Econ 101 SCQ Questions
(Table: Total Cost Data) Look at the table Total Cost Data. What is the total variable cost for this bicycle firm when the firm produces 5 bicycles? A. $50 B. $240 C. $60 D. $190
D
(Figure and Table: The Market for Taxi Rides) Look at the figure and table The Market for Taxi Rides. If the government imposes an excise tax of $1 per ride (causing the supply curve to shift upward by that amount), then the government will collect tax revenues of ________. However, there will be a deadweight loss to society of ________ caused by this tax. A. $9 million; $0.5 million B. $16 million; $1 million C. $45 million; $1 million D. $50 million; $0.5 million
A
(Figure: A Changing Budget Constraint for Strawberries and Shortcake) Look at the figure A Changing Budget Constraint for Strawberries and Shortcake. Seb's original budget line is given by BL1 and his original indifference curve is given by I1. Which of the following would have caused his budget line to move to BL2? A. The price of strawberries increased. B. The price of shortcake increased. C. Seb's income decreased. D. The price of strawberries decreased.
A
(Figure: Gain in Producer Surplus) Look at the figure Gain in Producer Surplus. Which of the following area or areas represent producer surplus when the price is equal to P2? A. D, E, and F B. B and C C. D and E D. A, B, and C
A
(Figure: Rent Controls) Look at the figure Rent Controls. If rent controls are set at Rent1: A. the shortage of rental units is the distance Q3 - Q1. B. some renters will be willing to pay a price as high as Rent4 for Q1 units. C. no one will have to pay a higher actual price than Rent0, nor will anyone be willing to do so. D. there will be a surplus of rental units, but it is impossible to tell how large the surplus is based on the information provided.
A
(Figure: The Average Total Cost Curve) Look at the figure The Average Total Cost Curve. The total cost of producing five pairs of boots is approximately: A. $408. B. $82. C. $108. D. $17.
A
(Figure: The Demand and Supply of Wheat) Look at the figure The Demand and Supply of Wheat. What is the equilibrium price in this wheat market? A. $6 B. $4 C. $2 D. $8 E. There is no equilibrium price.
A
(Figure: The Marginal Product of Labor) Look at the figure The Marginal Product of Labor. The total product for three workers is: A. 51 bushels. B. 45 bushels. C. 39 bushels. D. 15 bushels.
A
(Figure: The Market for Butter) Look at the figure The Market for Butter. If a government price floor at $1.20 is imposed on this market, an inefficiency will result in the form of a: A. surplus of 4.5 million pounds of butter. B. shortage of 4.5 million pounds of butter. C. surplus of 1.5 million pounds of butter. D. shortage of 1.5 million pounds of butter.
A
(Figure: The Market for Hybrid Cars) Look at the figure The Market for Hybrid Cars. What area represents consumer surplus if there is a binding price floor at P1? A. a B. a + b C. a + b + c D. a + b + d
A
(Figure: The Market for Lattes) Look at the figure The Market for Lattes. What is the price elasticity of supply between the prices of $2 and $2.50 per cup (using the midpoint formula)? A. 1 B. 1.29 C. 1.51 D. 3
A
(Figure: Three Firms that Pollute) Three firms in a small city are responsible for mercury pollution, and the marginal benefit of the individual polluters is shown in the figure Three Firms That Pollute. If each company is allowed to emit only 300 tons of mercury per day, which company will be most adversely affected? A. firm A B. firm B C. firm C D. They are equally affected.
A
(Figure: Traffic Lights in Plymouth) Look at the figure Traffic Lights in Plymouth. Plymouth has 1,000 residents. Each of the residents has the same individual marginal benefit per traffic light. Without government intervention, the town will have _____ traffic lights. A. 0 B. 4 C. 8 D. 12
A
(Table: Food and Clothing Bundles) Look at the table Food and Clothing Bundles. Teddy enjoys consuming food and clothing. The table shows five bundles of food and clothing that all provide Teddy with the same amount of utility. The marginal rate of substitution of food for clothing as Teddy moves from bundle D to bundle E is equal to: A. 1 B. -2.8 C. -14 D. -5
A
(Table: Marginal Benefit, Cost, and Consumer Surplus) The table Marginal Benefit, Cost, and Consumer Surplus shows six consumers' willingness to pay for one iTunes download. If the marginal social cost is constant at $0, then the efficient price is _____ and consumer surplus is _____. A. $0; $37 B. $1; $36 C. $4; $33 D. $5; $32
A
(Table: Output and Costs) Look at the table Output and Costs. Using the information in the table, when output equals four, total variable cost equals: A. 48. B. 38. C. 58. D. 28.
