In the above figure, which of the following is TRUE regarding the movements from point A to B and from point C to D? I)II)III)A) I and II B) I and III C) II and III D) I, II and III
A) I and II
28) The table above shows Mary's utility from chips and soda. The table shows thatA) Mary's marginal utility decreases as she consumes more chips. B) Mary prefers sodas to chips.C) Mary's total utility decreases as she consumes more chips. D) Mary will consume no soda and only chips.
A) Mary's marginal utility decreases as she consumes more chips.
28) To help pay for the cost of sport related injuries, the government imposes a tax on sellers of all sports equipment. Using the above figure, how much producer surplus is lost from this tax on sports equipment?A) P0P1da B) abd C) P0P1ba D) acd
A) P0P1da
12) The above table gives some of Tammy's total and marginal utilities from comedy videos. Which of the following statements is TRUE?A) Tammy's total utility from five comedy videos is 800.B) Tammy's marginal utility from the third comedy video is equal to 580/3. C) Tammy's marginal utility from the first comedy video is less than her marginal utility from the third comedy video. D) None of the above answers are correct.
A) Tammy's total utility from five comedy videos is 800.
26) When you chose to buy the second cup of coffee instead of the third bagel, which of the following is necessarily CORRECT? A) The marginal utility per dollar from the third bagel is less than the marginal utility per dollar from the second coffee.B) The second coffee is cheaper than the third bagel.C) The second coffee will give you higher marginal utility. D) Both answers A and C are correct.
A) The marginal utility per dollar from the third bagel is less than the marginal utility per dollar from the second coffee.
6) The table above gives the demand schedule for peas. Which of the following statements CORRECTLY describes the price elasticity of demand?A) The price elasticity of demand is larger at point A than at point B.B) The price elasticity of demand increases moving from point A to point B to point C to point D to point E. C) The price elasticity of demand is larger at point D than at point A.D) The price elasticity of demand is constant because the slope is constant.
A) The price elasticity of demand is larger at point A than at point B
38) A cost due to an increase in activity is called A) a marginal cost.B) the total cost.C) an incentive loss. D) a negative marginal benefit.
A) a marginal cost.
34) The statement "An increase in the price of gasoline will lead to a decrease in the amount purchased" is A) a positive statement. C) a scientific statement.B) a political statement. D) a normative statement
A) a positive statement.
24) Which of the following results in a movement along the supply curve of spinach but does NOT shift the supply curve of spinach? A) a rise in the price of spinachB) great weather that produces a bumper spinach crop this yearC) an increase in wages for workers in spinach fields D) disastrous weather that destroys half of this year's spinach crop
A) a rise in the price of spinach
40) If the marginal cost of an activity exceeds the marginal benefit, then A) an alternative action will be selected.B) the person must concentrate on the activity's total benefits.C) the forgone alternatives' costs must be increased. D) the activity will occur because the high marginal cost means it must be highly valued.
A) an alternative action will be selected
36) A cost borne not by the producer but by other people is called ________ cost.A) an external B) an unregulated C) a consumer D) a non-production
A) an external
48) The elasticity of supply measures the sensitivity of A) quantity supplied to a change in price.B) supply to changes in costs.C) price to changes in supply. D) quantity supplied to quantity demanded.
A) quantity supplied to a change in price.
28) An increase in technology for producing personal computers leads toA) an increase in the supply of personal computers. B) a decrease in the supply of personal computers. C) a decrease in the demand for personal computers. D) an increase in the demand for personal computers.
A) an increase in the supply of personal computers
10) The relative price of a good isA) an opportunity cost.B) equal to the money price of a good.C) what you get paid for babysitting your cousin.D) equal to the price of that good divided by the quantity demanded of the good.
A) an opportunity cost.
4) The figure above shows the housing market in the city of Appleville. A rent ceiling of $650 per month is imposed. With the rent ceiling, the deadweight loss in the Appleville housing market isA) at least $15,000 per month. B) 300 units per month.C) zero. D) at most $7,500 per month.
A) at least $15,000 per month.
36) The figure above shows the market for milk in Cowland. If a subsidy paid to producers of $1 per gallon of milk is introduced,what is the price that consumers pay?A) between $3.00 and $4.00 per gallonB) $4.00 a gallon C) between $4.00 and $5.00 per gallon D) $3.00 a gallon
A) between $3.00 and $4.00 per gallon
10) As the quantity of a good consumed increases, its marginal utility ________ and its total utility ________.A) decreases; increases B) decreases; decreases C) increases; decreases D) increases; increases
A) decreases; increases
2) Compared to the situation before international trade, after the United States imports a good production in the United States ________ and consumption in the United States ________.A) decreases; increasesC) increases; increasesB) increases; decreases D) decreases; decreases
A) decreases; increases
34) A tariff on imported peanuts ________ the quantity of peanuts imported and ________ the domestic price of peanuts. A) decreases; increases C) increases; lowers B) does not change; increases D) decreases; decreases
A) decreases; increases
36) A tariff is imposed on a good. This will ________ the domestic producer surplus, ________ the domestic consumer surplus, and ________ total surplus in the home country. A) increase; decrease; decreaseC) increase; remain unchanged; increaseB) increase; increase; increase D) increase; decrease; increase
A) increase; decrease; decrease
30) The marginal social benefit curve for a product can be the same as the good's A) demand curve.B) consumer surplus curve.C) supply curve. D) marginal cost curve.
A) demand curve.
48) If the price of a movie download falls, the rental rate of DVDs ________ and the equilibrium quantity of DVDs rented ________. A) falls; decreases B) rises; decreases C) falls; increases D) rises; increases
A) falls; decreases
50) In goods markets ________ and in factor markets ________. A) firms sell to households; households sell to firmsC) firms sell to households; firms sell to householdsB) households sell to firms; households sell to firms D) households sell to firms; firms sell to households
A) firms sell to households; households sell to firms
42) Michael consumes only steak and lobster. Suppose that the price of steak rises. After Michael is back at equilibrium, compared to the situation when steak was cheaper, the marginal utility from the last steak willA) have increased.B) have decreased. C) not have changed.D) not be comparable with the marginal utility before the price hike.
A) have increased.
6) Which of the following is a microeconomic topic?A) how rent ceilings impact the supply of apartmentsB) how a trade agreement between the United States and Mexico affects both nations' unemployment rates C) comparing inflation rates across countriesD) how a tax rate increase will impact total production
A) how rent ceilings impact the supply of apartments
The figure shows the market for shirts in the United States, where D is the domestic demand curve and S is the domestic supply curve. The world price is $20 per shirt.28) In the figure above, with international trade the United States ________ million shirts per year.A) imports 32 B) exports 16 C) exports 32 D) imports 48
A) imports 32
14) Which of the following lists has variables that all shift a good's demand curve? A) income, preferences, number of buyers, price of complementary goodB) price of the good, preferences, prices of substitution goods, incomeC) expectation of future price, price of the good, number of buyers, income D) Both answers A and B are correct.