A
(Table: Production Possibilities Schedule I) Look at the table Production Possibilities Schedule I. If the economy produces 2 units of consumer goods per period, it also can produce at most ________ units of capital goods per period. A. 24 B. 28 C. 18 D. 30
A
(Table: Total Cost and Total Individual Benefit) Look at the table Total Cost and Total Individual Benefit. If an individual resident were to decide about hiring and paying for animal control officers on his or her own, how many officers would that resident hire? A. 0 B. 1 C. 3 D. 5
A
(Table: Wages and Hours Worked) Look at the table Wages and Hours Worked. Graphing the relation with wages on the vertical axis and hours worked on the horizontal axis, the slope between point D and point E is: A. 2 B. 45 C. 0.5 D. 5
A
Abdul spends all of his income on food (F) and shelter (S). His budget line is given by the equation 5F + 20S = 100. Which of the following consumption bundles is part of his consumption possibilities? A. 8 units of F and 3 units of S B. 14 units of F and 2 units of S C. 0 units of F and 6 units of S D. 20 units of F and 15 units of S
A
According to economists, equilibrium exists when: A. no individual has an incentive to change his or her behavior B. output is distributed equitably C. an individual would be better off taking a different action D. scarcity is eliminated
A
An increase in the price of hamburger would probably result in ________ in the demand for hamburger buns. A. a decrease B. an increase C. no change D. random fluctuations
A
An increase in the price of sugar (an ingredient for soft drinks) and an increased concern about tooth decay caused by the consumption of soft drinks will result in which of the following in the soft drink market? A. Equilibrium quantity will decrease, but equilibrium price may decrease, increase, or stay the same. B. Equilibrium quantity will increase, but equilibrium price may decrease, increase, or stay the same. C. There will be an increase in both the equilibrium price and quantity. D. There will be a decrease in both equilibrium price and quantity. E. The equilibrium price and quantity will stay the same.
A
Assume the cross-price elasticity of demand for Coke and Pepsi is equal to 3. If Pepsi raises its price by 10%, then the quantity of: A. Coke demanded will increase by 30%. B. Coke demanded will decrease by 30%. C. Pepsi demanded will increase by 30%. D. Pepsi demanded will decrease by 30%.
A
If drivers decide to make phone calls without considering the costs imposed on others, the: A. number of phone calls made while driving will be more than the socially optimal quantity. B. number of phone calls made while driving will be fewer than the socially optimal quantity. C. marginal social cost curve will lie below the marginal cost of production curve. D. marginal social benefit curve will lie below the marginal social cost curve.
A
If the estimated price elasticity of demand for foreign travel is 4, then: A. a 20% decrease in the price of foreign travel will increase the quantity demanded by 80%. B. the demand for foreign travel is inelastic. C. a 10% increase in the price of foreign travel will increase the quantity demanded by 40% D. a 20% increase in the price of foreign travel will increase the quantity demanded by 80%.
A
If your purchases of shoes increase from 9 pairs per year to 11 pairs per year when your income increases from $19,000 to $21,000 a year, other things equal, for you, shoes are considered: A. a normal good. B. an inferior good. C. a complementary good. D. a substitute good.
A
Joan loves to eat sushi. Her first piece of sushi normally gives her a marginal benefit of $4.50. Each additional piece creates a marginal benefit that declines by $0.25 per piece. If her favorite sushi bar charges $2.75 per piece of sushi, how many pieces should she eat? A. 8 B. 10 C. 5 D. 11
A
Many students have recently decided to study abroad. Some of them , concerned about economic competitiveness, have decided to intensively study a language before they leave the country. Which panel indicates the expected impact of this activity on the market for language software? A. A B. B C. C D. D
A
Max consumes only yogurt and almonds, and he is on his highest possible indifference curve. Two bundles on this indifference curve are bundle A (4 yogurts and 2 almonds), bundle B (3 yogurts and 3 almonds). Between points A and B, what is Max's marginal rate of substitution of yogurt for almonds? A. 1 B. 2 C. 3 D. 1.33
A
Peanut butter and jelly are complements. If there is a decrease in the price of jelly, producer surplus in the peanut butter market: A. will increase. B. will decrease. C. will not change. D. may change, but it is impossible to tell if it will increase or decrease.
A
Public goods are NOT sold in efficient quantities in the marketplace because: A. once supplied to a buyer, they can be made available at no cost to someone else. B. the more one person has, the less another person has. C. they are usually so costly that only the wealthy can afford them. D. they are usually very poor quality goods.
A
Rapidly increasing health costs have been a major political concern since at least 1992. Suppose the government sets a price ceiling (the maximum price) for a normal doctor's visit at $20 to control rising health costs but the market equilibrium price is $40. If this health services market is perfectly competitive, what will happen? A. More people will try to visit the doctor, but there will be fewer doctors willing to see patients at that price. B. The same number of people will try to visit the doctor, and the same number of doctors are willing to see patients at that price. C. More people will be able to see the doctor, since the price is lower. D. Fewer people will try to see the doctor, and fewer doctors are willing to see patients at that price.
A
Scarcity in economics means that: A. we do not have sufficient resources to produce all of the goods and services we want B. economists are clearly not doing their job C. the wants of people are limited D. there must be poor people in rich countries
A
Suppose Cyd knows the average total cost of producing 9 scones is $5, while the average total cost of producing 10 scones is $5.20. What is the marginal cost of the tenth scone? A. $7.00 B. $5.20 C. $0.20 D. $5.00
A
The cost of sensors used in making digital cameras falls, while a successful ad campaign makes digital cameras more fashionable. As a result, the equilibrium price of digital cameras _____ and the equilibrium quantity _____. A. may increase, decrease, or stay the same; increases B. decreases; increases C. increases; may increase, decrease, or stay the same D. increases; increases
A
The current federal minimum wage is ______ per hour. A. $7.25 B. $7.40 C. $9.00 D. $9.10 E. $15.00
A
The fact that two variables always move together over time: A. does not prove that one of the variables is dependent on the other B. proves that one of the variables is dependent on the other C. is often illustrated or depicted using either a pie chart or a bar chart D. proves that changes in one variable cause changes in the other
A
The marginal cost of producing an artificially scarce good is equal to: A. zero. B. the marginal benefit if consumer surplus equals zero. C. the average total cost. D. its price.