A) income, preferences, number of buyers, price of complementary good
12) In the figure above, originally the apartment rental market is in short-run and long-run equilibrium with a rent of $600 per month. Then the government imposes a rent ceiling of $500 per month, which causes a shortage. Suppose that apartments are a normal good and incomes rise. The increase in incomeA) increases the shortage. B) raises the rent. C) decreases the shortage. D) has no effect on the shortage.
A) increases the shortage.
18) As Mary's income increases by 20 percent, her demand for tickets to National Hockey League games increases by 10 percent. Mary's demand for tickets is income ________; for Mary, hockey tickets are ________ good.A) inelastic; a normal B) elastic; an inferiorC) inelastic; an inferior D) elastic; a normal
A) inelastic; a normal
44) A supply curve that is horizontal reflects a supply thatA) is elastic. B) has a zero elasticity. C) is unit elastic. D) is inelastic.
A) is elastic.
50) The infant industry argument is based on the idea ofA) learning-by-doing. B) countervailing duties. C) global monopoly. D) absolute productivity advantage.
A) learning-by-doing.
40) In the figure above, suppose that Mac and Izzie trade and reach point c. Then A) neither Mac nor Izzie produce outside their production possibilities frontiers. B) Mac produces outside his production possibilities frontier.C) Izzie produces outside her production possibilities frontier. D) Mac and Izzie both produce outside their production possibilities frontiers.
A) neither Mac nor Izzie produce outside their production possibilities frontiers.11`
32) Tariffs and import quotas differ in thatA) one is a tax, while the other is a limit.B) one is legal, while the other is not.C) one is imposed by the government, while the other is imposed by the private sector. D) one is a form of trade restriction, while the other is not.
A) one is a tax, while the other is a limit.
16) The marginal benefit from a good is the amount a person is willing to pay forA) one more unit of the good.B) all of the units of the good the person consumes divided by the number of units he or she purchases. C) all of the good the person consumes.D) one more unit of the good divided by the number of units purchased.
A) one more unit of the good.
46) If a country imposes a tariff on an imported good, the tariff ________ the price in the importing country and ________ the quantity of imports.A) raises; decreases B) lowers; does not change C) raises; does not change D) raises; increases
A) raises; decreases
2) If the price of a hot dog is $2 and the price of a hamburger is $4, then the A) relative price of a hot dog is 1/2 of a hamburger per hot dog.B) relative price of a hamburger is 1/2 of a hot dog per hamburger.C) money price of a hot dog is 2 hamburgers per hot dog. D) money price of a hamburger is 2 hot dogs per hamburger.
A) relative price of a hot dog is 1/2 of a hamburger per hot dog.
42) The elasticity of supply does NOT depend on A) the fraction of income spent on the product. B) the time elapsed since the price change.C) resource substitution possibilities. D) none of the above because all of the factors listed affect the elasticity of supply.
A) the fraction of income spent on the product.
20) Total utility is maximized when a consumer has spent all of his or her income andA) the marginal utility per dollar from all goods is equal. B) the total utility per dollar from all goods is equal. C) marginal utility is maximized. D) spent equal amounts on all goods.
A) the marginal utility per dollar from all goods is equal.
8) A relative price is A) the ratio of one price to another price. B) not an opportunity cost. C) also called the money price. D) the number of dollars that must be given up in exchange for the good.
A) the ratio of one price to another price.
48) Trade barriers are politically popular becauseA) their benefits are concentrated, while their costs are widespread.B) their benefits are widespread, while their costs are highly concentrated. C) they are a way to avoid trade wars and still protect domestic producers. D) people recognize their use as a negotiating tool in international relations.
A) their benefits are concentrated, while their costs are widespread
16) The gains from trade that are possible when two countries have different opportunity costs for wheat and coffee are realized when A) trade occurs and resources are reallocated within the two countries.B) each country has an absolute advantage in one of the two commodities.C) the demand curves in both countries shift inward. D) the two countries continue to produce the same quantities of wheat and coffee.
A) trade occurs and resources are reallocated within the two countries.
32) The figure above shows the market for umbrellas in Sunville. When the market for umbrellas in Sunville is in equilibrium, what is the total deadweight loss?A) $2,000B) $0 C) 600 umbrellas D) $800
B) $0
12) Stefano has just completed an original oil painting. After considering the costs for brushes, paint, canvas, and the value of Stefano's labor time, the marginal cost of the painting is $1,000. Lucky Stefano. One art lover paid him $1,500. How much producer surplus did Stefano obtain?A) The amount of producer surplus cannot be determined from the information given.B) $500C) $1,500D) $1,000
B) $500
26) A 10 percent increase in income increases the quantity of orange juice demanded from 19,200 to 20,800 gallons. The income elasticity of demand for orange juice isA) 1.0. B) 0.8. C) 1.2. D) 0.5.
B) 0.8
46) The table gives some data on the supply of roses in a small town. When the price rises from $15 a dozen to $25 a dozen, the elasticity of supply is ________.A) 0.20 B) 0.80 C) 1.25 D) 5.00
B) 0.80
24) If a 10 percent increase in income results in an 8 percent increase in the quantity demanded of a good, the income elasticity of demand equals ________ and the good is ________ good.A) 1.2; a normal B) 0.80; a normalC) -1.2; an inferior D) 0.80; an inferior
B) 0.80; a normal
14) According to the diagram in the above figure, what is the marginal benefit of consuming the 3 millionth gallon of gasoline per month?A) 2 pounds of shrimp per gallon of gasolineB) 1 pound of shrimp per gallon of gasoline C) 5 pounds of shrimp per gallon of gasoline D) 3 pounds of shrimp per gallon of gasoline
B) 1 pound of shrimp per gallon of gasoline
44) The above table gives Sue's marginal utility schedules for sub sandwiches and Mountain Dew, the only products Sue consumes. Suppose the price of a sub sandwich is $4 each and the price of a Mountain Dew is $2 each. Sue's income is $12. If Sue is at a consumer equilibrium, she eats ________ sub sandwich(es) and drinks ________ Mountain Dews.A) 3; 0 B) 2; 2 C) 1; 4 D) 0; 6
B) 2; 2
18) Sonya's budget for magazines and chocolate bars is $50. Her marginal utility from these goods is shown in the table above. If the price of a magazine is $5 and the price of a chocolate bar is $2.50, which of the following combinations maximizes Sonya's utility? A) 5 magazines and 10 chocolate bars B) 3 magazines and 14 chocolate barsC) 2 magazines and 20 chocolate bars D) 1 magazine and 18 chocolate bars
B) 3 magazines and 14 chocolate bars
20) In the figure above, at the allocatively efficient level of computer production consumers are willing to give upA) more than 3 televisions per computer. B) 3 televisions per computer.C) 0 televisions per computer. D) between 0 and 3 televisions per computer.