A
The marginal utility of coffee consumption for Steve is the change in _____ generated by consuming an additional cup of coffee. A. total utility B. total consumption C. total demand D. price
A
The most likely reason that the government implements a _____ is because it feels the price is too high for _____. A. price ceiling; consumers B. price ceiling; producers C. price floor; producers D. price floor; consumers
A
Vanessa buys 4 pomegrantes and 7 apples. Assuming that diminishing marginal utility applies to both pomegranates and bananas, if Vanessa buys more pomegranates and fewer bananas, the _____ of pomegranates will _____, and the _____ of bananas will _____. A. marginal utility; fall; marginal utility; rise B. marginal utility; rise; marginal utility; fall C. total utility; fall; marginal utility; rise D. marginal utility; rise; total utility; rise
A
When a market is efficient: A. there is no way to make some people better off without making other people worse off. B. consumers who value buying a good the least are the ones who are able to purchase the good. C.producers whose willingness to accept a price that is greater than the market price are able to sell their good. D. there are ways to make everyone better off.
A
Which of the following is an example of a black market transaction? A. a tenant in a rent-controlled apartment subletting at a higher rent B. the purchase of an inferior radio at a department store C. waiting in line during the gasoline shortages of the 1970s D. the oil market
A
Xavier notices that the marginal utility of working with a tutor seems to fall with each hour the tutor helps him study. If Xavier keeps the tutor until his grade actually begins to fall, his marginal utility will be: A. negative. B. positive, but rising more slowly. C. zero. D. immeasurable.
A
You are planning to study 8 hours this week for your economics final and are considering studying a 9th hour. You should: A. make your decision based on the cost of the next best alternative use of your time compared to the benefit of one or more hour of study B. compare the benefits of one more hour of study with the cost of one less hour of studying calculus C. compare the benefits of one more hour of study with the cost of one less hour of sleep D. compare the benefits of one more hour of study with the cost of one less hour of work at your part-time job
A
(Figure: An Individual's Marginal Benefit from a Public Good) Look at the figure An Individual's Marginal Benefit from a Public Good. Assume that two individuals will share consumption of a public good; each individual has the marginal benefit curve shown in the figure. If the marginal cost of the good is $24, how many units of this public good would maximize society's welfare? A. 0 B. 8 C. 12 D. 16
B
(Figure: Consumer Equilibrium I) Look at the figure Consumer Equilibrium I. If in equilibrium Owen receives marginal utility of 10 utils from the last pizza he consumes, his marginal utility from the last soda must be ___. A. 0.5 B. 0.75 C. 1.5 D. 13.3
B
(Figure: Demand for Coconuts) Look at the figure Demand for Coconuts. If coconuts area normal good and the price of coconuts increases, it would be represented in the figure as a movement from: A. A to B. B. B to A. C. C to A. D. E to B. E. B to C.
B
(Figure: Demand for DVDs) Look at the figure Demand for DVDs. A decrease in the price of DVD players (a complement) would result in a change illustrated by: A. the move from f to g in panel A. B. the move from h to i in panel B. C. the move from j to k in panel C. D. the move from l to m in panel D.
B
(Figure: Income Tax Payments) Look at the figure Income Tax Payments. Which panel or panels best represent the effects of a progressive income tax? A. A B. B C. C D. A and B
B
(Figure: Monthly Demand for Ice Cream Cones) Look at the table Monthly Demand for Ice Cream Cones. The graph represents one individual's monthly demand for ice cream cones. At a price of $5 per cone, this individual will consume 10 cones in a month. How much consumer surplus does this consumer receive? A. $100 B. $50 C. $150 D. $500
B
(Figure: The Market for e-Books) If the price of e-Books decreases from $6 to $4, total revenue changes from _______ to _______, which means that demand is _________. A. $240; $200; elastic B. $240; $200; inelastic C. $180; $240; elastic D. $40 to $50; inelastic
B
(Scenario: Private and External Benefits) Look at the scenario Private and External Benefits. The community decides that given all the benefits of lawn upkeep, it is important to maintain the socially optimal number of lawn upkeep hours. A market solution to achieve this is to: A. require community lawn service of 45 hours. B. subsidize everyone who contributes to lawn upkeep with a payment of $15. C. implement a Pigouvian lawn tax of $65. D. provide no additional funds to lawn upkeep.
B
(Table: Marginal Benefit, Cost, and Consumer Surplus) The table Marginal Benefit, Cost, and Consumer Surplus shows six consumers' willingness to pay for one iTunes download. If the marginal social cost is constant at _____, then _____ consumers will purchase this good and consumer surplus is _____. A. $5; three; $30 B. $4; four; $18 C. $5; two; $37 D. $4; four; $34
B
(Table: Production Function for Soybeans) The table shows a production function for soybeans. Assume that the fixed input, capital, is 10 acres of land and a tractor, which have a combined cost of $150 per day. The cost of labor is $100 per worker per day. The variable cost of producing 45 bushels of soybeans is: A. $100 B. $200 C. $350 D. $4500
B
A perfectly competitive firm maximizes profit in the short run by producing the quantity at which: A. TR = TC. B. MR = MC. C. Q × (P - ATC) = 0. D. P < AVC.
B
A plastics manufacturing plant dumps wastewater into the Big River. This leads to higher costs and disruption for fishermen on the river, for which they are not compensated. In this situation: A. too little of society's resources is being used to produce plastic. B. too much of society's resources is being used to produce plastic. C. the ideal amount of society's resources is being used to produce plastic. D. there is an external benefit to society from plastic production.
B
A shift of the demand curve for thin-crust pizza would not be caused by a change in: A. buyers' incomes. B. the price of thin-crust pizza. C. the price of thick-crust pizza. D. the popularity of thin-crust pizza.
B
A thousand people are in the path of a tsunami. The government has limited time and must choose only one from among several evacuation plans. Which of the following is equivalent to saving 300 lives for certain? A. A 30% chance of saving 1,000 people and a 70% chance of saving no one. B. 700 people die for certain. C. A 30% chance that no one will die and a 70% chance that everyone will die. D. 700 people live for certain.
B
An excise tax causes inefficiency because the number of transactions in a market is reduced. Because the tax discourages mutually beneficial transactions, there is a(n)________ from a tax. A. quota rent B. deadweight loss C. increased consumer surplus D. increased producer surplus
B
As an economy moves from point to point along its PPF, what is changing? A. the productivity of the resources available in the economy B. the allocation of resources within the economy C. the size of the labor force D. the amount of resources available in the economy
B
Diminishing returns to an input occur: A. when all inputs are fixed. B. when some inputs are fixed and some are variable. C. when all inputs are variable. D. only when there are no fixed inputs.
B
Gasoline, a derivative of oil, is a large part of transportation costs for many producers. If the price of oil increases at the same time that incomes fall for many consumers, one would expect the equilibrium price of many normal goods to _____, while their equilibrium quantities would _____. A. fall; rise B. fall, rise, or stay the same; decrease C. decrease; fall, rise, or stay the same D. fall; fall
B
If air travel to Hawaii becomes less expensive, what is likely to happen in the market for hotel rooms in Hawaii? A. The demand curve for hotel rooms will shift to the left. B. The demand curve for hotel rooms will shift to the right. C. The supply curve for hotel rooms will shift to the left. D. The supply curve for hotel rooms will shift to the right. E. nothing
B
It is certain that the equilibrium price will fall when: A. the supply curve and the demand curve both shift to the right. B. the supply curve shifts to the right and the demand curve shifts to the left. C. supply decreases and demand stays the same. D. supply and demand both increase.
B
It is very difficult for Julia to find inexpensive and available inputs for her business. Because of this, we predict that Julia's price elasticity of supply is: A. elastic. B. inelastic. C. unit-elastic. D. perfectly elastic.
B
Kayla and Jada are roommates in New York City. Both Kayla and Jada recently received raises. Kayla now buys more CDs than before, but Jada buys fewer. Kayla behaves as if CDs are ________ goods, and Jada's income elasticity of demand for CDs is ________. A. normal; positive B. normal; negative C. inferior; positive D. inferior; negative
B
Krista's dry-cleaning business incurs $900 per month in fixed costs. Last month her total output was 3,000 pounds of clothes. This month her total output fell to 2,700 pounds. This means her average fixed cost _____ by a little more than _____. A. fell; 3.33 cents B. increased; 3.33 cents C. fell; 2.50 cents D. increased; 2.50 cents
B
Public goods should be produced up to the point at which the marginal cost of production equals: A. the maximum price any individual is willing to pay for that unit. B. the sum of the individual marginal benefits from all consumers of that unit. C. zero, which is the marginal cost of allowing another individual to consume the good. D. the highest marginal benefit from any individual consumer of the good.
B
Rice and potatoes are substitutes in consumption. If the price of rice rises and there is a bumper crop of potatoes, in the market for potatoes one would expect the equilibrium price to _____ and the equilibrium quantity to _____. A. rise; fall B. rise, fall, or stay the same; rise C. rise; fall, rise, or stay the same D. fall; fall
B
Sabreen gets 5 units of utility from one slice of pizza and 9 units of utility from two slices of pizza. The principle of diminishing marginal utility implies that the total utility from three slices of pizza will be _____ units of utility. A. exactly 12 B. less than 13 C. less than 9 D. more than 14
B
Sarah's accountant tells her that she made a profit of $43,002 running a pottery studio in Orlando. Sarah's husband, an economist, claims Sarah made $0 profit running her pottery studio. This means her husband is claiming that she incurred ________ in ________ costs. A. $86,004; implicit B. $43,002; implicit C. $43,002; explicit D. $86,004; explicit
B
Suppose Governor Meridias decides to initiate a state income tax. The first $50,000 of household income is tax-free, while any income above $50,000 is taxed at 10%. A household earning $50,000 has a marginal tax rate of _____ and an average tax rate of _____. A. 10%; 10% B. 0%; 0% C. 10%; 0% D. 0%; 10%
B
Suppose that the price of overnight package delivery service is $18 before a $5 excise tax is imposed. With the tax, the price rises to $20. What is the producer's burden of the tax? A. $2 B. $3 C. $5 D. $13
B
Suppose that the rate for a hotel room is $75 before the imposition of an $8 excise tax. With the tax, the rate rises to $80. What is the consumer's burden of the tax? A. $3 B. $5 C. $8 D. $10
B
Suppose the Jamaican government sets coffee prices at $1 per pound, when the market price is $10. The government's actions will: A. result in coffee surpluses even in a coffee-rich country. B.cause coffee shortages even in a coffee-rich country. C. improve efficiency, since the low prices will force producers to find cheaper production methods. D. improve equality between rich and poor, since the poor can now afford coffee.