B) 3 televisions per computer.
50) The above figure shows the market for hamburger. Which figure shows the effect of an announcement by the U.S. Food and Drug Administration (FDA)that eating hamburger causes early death?A) Figure A B) Figure B C) Figure C D) Figure D
B) Figure B
10) Which of the following questions is a topic that would be studied by microeconomics? A) Why did production and the number of jobs shrink in 2009?B) How will a lower price of digital cameras affect the quantity of cameras sold?C) What is the current unemployment rate in the United States? D) Will the current budget deficit affect the well-being of the next generation?
B) How will a lower price of digital cameras affect the quantity of cameras sold?
38) To try to help farmers, governmentsI. set production quotas.II. set price floors.A) only II B) I and II C) only I D) neither I nor II
B) I and II
28) Which of the following are TRUE regarding "positive" statements? I They describe what "ought to be. II "They describe what is believed about how the world appears. III They can be tested as to their accuracy.
B) II and III
8) Which of the following is a result of a rent ceiling set below the equilibrium rent? I. equity in the housing marketII. Efficient allocation of resources III. Shortage of housing units A) I and II B) III only C) II only D) I and III
B) III only
10) Molly just graduated from high school. The figure shows her possibilities frontier. If Molly goes to college, she will move from point M to point K. In terms of consumption goods, Molly's opportunity cost of going to college isA) MK. B) LM. C) KL. D) OL.
B) LM.
26) The supply of oil is more elastic than the demand for oil. If oil is taxed $10 per barrel, how will the tax be divided between the buyers and sellers?A) The sellers and buyers will split the tax evenly.B) The buyers will pay more of the tax than the sellers. C) The sellers will pay the entire tax.D) The sellers will pay more of the tax than the buyers.
B) The buyers will pay more of the tax than the sellers.
18) Which of the following best reflects an increase in quantity demanded and NOT an increase in demand? A) Consumers expect lower prices next month for computers.B) The price of hair stylings falls.C) A college expects enrollment to increase, despite no change in the tuition. D) Skiing becomes a fashionable winter sports activity.
B) The price of hair stylings falls.
22) The government sets a price floor for corn which is above the equilibrium price of corn. As a result, ________. A) a shortage of corn will be createdB) a deadweight loss will be createdC) the corn market will be efficient D) none of the above answers is correct
B) a deadweight loss will be created
34) Sarah consumes only strawberries and cream, and she is spending all of her income. Her marginal utility of her last dish of strawberries is 200 and her marginal utility of her last pint of cream is 200. The price of strawberries is $1.00 per dish and the price of cream is $2.00 per pint. To maximize her utility, Sarah shouldA) definitely buy no cream at her consumer equilibrium. B) buy more strawberries and less cream.C) buy more cream and less strawberries. D) not change her purchases of strawberries and cream.
B) buy more strawberries and less cream.
22) Economic growth comes fromA) capital accumulation and the avoidance of opportunity cost.B) capital accumulation and technological advance.C) people willing to increase their skills in which case, economic growth is free. D) producing more goods than people want to consume.
B) capital accumulation and technological advance.
4) The marginal utility from the consumption of a good is equal to theA) total utility divided by the quantity consumed.B) change in total utility divided by the change in the quantity consumed. C) change in total utility divided by the change in price.D) total utility divided by the price.
B) change in total utility divided by the change in the quantity consumed.
20) In the figure above, D0 is the demand for labor curve. Imposing a minimum wage of $6 per hour will initially A) decrease employment from 40 to 20 million hours per year. B) decrease employment from 30 to 20 million hours per year. C) increase employment from 20 to 40 million hours per year. D) increase employment from 30 to 40 million hours per year.
B) decrease employment from 30 to 20 million hours per year.
46) When a government fines and/or imprisons persons convicted of using illegal drugs, the government is attempting to decrease the illegal drug trade by shifting the ________ curve for illegal drugs ________.A) supply; rightwardB) demand; leftward C) demand; rightward D) supply; leftward
B) demand; leftward
30) Who benefits from an import quota on a good?A) domestic consumers of the good B) domestic producers of the good C) foreign governments D) foreign producers of the good
B) domestic producers of the good
42) According to Utilitarian principles first discussed in the nineteenth century, fairness implies A) winner takes all.B) equality of income.C) equality of opportunity. D) maximizing consumption.
B) equality of income.
6) Often people trying to withdraw money from their bank must wait in line, which reflects a ________ allocation method. A) contest B) first-come, first-servedC) command D) market price
B) first-come, first-served
10) The night before enrollment was to open for the University of Johannesburg a line of people more than a mile long formed outside the gates. When the gates opened, a stampede started, and a woman lost her life in her attempt to secure her son a spot at the university and a chance for a better life. (Source: New York Times, January 10, 2012)Based on the news clip above, the allocation of resources in made using A) market price. B) first-come, first-served. C) auction. D) lottery.
B) first-come, first-served.
32) In one day, Brandon can either plow 10 acres or plant 20 acres. In one day, Christopher can either plow 14 acres or plant 14 acres. Brandon and Christopher canA) exchange, but only Christopher will gain from the exchange.B) gain from exchange if Brandon specializes in planting and Christopher specializes in plowing. C) gain from exchange if Brandon specializes in plowing and Christopher specializes in planting. D) exchange, but only Brandon will gain from the exchange
B) gain from exchange if Brandon specializes in planting and Christopher specializes in plowing.
4) The figure above illustrates Mary's production possibilities frontier. If Mary wants to move from point b to point c, she must A) improve technology. B) give up some of good Y in order to obtain more of good X. C) increase the accumulation of capital. D) give up some of good X in order to obtain more of good Y.
B) give up some of good Y in order to obtain more of good X.
22) Duke increased his spending on steak from $7 to $11 per week because of a 12 percent salary increase, so his A) income elasticity of demand for steak is 1.37.B) income elasticity of demand for steak is 3.7.C) price elasticity of demand for steak is 3.7. D) price elasticity of demand for steak is 1.37.
B) income elasticity of demand for steak is 3.7.
48) Utilitarianism is the idea that only A) competition brings efficiency.B) income equality is fair.C) efficiency is fair. D) efficiency brings equality.
B) income equality is fair.
20) A decrease in quantity demanded because of an increase in price is represented by a A) rightward shift of the demand curve.B) movement up and to the left along the demand curve.C) movement down and to the right along the demand curve. D) leftward shift of the demand curve.
B) movement up and to the left along the demand curve.
34) A $10 per-unit tax on cell phones raises the equilibrium price paid by consumers by $5. Before the tax, 5,000 cell phones were sold per year. The revenue from the tax isA) more than $50,000 per year.B) positive but less than $50,000 per year. C) zero.D) $50,000 per year.
B) positive but less than $50,000 per year.
4) Unit elastic demand means that theA) ratio of a change in the quantity demanded to a change in the price equals 1.B) ratio of a percentage change in the quantity demanded to a percentage change in the price equals 1. C) demand curve is horizontal.D) demand curve is vertical.
B) ratio of a percentage change in the quantity demanded to a percentage change in the price equals 1.
46) In the figure, the equilibrium price is initially $3 per bushel of wheat. If buyers come to expect that the price of a bushel of wheat will rise in the future, but sellers do not, the current equilibrium price willA) not change.B) rise. C) fall.D) Perhaps rise, fall, or stay the same, depending on whether there are more demanders or suppliers in the market.
B) rise.
10) Demand is perfectly inelastic whenA) shifts in the supply curve results in no change in price.B) shifts of the supply curve result in no change in quantity demanded.C) shifts of the supply curve result in no change in the total revenue from the quantity sold. D) the good in question has perfect substitutes.
B) shifts of the supply curve result in no change in quantity demanded.
38) In the above figure, a price of $15 per dozen roses would result in a ________ so that the price of roses will ________. A) surplus; fallB) shortage; riseC) shortage; fall D) surplus; rise
B) shortage; rise
24) In the figure above, point E could be obtained ifA) resources were shifted from health care to education. B) society's resources increased.C) resources were used more efficiently.D) resources were shifted from education to health care.
B) society's resources increased.
32) In the above figure, if the price is $8 then there is a A) shortage of 200.C) shortage of 100.B) surplus of 200. D) surplus of 100.
B) surplus of 200.
A) price of apps. B) the technology used to produce an iPad. C) price of a rival's tablet. D) price of an iPad.
B) the technology used to produce an iPad.
48) Anna and Maria produce shirts and ties. The figure above shows Anna's PPF and Maria's PPF. Anna and Maria can achieve the gains from trade if Anna produces ________ and Maria produces ________. 2) _______A) shirts; ties B) ties; shirts C) only ties; shirts and ties D) shirts and ties; only ties
B) ties; shirts
12) Macroeconomic topics includeA) studying the determination of wages and production costs in the software industry. B) total, nationwide employment.C) the impact of government regulation of markets.D) studying what factors influence the price and quantity of automobiles.
B) total, nationwide employment.
22) In the above figure, if the price is $2, then the total consumer surplus isA) trapezoid bdfc. B) triangle abc. C) triangle cef. D) trapezoid adec.
B) triangle abc.
20) Using the table, Fred's marginal cost of the 200th slice of pizza isA) $6. B) $20. C) $2.50. D) $0.50.
C) $2.50.
The figure shows the market for shirts in the United States, where D is the U.S demand curve and S is the U.S. supply curve. The world price is $20 per shirt. The United States imposes a tariff on imported shirts, $4 per shirt.38) In the figure above, the U.S. government's revenue from the tariff is ________.A) $128 million B) $48 million C) $64 million D) $32 million
C) $64 million
18) In the table above, what is the level of unemployment (in millions of workers) if the minimum wage is set at $8 per hour? A) 4B) 3C) 0 D) 1
C) 0
14) The market for unskilled labor is illustrated in the figure above. The market is in equilibrium and then a minimum wage of $3 per hour is imposed. Unemployment will equalA) 10 million hours per year.B) 20 million hours per year. C) 0 hours.D) 30 million hours per year.
C) 0 hours.
8) In the production possibilities frontier depicted in the figure above, which of the following combinations of hats and bananas is inefficient?A) 4 million pounds of bananas and 4 million hats B) 0 pounds of bananas and 6 million hatsC) 1 million pounds of bananas and 3 million hats D) 2 million pounds of bananas and 5 million hats
C) 1 million pounds of bananas and 3 million hats
42) In the figure above, if Mac and Izzie both completely specialized and traded with one another, their joint output would be A) 6 computers and 6 TV sets per month. B) 3 computers and 3 TV sets per month.C) 12 computers and 12 TV sets per month. D) 24 computers and 24 TV sets per month.
C) 12 computers and 12 TV sets per month.
8) The above table gives the total utility that Homer obtains from consuming various quantities of chocolate chip cookies. The marginal utility from the third pound of cookies isA) 3. B) 9.C) 12. D) 4.
C) 12.
6) An ice cream cone costs $1.50. A can of soda costs $0.75. The relative price of an ice cream cone is A) $0.75, the opportunity cost of a can of soda. B) 1/2 can of soda per ice cream cone, the opportunity cost of an ice cream cone. C) 2 cans of soda per ice cream cone, the opportunity cost of an ice cream cone. D) 1/6 pizza per taco. D) neither I nor II D) $1.50, the opportunity cost of a can of soda.
C) 2 cans of soda per ice cream cone, the opportunity cost of an ice cream cone.
28) A 10 percent decrease in the price of a Pepsi decreases the demand for a Coca-Cola by 50 percent. The cross elasticity of demand between a Pepsi and Coca-Cola isA) 0.20. B) 10. C) 5. D) 50.
C) 5.
34) If a fall in the price of good A increases the quantity demanded of good B A) A and B are substitutes.B) B is a substitute for A, but A is a complement to B.C) A and B are complements. D) A is a substitute for B, but B is a complement to A.
C) A and B are complements.
50) Adam makes $25,000 per year and Bob makes $45,000 a year, and they both have the same marginal benefit curve. According to the utilitarian view, if a dollar is transferred from Bob to Adam, thenA) the change in Adam's marginal benefit plus the change in Bob's marginal benefit is negative.B) Adam's marginal benefit decreases by more than Bob's marginal benefit increases. C) Adam's marginal benefit increases by more than Bob's marginal benefit decreases.D) the change in Adam's marginal benefit plus the change in Bob's marginal benefit equals zero.
C) Adam's marginal benefit increases by more than Bob's marginal benefit decreases.
A) The supply curve will shift to bring the market to equilibrium.B) The demand curve will shift to bring the market to equilibrium.C) The price will adjust to bring the market to equilibrium. D) Both A and B are correct.