B
If the price is consistently below the average variable cost, then in the short run a perfectly competitive firm should: A. raise price. B. sell more output. C. shut down. D. lower price to sell more.
C
Suppose the town of Falls Valley has a mosquito problem. After a bad summer, the town accountants explain that the marginal cost of providing one more treatment for mosquito control is $100,000. The town should provide the additional mosquito control only if the marginal: A. benefit for any individual citizen is at least $100,000. B. benefit for all individual citizens adds up to at least $100,000. C. social cost of mosquito control is more than $100,000. D. social cost of mosquito control is less than $100,000.
B
Suppose you hear an economist make an assertion that, between the two countries, France has a comparative advantage in the production of chocolate and that Italy has a comparative advantage in the production of wine. Which of the following statements is another way of stating the same idea expressed in the assertion? A. French chocolate is better tasting than Italian chocolate B. France can produce chocolate at a lower opportunity cost than Italy can C. France can produce wine at a lower opportunity cost than Italy can D. French wine is better tasting than Italian wine
B
The government of New York City has banned smoking in all restaurants, bars, beaches, parks, and plazas. This is an example of which principle? A. resources should be used as efficiently as possible to achieve society's goals B. when markets fail to achieve efficiency, government intervention can improve society's welfare C. one person's spending is another person's income D. there are gains from trade
B
Which of the following changes would cause a shift inward in the demand for streamed movies? A. a decrease in the price of streamed movies B. a decrease in the price of movie admissions C. improved technology in the delivery of streamed movies D. an increase in the supply of streamed movies E. more people having free time for leisure activities
B
The price elasticity of supply for a good is 3 if a: A. 1% increase in price leads to a 3% decrease in the quantity supplied. B. 1% decrease in price leads to a 3% decrease in the quantity supplied. C. 9% decrease in price leads to a 3% decrease in the quantity supplied. D. 9% increase in price leads to a 3% decrease in the quantity supplied.
B
What would be the dominant effect in the market for new homes of an increase in the wages of skilled tradesmen who work in housing construction? A. The supply of new homes would shift to the right. B. The supply of new homes would shift to the left. C. The demand for new homes would shift to the right. D. The demand for new homes would shift to the left.
B
When a person maximizes utility within a budget constraint, the resulting consumption bundle When a person maximizes utility within a budget constraint, the resulting consumption bundle will lie at the: A. intersection of a budget line and an indifference curve. B. tangency of a budget line and an indifference curve. C. tangency of a price consumption curve and an income consumption curve. D. intersection of an income consumption curve and a price consumption curve.
B
When all of a firm's inputs are doubled, input prices do not change, and this results in the firm's level of production more than doubling, a firm is operating: A. on the upward-sloping portion of its long-run average total cost curve. B. on the downward-sloping portion of its long-run average total cost curve. C. at the minimum of its long-run average total cost curve. D. on the upward-sloping portion of its marginal cost curve.
B
When the price of air travel rises, both the income and substitution effects play a role in the response. The income effect describes what happens due to the: A. fact that many consumers will switch to traveling by car or by train. B. fact that consumers find their incomes now have a lower purchasing power. C. lower utility now received from air travel. D. lower utility now received from travel of any type.
B
Which of the following statements is true because of the principle of diminishing marginal utility? A. When a customer continues to eat more pie at the Pie Palace, each additional piece of pie gives a larger amount of marginal utility. B. When a customer continues to eat more pie at the Pie Palace, each additional piece of pie gives a smaller amount of marginal utility. C. The marginal utility of a piece of pie is maximized when the total utility of pie is zero. D. The total utility of pie is at a maximum while the marginal utility of pie is still increasing.
B
Yitian goes to see Star Wars: The Force Awakens for $12. After watching the first 15 minutes, he realizes that there are many better shows on TV. He leaves. Yitian understands the problem of _____. If he stayed, he would have exhibited _________. A. sunk cost, the endowment effect B. sunk cost, the sunk-cost fallacy C. underconfidence, overconfidence D. the sunk-cost fallacy, sunk cost
B
(Figure: A Perfectly Competitive Firm in the Short Run) Look at the figure A Perfectly Competitive Firm in the Short Run. The firm's total cost of producing its most profitable level of output is: A. BS. B. DK. C. 0FKD. D. 0ESB.