C) The price will adjust to bring the market to equilibrium.
16) The price elasticity of demand for corn is 0.4. A new hybrid of corn is discovered and all farmers start to use it, which increases the quantity of corn they can produce from each acre. What happens to the farmers' total revenue?A) The total revenue will not change.B) The total revenue will increase. C) The total revenue will decrease.D) There is not enough information to determine what happens to the total revenue.
C) The total revenue will decrease.
18) The 2010 Patient Protection and Affordable Care Act (Obamacare) contains a provision that may require individuals to either purchase private health insurance or pay a tax. This is an example ofA) centrally planned socialism. B) the invisible hand.C) a mixed economy. D) market capitalism.
C) a mixed economy.
44) Suppose that the government of New York state promises to decrease taxes to a firm if it decides to stay in New York instead of moving to another state. This policy on the part of the state constitutes ________, to make the ________ of the firm remaining in New York.A) a command; marginal benefit exceed the marginal cost B) a command; marginal cost exceed the marginal benefit C) an incentive; marginal benefit exceed the marginal cost D) an incentive; marginal cost exceed the marginal benefit
C) an incentive; marginal benefit exceed the marginal cost
30) Which of the following does NOT shift the supply curve?A) a decrease in the wages of labor used in production of the good B) a fall in the price of a substitute in productionC) an increase in the price of the goodD) a technological advance
C) an increase in the price of the good
44) The figure above shows the market for milk in Cowland. If a subsidy paid to producers of $1 per gallon of milk is introduced, what is the amount, including the subsidy, that suppliers keep per gallon?A) $3.00 a gallon B) between $3.00 and $4.00 per gallonC) between $4.00 and $5.00 per gallon D) $4.00 a gallon
C) between $4.00 and $5.00 per gallon
12) Prior to international trade, the price of good X is lower in country A than in country B. This means that we know that A) country B has a comparative advantage in the production of product X.B) country A has an absolute advantage in the production of product X.C) country A has a comparative advantage in the production of product X. D) country B has an absolute advantage in the production of product X.
C) country A has a comparative advantage in the production of product X.
24)The figure shows the market for shirts in the United States, where D is the domestic demand curve and S is the domestic supply curve. The world price is $20 per shirt.24) In the figure above, international trade ________ producer surplus in the United States by ________.A) increases; $320 million B) decreases; $320 million C) decreases; $192 millionD) increases; $192 million
C) decreases; $192 million
26) Suppose sugar is exported from a nation. In the sugar market who does NOT benefit from the exports? A) domestic producers B) foreign consumers C) domestic consumers D) workers in the industry
C) domestic consumers
50) Goods and services that can be produced by using commonly available resources that could be allocated to a wide variety of alternative tasks have a supply that isA) unit elastic.B) perfectly inelastic. C) elastic. D) inelastic.
C) elastic.
16) The income earned by the people who sell the services of the factor of production ________ is called ________. A) capital; rent B) entrepreneurship; wagesC) entrepreneurship; profit D) land; profit
C) entrepreneurship; profit
42) Opportunity cost means theA) accounting cost minus the marginal benefit. B) monetary costs of an activity.C) highest-valued alternative forgone.D) accounting cost minus the marginal cost.
C) highest-valued alternative forgone.
40) A tariff is a tax that is imposed by the ________ country when an ________ good crosses its international boundary.A) exporting; exported B) exporting; imported C) importing; imported D) importing; exported
C) importing; imported
50) According to marginal utility theory, a rise in income will A) increase the marginal utility of all goods.B) increase consumption of all goods.C) increase a consumer's total utility. D) None of the above answers is correct.
C) increase a consumer's total utility.
8) Compared to the situation before international trade, after the United States exports a good production in the United States ________ and consumption in the United States ________.A) decreases; decreases B) increases; increasesC) increases; decreases D) decreases; increases
C) increases; decreases
14) Of the following, demand is likely to be the least elastic for A) pink grapefruit. B) diamonds.C) insulin for diabetics. D) iceberg lettuce.
C) insulin for diabetics.
6) In the figure above, originally the apartment rental market is in short-run and long-run equilibrium with a rent of $600 per month. Then the government imposes a rent ceiling of $500 per month. The loss of producer surplus A) is smaller than the gain in consumer surplus. B) is the same size as the gain in consumer surplus. C) is larger than the gain in consumer surplus. D) could be smaller than, larger than, or the same size as the gain in consumer surplus.
C) is larger than the gain in consumer surplus
2) A person's consumption possibilities is defined by the budget line becauseA) all consumers must consume on their budget line.B) it marks the boundary between what can be produced and what is unattainable given the current state of technology and resources. C) it marks the boundary between what is affordable and unaffordable.D) it represents the individual's preference for different combinations of goods.
C) it marks the boundary between what is affordable and unaffordable.
20) Which factor of production earns most income in the United States? A) capital B) moneyC) laborD) entrepreneurship
C) labor
10) The United States has a comparative advantage in producing cotton if the U.S. price of cotton before international trade is ________ the world price.A) not comparable to B) greater thanC) less than D) equal to
C) less than
24) According to economistsA) centrally planned socialism is the best system available since governments generally make decisions that are in social interest.B) market capitalism is the best system available and any government intervention and regulation will inevitably harm the social interest.C) market capitalism is the best system available and some government intervention and regulation can either help or harm the social interest.D) centrally planned socialism and pure market capitalism are equally capable of promoting social interest, but a mixed economy is an undesirable compromise between the two that will harm social interest.
C) market capitalism is the best system available and some government intervention and regulation can either help or harm the social interest.
20) When consumers' incomes increased 10 percent, the quantity of milk bought increased 5 percent. This result means A) milk is a luxury.B) milk is an inferior good.C) milk is a necessity. D) the demand for milk is income elastic.
C) milk is a necessity.
12) As the relative price of a good falls, the substitution effect implies that people buyA) less of that good and less of its substitutes. B) less of that good and more of its substitutes. C) more of that good and less of its substitutes. D) more of that good and more of its substitutes.
C) more of that good and less of its substitutes
38) Marginal utility theory predicts that an increase in income means that the consumption of A) inferior goods will increase and consumption of normal goods will decrease.B) all goods will increase.C) normal goods will increase and consumption of inferior goods will decrease. D) None of the above answers is correct.
C) normal goods will increase and consumption of inferior goods will decrease.
30) Statements about what ought to be are called A) assumptions.C) normative statements.B) positive statements. D) implications.
C) normative statements
30) If demand is perfectly elastic, a sales tax is paid by A) only the buyers.B) both the buyers and sellers.C) only the sellers. D) None of the above answers is correct.
C) only the sellers.
46) When the government hires people to serve in the army, these people are no longer available to do other work. This choice illustrates the concept of A) a social interest/private interest conflict. C) opportunity cost. B) an incentive.D) marginal benefit.
C) opportunity cost.
8) Scarcity isA) an economic problem only for poor people.B) eliminated by choices.C) our inability to satisfy all our wants.D) a situation that exists during economic recessions but not during economic booms.
C) our inability to satisfy all our wants.
38) A person has a comparative advantage in an activity if that person can A) perform that activity at a higher opportunity cost than anyone else.B) produce fewer goods in a given amount of time than another person. C) perform the activity at a lower opportunity cost than anyone else. D) produce more goods in a given amount of time than another person.
C) perform the activity at a lower opportunity cost than anyone else.
4) If a person will rent an apartment only to married couples over 30 years old, that person is allocating resources using a ________ allocation method.A) command B) market price C) personal characteristics D) first-come, first-served
C) personal characteristics
26) In the figure above, a decrease in the quantity of oil supplied but NOT a decrease in the supply of oil is shown by a movement fromA) point a to point e. B) point a to point b. C) point a to point c. D) point a to point d.
C) point a to point c.
42) If the United States imposes a tariff on imported steel, the tariff will A) increase the total U.S. consumption of steel.C) raise the U.S. price of imported steel.B) decrease employment in the U.S. steel industry. D) decrease the U.S. production of steel.
C) raise the U.S. price of imported steel.
12) Demand is price elastic if aA) price increase leads to an increase in the quantity demanded.B) relatively large price increase leads to a relatively small decrease in the quantity demanded. C) relatively small price increase leads to a relatively large decrease in the quantity demanded. D) price increase leads to a decrease in the quantity demanded.
C) relatively small price increase leads to a relatively large decrease in the quantity demanded.
10) In the above figure, a rent ceiling of $300 per month would A) result in a shortage of 2000 units.C) result in a shortage of 7000 units.B) not affect the equilibrium quantity. D) result in a surplus of 7000 units.
C) result in a shortage of 7000 units.
50) After you graduate, you have decided to accept a position working at the Bureau of Labor Statistics for $45,000.00 a year. The two other offers you received were working for Wal-Mart for $38,000 and working for Ernst and Young consulting for $42,000. Of these two offers, you would have preferred the job at Ernst and Young. What is the opportunity cost of accepting the position at the Bureau of Labor Statistics? A) the $42,000 you would have been paid working for Ernst and Young and the $38,000 you would have been paid working for Wal- MartB) the $45,000 you are paid for working at the Bureau of Labor StatisticsC) the $42,000 you would have been paid working for Ernst and Young D) the $38,000 you would have been paid working for Wal-Mart
C) the $42,000 you would have been paid working for Ernst and Young
4) Microeconomics is the study of A) the national economy. C) the choices that individuals and businesses make.
C) the choices that individuals and businesses make.
14) Marginal cost isA) the total opportunity cost of producing all the units of the good.B) the same as the marginal benefit because producers benefit from the money they receive when they sell the good. C) the opportunity cost of producing one more unit.D) zero at the efficient level of production.
C) the opportunity cost of producing one more unit.
30) The income elasticity of demand is the percentage change in ________ divided by the percentage change in ________. A) the price; incomeB) income; the priceC) the quantity demanded; income D) income; the quantity demanded
C) the quantity demanded; income
32) The figure shows the market for books before and after a sales tax is introduced. The tax on books is ________ a book, buyers pay ________ of tax per book, and the government's tax revenue is ________ a week.A) $0.40; $0.40; $4B) $0.80; $1.20; $12 C) $1.20; $0.80; $128 D) $1.20; $0.80; $12
D) $1.20; $0.80; $12
22) Suppose that you consume only pizza, which costs $4 per slice, and Diet Pepsi, which costs $2 each. The table above gives your utility from consuming these two goods. If your income is $20, which of the following consumption combinations will you choose? A) 2 slice of pizza and 6 Diet Pepsis C) 5 slices of pizza and no Diet Pepsi B) 4 slices of pizza and 2 Diet Pepsis D) 3 slices of pizza and 4 Diet Pepsis
D) 3 slices of pizza and 4 Diet Pepsis
24) The table above gives the utility from pens and pencils. If pens and pencils both cost $.25 each and the consumer has an income of $2.25, which of the following combinations maximizes the consumer's utility?A) 3 pens and 6 pencils B) 4 pens and 5 pencils C) 6 pens and 3 pencils D) 5 pens and 4 pencils
D) 5 pens and 4 pencils
8) Which of the following is TRUE?A) When a market price allocates resources, everyone who is able to pay the price gets the resource.B) When the government decides how to allocate tax dollars among competing uses, resources are allocated by command.C) When a manager offers everyone in the company the opportunity to win a prize, resources are allocated by a market price. D) A command system works well when the lines of authority and responsibility are clear.
D) A command system works well when the lines of authority and responsibility are clear.
46) Which of the following arguments support the proposition that society should accept at least some income inequality?A) Administrative costs associated with income redistribution imply that low-income people receive less than $1 for each dollar taken from high-income people.B) Income redistribution will require taxation, causing inefficiently low levels of labor supply and saving, thus decreasing the size of the economic pie.C) Income redistribution programs divert skilled labor and capital to tax compliance activities and away from production of goods and services that people value.D) All of the above answers are correct because all support the proposition that society should accept some income inequality.
D) All of the above answers are correct because all support the proposition that society should accept some income inequality.
14) The table above shows the total utility from the two goods Freddy likes to consume. If Freddy has consumed 4 fruit drinks and then decides to drink anotherA) the marginal utility from the 5th drink equals 30. B) his total utility will increase.C) the marginal utility from the 5th drinks equals 50. D) Both answers A and B are correct.
D) Both answers A and B are correct.
30) When a consumer spends all of his or her income and consumes a bundle of goods such that the marginal utility per dollar from all goods is equal, then theA) consumer is in his or her consumption equilibrium. B) consumer's total utility is maximized.C) marginal utilities for each good are maximized. D) Both answers A and B are correct.
D) Both answers A and B are correct.
48) The above table gives Sue's marginal utility schedules for sub sandwiches and Mountain Dew, the only products Sue consumes. Suppose initially the price of a sub sandwich is $4 each and the price of a Mountain Dew is $2 each. Sue's income is $12. If the price of subs rises to $6 each, Sue will consumeA) more Mountain Dews. B) fewer subs.C) fewer Mountain Dews so that she can still afford to buy two subs. D) Both answers A and B are correct.
D) Both answers A and B are correct.