C
(Figure: A Perfectly Competitive Firm in the Short Run) Look at the figure A Perfectly Competitive Firm in the Short Run. The lowest price that will yield zero economic profit is indicated by the letter: A. G B. F C. E D. N
C
(Figure: An Individual's Marginal Benefit from a Public Good) Look at the figure An Individual's Marginal Benefit from a Public Good. Assume that two individuals will share consumption of a public good; each individual has the marginal benefit curve shown in the figure. If the marginal cost of the good is $8, how many units of the public good will be provided by the private market? A. 0 B. 8 C. 12 D. 16
C
(Figure: City with Two Polluters) Look at the figure City with Two Polluters. If the government wants to limit total emissions to 2,200 tons, it could impose an emissions tax of ________ on both firms. A. $100 B. $200 C. $300 D. $400
C
(Figure: Consumer Equilibrium I) Look at the figure Consumer Equilibrium I. What is Owen's optimal consumption bundle? A. 4 pizzas and 150 sodas B. 8 pizzas and 40 sodas C. 6 pizzas and 40 sodas D. 14 pizzas and 20 sodas
C
(Figure: Guns and Butter) Look at the figure Guns and Butter. On this figure, points A, B, E, and F: A. indicate constant costs for guns and increasing costs for butter B. show that the opportunity cost of more guns increases but that of more butter decreases C. indicate combinations of guns and butter that society can produce using all of its factors efficiently D. indicate that society wants butter more than it wants guns
C
(Figure: Pollution and Efficiency) Look at the figure Pollution and Efficiency. If this market, where sulfur emissions are a result of production, produced ________ units of emissions, then ________. A. 40; MSB = MSC B. 30; MSB < MSC C. 40; MSB < MSC D. 30; MSC < MSB
C
(Figure: The Market for Round-Trip Airline Flights) Look at the figure The Market for Round-Trip Airline Flights. The supply and demand graph represents the market for round-trip airline flights between Boston and New York. Suppose the mayor of New York decides to limit the number of flights to Q1 to reduce air pollution. What is the price wedge from the quota? A. P1 - P2 B. P2 - P3 C. P1 - P3 D. P1 + P2
C
(Figure: The Market for Sandwiches) Look at the figure The Market for Sandwiches. At the competitive price of $5, 10 sandwiches are sold. At this competitive price, consumer surplus equals ________ and producer surplus equals ________. A. $50; $50 B. $100; $50 C. $50; $25 D. $100; $25
C
(Figure: Traffic Lights in Plymouth) Look at the figure Traffic Lights in Plymouth. Plymouth has 1,000 residents. Each of the residents has the same individual marginal benefit per traffic light. If the government provides traffic lights, the socially efficient quantity is: A. 0. B. 4. C. 8. D. 12.
C
(Table: Costs for Birthday Cakes) Annie has a bakery that specializes in birthday cakes, and her variable costs of producing cakes are shown in the table Costs of Birthday Cakes. Assume that her fixed costs are $0. The minimum average variable cost occurs at what output? A. 2 B. 3 C. 4 D. 5
C
(Table: Johnson's Income and Expenditures) Look at the table Johnson's Income and Expenditures. For Johnson, magazines are: A. a negative good. B. an inferior good. C. a normal good. D. a neutral good.
C
(Table: Market for Apartments) Look at the table Market for Apartments. If a government price ceiling of $600 is imposed on this market, an inefficiency will result in the form of a: A. surplus of 0.6 million apartments. B. surplus of 0.8 million apartments. C. shortage of 0.8 million apartments. D. shortage of 0.6 million apartments.
C
(Table: Market for Taxi Rides) Look at the table The Market for Taxi Rides. If a government quota limit at 7 million rides is imposed on this market, the quota rent that will accrue to the owner of a taxi medallion will be ________, but there will be a missed opportunity (inefficiency) to consumers of ________. A. $1 per ride; 1 million rides B. $2 per ride; 2 million rides C. $3 per ride; 3 million rides D. $4 per ride; 4 million rides
C
(Table: Security in a Residential Community) Look at the table Security in a Residential Community. The marginal cost of hiring the second security guard is _____, and the marginal social benefit is _____. A. $150; $200 B. $450; $1,800 C. $150; $600 D. $450; $600
C
(Table: Street Cleanings) Look at the table Street Cleanings. Suppose that the marginal cost of each street cleaning is $18. Which statement is TRUE? A. If the city decided to clean the streets only once per month, Peter would be willing to pay the entire cost of the cleaning. B. If the city decided to clean the streets only once per month, Wendy would be willing to pay the entire cost of the cleaning. C. If Wendy and Peter were the only people in society, the efficient number of street cleanings would be one per month. D. If Wendy and Peter were the only people in society, the efficient number of street cleanings would be at least two per month.
C
(Table: The Marginal Social Cost of Batteries) The table The Marginal Social Cost of Batteries lists several price (P) and quantity (QS) values along the market supply curve for batteries. Because batteries generate toxic wastes, there is an external cost associated with their production. The marginal external cost is estimated to be $10. The marginal social cost would then be indicated by the values in the column labeled: A. MSC1. B.MSC2. C. MSC3. D. MSC4.
C
(Table: Total Cost and Total Individual Benefit) Look at the table Total Cost and Total Individual Benefit. Assume there are 1,000 residents and they all have the same total individual benefit, as shown in the table. If the residents acted together, how many officers would they hire? A. 0 B. 1 C. 3 D. 5
C
If personal income up to and including $25,000 is not taxed, income of $25,001 to $50,000 is taxed at 10%, and income over $50,000 is taxed at 20%, then a family earning an income of $75,000 will pay _____ in personal taxes. A. $6,000 B. $15,000 C. $7,500 D. $11,250
C
A firm produces 200 pop-up speakers at an average total cost of $27 and an average variable cost of $24. What is the firm's level of total fixed cost? A. $3 B. $200 C. $600 D. $4,800
C
A new fast-food restaurant offered a free meal (valued at $5) a week for a year to its first 100 customers. Ramona camped out for 48 hours before the opening to be one of the first 100 customers. The cost of the free meal a week for a year for Ramona was: A. the cost is impossible to determine B. zero C. whatever she would have done with those 48 hours D. $260
C
If personal income up to and including $25,000 is not taxed, income of $25,001 to $50,000 is taxed at 10%, and income over $50,000 is taxed at 20%, then a family earning an income of $75,000 will pay an AVERAGE tax rate of: A. 5%. B. 7.5%. C. 10%. D. 20%.