40) The above figure shows the marginal social benefit and marginal social cost curves of doughnuts in the nation of Kaffenia. Which of the following would lead the quantity of doughnuts in Kaffenia to differ from the efficient quantity?A) The existence of many producers and sellers of doughnuts.B) The existence of just one producer and seller of doughnuts. C) Damage to the environment from the disposal of oil used to cook the doughnuts. D) Both answers B and C are correct.
D) Both answers B and C are correct.
34) Agnes can produce either 1 unit of X or 1 unit of Y in an hour, while Brenda can produce either 2 units of X or 4 units of Y in an hour.A) Brenda has a comparative advantage in the production of X.B) Agnes has a comparative advantage in the production of Y. C) Brenda cannot gain from trade.D) Brenda has an absolute advantage in the production of X and Y.
D) Brenda has an absolute advantage in the production of X and Y
28) In the figure above, a point showing an inefficient production point is point A) A. B) B. C) C. D) D.
D) D.
44) The above figures show the market for oranges. Which figure shows the effect of a new technology called "the orange picker," which harvests oranges less expensively than ever before?A) Figure A B) Figure B C) Figure C D) Figure D
D) Figure D
36) Which of the following leads a good to have a high elasticity of supply?I. The good must be produced using unique resources.II. The good is produced using commonly available resources.A) I only B) I and II C) neither I nor IID) II only
D) II only
40) Which of the following statements is TRUE?A) Marginal utility theory predicts that all goods are normal goods and that all goods are substitutes for each other.B) Marginal utility theory predicts that an increase in a consumer's income increases consumption of all goods.C) Marginal utility theory makes no prediction about a consumer's responses to hikes in the prices of the goods and services he or she consumes.D) It is possible to derive the law of demand—that a higher price decreases the quantity demanded—using marginal utility theory.
D) It is possible to derive the law of demand—that a higher price decreases the quantity demanded—using marginal utility theory
22) The United States has a comparative advantage and specialize in the production of airplanes. Compared to the situation with no trade, which of the following will occur?A) The quantity of airplanes demanded in the United States will increase.B) There will be no change in the price of airplanes in the United States. C) The world price of airplanes will increase.D) More airplanes will be produced in the United States.
D) More airplanes will be produced in the United States.
38) The elasticity of the momentary supply curve for any good always equals A) zero.B) positive infinity.C) one. D) None of the above answers is correct.
D) None of the above answers is correct.
44) Utilitarianism argues thatA) There is a tradeoff between equality and efficiency. B) The competitive market is fair.C) The result is fair if the rules are fair.D) Only equality brings efficiency.
D) Only equality brings efficiency.
6) Diminishing marginal utility means thatA) the total utility from one hamburger exceeds the total utility from two hamburgers. B) the price of two hamburgers is twice the price of one.C) beyond a certain point, total utility decreases as income rises.D) Ralph will enjoy his second hamburger less than the first.
D) Ralph will enjoy his second hamburger less than the first.
32) "Government should act to reduce poverty levels."A) This statement is a positive statement.B) This statement is an example of the post hoc fallacy.C) This statement is an example of the fallacy of composition. D) This statement is a normative statement
D) This statement is a normative statement
36) Marginal utility theory predicts that a rise in the price of a banana results in A) a movement downward along the demand curve for bananas.B) the demand curve for bananas shifting rightward.C) the demand curve for bananas shifting leftward. D) a movement upward along the demand curve for bananas.
D) a movement upward along the demand curve for bananas.
50) Compared to the situation in which a good is legal, making the good illegal and imposing ________ results in less being sold. A) any fine on either the buyer or the sellerB) a much higher fine on sellers than on buyersC) a much higher fine on buyers than on sellers D) all of the above
D) all of the above
18) When the Smiths were shopping for their present home, the asking price from the previous owner was $250,000.00. The Smiths had decided they would pay no more than $245,000.00 for the house. After negotiations, the Smiths actually purchased the house for $239,000.00. Therefore, the previous owner earned a producer surplus ofA) $250,000.00. B) $5,000.00.C) $11,000.00.D) an amount unknown given the information in the question.
D) an amount unknown given the information in the question.
46) Markets are best defined asA) specific geographic locations where people get together to buy and sell.B) hypothetical constructs used to analyze how people form their tastes and preferences. C) places where people can inspect goods and services carefully.D) arrangements where buyers and sellers get together to buy and sell.
D) arrangements where buyers and sellers get together to buy and sell.
40) As time passes after a change in the price, the supply of a good or service A) becomes less elastic.B) initially becomes less elastic and then becomes more elastic.C) initially becomes more elastic and then becomes less elastic. D) becomes more elastic
D) becomes more elastic
2) Economics can be defined as the social science that explains the
D) choices that we make as we cope with scarcity.
44) In order to societies to reap the gains from trade, it is necessary to A) achieve productive efficiency.C) foster economic growth.B) distribute resources equally.D) define and enforce property rights.
D) define and enforce property rights.
44) Who benefits from a tariff on a good? A) domestic consumers of the goodC) foreign governmentsB) foreign producers of the good D) domestic producers of the good
D) domestic producers of the good
12) Resource use is allocatively efficient when marginal benefit is A) at its maximum value.C) less than marginal cost.B) greater than marginal cost. D) equal to marginal cost.
D) equal to marginal cost.
36) When the price is below the equilibrium price, the quantity demandedA) is less than the equilibrium quantity but the quantity supplied exceeds the equilibrium quantity.B) exceeds the equilibrium quantity and the quantity supplied also exceeds the equilibrium quantity.C) is less than the equilibrium quantity and the quantity supplied also is less than the equilibrium quantity. D) exceeds the equilibrium quantity but the quantity supplied is less than the equilibrium quantity.
D) exceeds the equilibrium quantity but the quantity supplied is less than the equilibrium quantity.
20) In a market open to international trade, at the world price the quantity demanded is 150 and quantity supplied is 200. This country willA) export 200 units. B) import 50 units. C) import 150 units. D) export 50 units.
D) export 50 units.
4) When the principle of comparative advantage is used to guide trade, then a country specializes in producing only A) goods with the highest opportunity cost.B) goods for which production takes fewer worker-hour than another country.C) goods for which production costs are more than average total costs. D) goods with the lowest opportunity costs.
D) goods with the lowest opportunity costs.
42) Governments often intervene in agricultural markets by A) setting price floors that reduce prices for buyers.B) setting production quotas that will increase production. C) imposing heavy taxes on farm products. D) granting subsidies.
D) granting subsidies.