C
Although Mike has a legal right to listen to any kind of music, suppose his roommate John dislikes the heavy metal music Mike plays on his iPod dock. According to the Coase theorem, an efficient private solution to this negative externality can be found: A. even if both parties do not want to negotiate. B. even if the cost of hiring lawyers to negotiate a deal is high. C. if the transaction costs are low. D. by authorities confiscating Mike's iPod.
C
Apartment dwellers near Wrigley Field in Chicago are often able to watch the Chicago Cubs baseball team play from the roof of their apartment building, without having to pay the cost of buying a ticket. This is an example of a: A. marginal social cost. B. negative externality. C. positive externality. D. deadweight loss.
C
Bar owners often offer lower beer prices to women than they do to men. This will increase bar revenues: A. if women have a unit-elastic demand for beer. B. if women have an inelastic demand for beer. C. if women have an elastic demand for beer. D. if women have a negative income elasticity of demand for beer.
C
Black markets may develop as a result of price controls because: A. quantity demanded equals quantity supplied at the mandated price. B. price controls increase efficiency. C. individuals can profit by illegal exchanges. D. individuals cannot profit by illegal exchanges.
C
In economics, the short run is defined as: A. less than 1 year. B. less than 6 months. C. the period in which some inputs are considered to be fixed in quantity. D. the period in which some inputs are fixed, but it cannot exceed 1 year.
C
Josiah has an iPhone, and he frequently downloads songs from the iTunes website. He pays a small fee for each download, but downloading a song does not remove it from the iTunes inventory. Other consumers can also pay the fee and download a song that Josh might have already accessed. The iTunes service is best described as(n): A. private good. B. public good. C. artificially scarce good. D. common resource.
C
Marla will make $10 by tutoring for an additional hour, but she will lose an hour of studying for her economics test. Marla decides to study rather than tutor. Marla's choice indicates that she: A. values an hour of studying less than the $10 she would earn tutoring B. doesn't need the money C. values an additional hour of studying more than the $10 she would earn tutoring D. does not understand that there is no benefit from studying
C
Regardless of the price of ice cream, Charlie spends $5 a week on ice cream. What can we conclude about Charlie's demand for ice cream? A. His income elasticity of demand for ice cream is equal to one. B. His income elasticity of demand for ice cream is equal to zero. C. His price elasticity of demand for ice cream is equal to one. D. His price elasticity of demand for ice cream is equal to zero.
C
Since the 1960s, power plants have taken actions, such as switching to low-sulfur coal and installing scrubbers in their smokestacks, which have significantly reduced the problem of acid rain. Power plants took these actions mainly because: A. of concern about the environment. B. large firms in the United States have a history of being "good citizens" and doing what is best for society, even if this reduces their profits somewhat. C. government policies regulated the industry and provided power companies with incentives to take these actions. D. of concern about the environment and because government policies provided power companies with incentives to take these actions.
C
Some 93% of college students say that they are a better-than-average driver. This is an example of the systematic bias called: A. the endowment effect B. hyperbolic discounting C. overconfidence D. the sunk-cost fallacy
C
Tankao makes earbuds for mobile devices. When Tankao produces 20 sets of earbuds, its average variable cost is $5 per set and its average total cost is $8 per set. Tankao's: A. marginal cost is less than $3 per set. B. marginal cost is $3 per set. C. average fixed cost is $3 per set. D. marginal cost is equal to its average fixed cost.
C
The price elasticity of demand for a particular cancer drug is zero and the price elasticity of supply is 0.50. If a $1 excise tax is levied on producers, how much of this tax will eventually be paid by consumers? A. $0.50 B. $0 C. $1 D. $1.50
C
The total consumer surplus for good X can be calculated in all except one of the following ways. Which is the exception? A. the sum of the individual consumer surpluses for all buyers of X B. the area below the demand curve for X and above the price of X C. the area bounded by the demand curve for X and the two axes D. the sum, for all buyers of X, of the difference between what each buyer is willing to pay for X and the amount actually paid
C
Which of the following is usually associated with a positive externality? A. smoking cigarettes B. listening to a new CD with earbuds C. innovation in the semiconductor industry D. an indoor classical music concert with tickets that cost $50
C
Which of the following taxes best illustrates the ability-to-pay principle of tax fairness? A. Roads and highways are built and maintained by revenue from a tax on gasoline. B. A sales tax on food pays for police and fire protection. C. A property tax that is proportional to the value of the home is charged to homeowners to fund primary and secondary education. D. The local city playground is funded by a tax on all citizens.
C
(Figure and Table: Indifference Curve Map). Which of the following statements is true? A. Combination A is preferred to combination B. B. Combination B is preferred to combination D. C. Combination C is preferred to combination A. D. Combination B is preferred to combination C.