40) If a production quota is set below the equilibrium quantity, at the quota quantity, marginal benefit is ________ marginal cost and the level of production is ________.A) less than; inefficientB) greater than; efficient C) equal to; efficientD) greater than; inefficient
D) greater than; inefficient
14) A country opens up to trade and becomes an importer of a sugar. In the sugar market, consumer surplus will ________, producer surplus will ________, and total surplus will ________.A) decrease; decrease; decrease B) decrease; increase; increaseC) increase; decrease; decrease D) increase; decrease; increase
D) increase; decrease; increase
The figure shows the market for helicopters in the United States, where D is the domestic demand curve and S is the domestic supply curve. The United States trades helicopters with the rest of the world at a price of $36 million per helicopter.18) In the figure above, international trade ________ total surplus in the United States by ________.A) decreases; $2.56 billion B) increases; $4.8 billion C) decreases; $3.6 billion D) increases; $1.92 billion
D) increases; $1.92 billion
24) A minimum wage ________.A) is an effective way of increasing employment B) is a price ceiling in the labor market C) changes the demand for labor. D) is a price floor in the labor market
D) is a price floor in the labor market
6) The United States has a comparative advantage in producing airplanes if A) it has a larger quantity of skilled workers than do other nations.B) it can produce them at a lower opportunity cost than can other nations. C) it can produce them at a lower dollar cost than can other nations. D) it can produce a larger quantity than can other nations.
D) it can produce a larger quantity than can other nations.
14) An outcome is considered efficient ifA) it is the best available choice for an individual.B) it is possible to make someone better off without making anyone else worse off.C) it results in fair shares for everyone involved.D) it is not possible to make someone better off without making anyone else worse off.
D) it is not possible to make someone better off without making anyone else worse off.
22) The "gifts of nature" are included as part of which factor of production?A) entrepreneurship B) capital C) labor D) land
D) land
16) Marginal utility theory assumes that when Sally consume less of a good that she was previously consuming more than one unit of, her ________.A) income increases B) total utility is maximizedC) total utility increases D) marginal utility increases
D) marginal utility increases
24) The market supply curve shows theA) maximum price suppliers must receive in order to produce another unit of the good. B) profit that suppliers receive from producing another unit of the good.C) amount of producer surplus suppliers receive.D) minimum price suppliers must receive in order to produce another unit of the good.
D) minimum price suppliers must receive in order to produce another unit of the good.
2) The figure above shows the demand for and supply of rental housing A) a surplus of 3,000 units of rental housing.C) a shortage of 6,000 units of rental housing. B)a shortage of 3,000 units of rental housing.D) neither a shortage nor a surplus of rental housing
D) neither a shortage nor a surplus of rental housing
22) The figure above shows supply curves for soft drinks. Suppose the economy is at point a. An increase in the price of a soft drink is shown as a movement from point a toA) none of the points that are illustrated. B) point b. C) point c. D) point d.
D) point d.
32) You are the new vice president in charge of advertising at Taco Bell. In your upcoming advertising campaign, you plan to degrade the fast food competitor whose product is the closest substitute for Taco Bell's tacos. That would be the fast food chain whose cross elasticity of demand with your tacos is equal toA) negative 2.11. C) positive 1.00. D) positive 1.55
D) positive 1.55
34) In the above figure, suppose the quantity produced is 40. ThenA) the willingness to pay for the 40th unit is $2, the equilibrium price. B) the marginal social cost of the 40th unit is $1.C) production is not efficient because MSB > MSC.D) production is not efficient because MSC>MSB.
D) production is not efficient because MSC>MSB.
48) Suppose penalties are imposed on both buyers and sellers of marijuana, but the cost of breaking the law to sellers is greater than that to buyers. This measure will ________ the equilibrium price of marijuana and ________ the equilibrium quantity of marijuana sold.A) lower; increase B) raise; increaseC) not change; will decrease D) raise; decrease
D) raise; decrease
26) Capital accumulation definitelyA) makes the production possibilities frontier steeper. B) has no impact on the production possibilities frontier. C) shifts the production possibilities frontier inward.D) shifts the production possibilities frontier outward.
D) shifts the production possibilities frontier outward.
46) Marginal utility theory shows us that water, which is very common, has a ________ marginal utility and a ________ total utility. A) large; large B) small; smallC) large; small D) small; large
D) small; large
36) The data in the above table demonstrates that gains from trade can be captured ifA) the United States produced concrete in exchange for steel produced in France.B) each country became self-sufficient, produced both goods for itself, and did not engage in trade. C) the United States produced both goods.D) the United States produced steel in exchange for concrete produced in France.
D) the United States produced steel in exchange for concrete produced in France.
2) A contest is a good way to allocate scarce resources whenA) there is no effective way to distinguish among potential users. B) the decision being made affects a large number of people.C) the lines of responsibility are clear.D) the efforts of the players are hard to monitor directly.
D) the efforts of the players are hard to monitor directly.
34) In the above figure, if the demand curve is D2, thenA) an increase in price will shift the demand curve to D3.B) the equilibrium price will be P1 and the equilibrium quantity will be Q1. C) there will be a shortage equal to Q2 - Q1.D) the equilibrium price will be P1 and the equilibrium quantity will be Q2.
D) the equilibrium price will be P1 and the equilibrium quantity will be Q2.
48) Laura is a manager for HP. When Laura must decide whether to produce a few additional printers, she is choosing at the margin when she comparesA) the extra revenue from selling a few additional printers to the average cost of producing the additional printers.B) the total revenue from sales of printers to the total cost of producing all the printers. C) HP's printers to printers from competing companies, such as Lexmark.D) the extra revenue from selling a few additional printers to the extra costs of producing the printers.
D) the extra revenue from selling a few additional printers to the extra costs of producing the printers.
18) Resource use is allocatively efficientA) whenever marginal benefit exceeds marginal cost.B) whenever marginal cost exceeds marginal benefit.C) when the maximum possible quantity is being produced. D) when marginal benefit equals marginal cost.
D) when marginal benefit equals marginal cost.
36) Which of the following is an example of a positive statement?A) We should cut back on our use of carbon-based fuels such as coal and oil. B) Every American should have equal access to health care.C) The Federal Reserve ought to cut the interest rate.D) Increasing the minimum wage results in more unemployment.
Increasing the minimum wage results in more unemployment.
26) A positive statement isA) about what is.B) the result of a model's normative assumptions.C) valid only in the context of a model with simple assumptions. D) about what ought to be.
about what is.
2) The production possibilities frontier is the boundary between A) those wants that are limited and those that are unlimited. B) those combinations of goods and services that can be produced and those that cannot. C) those resources that are limited and those that are unlimited. D) those combinations of goods and services that can be produced and those that can be consumed.
those combinations of goods and services that can be produced and those that cannot.