D
(Figure: City with Two Polluters) Look at the figure City with Two Polluters. If the government issued each firm 800 permits, each allowing the emission of one ton (a total of 1,600 tons of emissions), and allowed them to trade permits, the market price to purchase one permit would equal: A. $100. B. $200. C. $300. D. $400.
D
(Figure: Consumer Surplus I) Look at the figure Consumer Surplus I. If the price rises from P1 to P2, consumer surplus decreases by the area: A. ABP2. B. AFP1. C. BGF. D. P1P2BF.
D
(Figure: Monthly Supply of Bread) Look at the figure Monthly Supply of Bread. The graph represents the monthly supply of bread at a local bakery. At the current price of $3 per loaf of bread, the bakery produces 120 loaves of bread per month. The producer surplus received by this bakery is equal to: A. $120. B. $60. C. $360. D. $180.
D
(Figure: Producer Surplus II) Look at the figure Producer Surplus II. If the price falls from P2 to P1, producer surplus decreases by the area: A. LMK. B. P1K0. C. P2M0. D. P2P1KM
D
(Figure: The Gains from Trade) Look at the figure The Gains from Trade. When demand increases from D1 to D2, equilibrium total surplus: A. decreases by $10.00. B. increases by $12.75. C. decreases by $15.00. D. increases by $27.50.
D
(Figure: The Marginal Cost Curve) Look at the figure The Marginal Cost Curve. According to the marginal cost curve, the total cost of mowing six lawns is approximately: A. $10 B. $20 C. $68 D. $88
D
(Figure: The Market for Blue Jeans) Look at the figure The Market for Blue Jeans. The government recently levied a $10 tax on the producers of blue jeans. What area or areas in the graph identify consumer and producer surplus after the tax was levied? A. a + b + c B. a + b + c + d + e + f C. d + e + f D. a + f
D
(Figure: The Market for Round-Trip Airline Flights) Look at the figure The Market for Round-Trip Airline Flights. The supply and demand graph represents the market for round-trip airline flights between Boston and New York. Suppose the mayor of New York decides to limit the number of flights to Q1 to reduce air pollution but allows producers to get the quota rent. What area or areas represent producer surplus after the quota is in place? A. a B. a + b + c C. c + e D. b + d + f
D
(Scenario: Private and External Benefits) Look at the scenario Private and External Benefits. The community estimates the marginal social benefit from lawn upkeep to be $15. Given this information, what is the socially optimal amount of lawn upkeep for this community? A. 0 hours B. 45 hours C. 50 hours D. 65 hours
D
(Table: Market for Butter) Look at the table Market for Butter. If the government imposes a price ceiling of $0.90 per pound of butter, the quantity of butter actually purchased will be: A. 10.5 million pounds. B. 1.5 million pounds. C. 10.0 million pounds. D. 9.0 million pounds.
D
(Table: Music Downloads) Look at the table Music Downloads. Two consumers, Eli and Madison, like to download songs to their MP3 players, and the table represents their willingness to pay for each downloaded song. Notice that you can tell these are marginals by looking at the wording of the first column. If an individual song can be downloaded at a price of $1, what is the total consumer surplus received by these consumers? A. $19.25 B. $18 C. $10 D. $11
D
A good is most likely to be artificially scarce if: A. it is nonexcludable and nonrival. B. the seller is a monopolist. C. it is nonexcludable but rival. D. it is excludable but nonrival.
D
A perfectly competitive firm's short-run supply curve is its _____ cost curve above its _____ cost curve. A. average variable; marginal B. marginal; average fixed C. marginal; average total D. marginal; average variable
D
A public good is a good or service for which exclusion is _____ and which is _____ in consumption. A. possible; rival B. possible; nonrival C. not possible; rival D. not possible; nonrival
D
All of the following curves are U-shaped, except the: A. long-run average total cost. B. average total cost. C. average variable cost. D. average fixed cost.
D
Egg producers know that the elasticity of demand for eggs is 0.1. If they want to increase sales by 5%, they will have to lower price by: A. 0.1%. B. 1%. C. 5%. D. 50%.
D
If two goods are substitutes, their cross-price elasticity of demand should be: A. less than 0. B. negative yet almost equal to 0. C. equal to 0. D. greater than 0.
D
If two variables are positively related: A. there is always a trade-off between the two B. one variable is always the reciprocal of the other C. as one goes up in value, the other typically goes down in value D. as one goes up in value, the other typically goes up in value, too
D
Lauren has 11 people working in her tangerine grove. The marginal product of the eleventh worker is 13 bushels of tangerines. If she hires a twelfth worker, the marginal product of that worker will be: A. 14 bushels. B. 15 bushels. C. 12 bushels. D. The answer cannot be determined with the information available.
D
Marginal cost can be calculated as: A. ΔTC / ΔQ, where TC is total cost and Q is output. B. ΔVC / ΔQ, where VC is variable cost and Q is output. C. the slope of the total cost curve. D. ΔTC / ΔQ, where TC is total cost and Q is output; ΔVC / ΔQ, where VC is variable cost and Q is output; and as the slope of the total cost curve.
D
Rent controls (like those in New York City) can cause all of the following except: A. inefficiently low quality. B. wasted resources resulting from the opportunity cost of time associated with trying to find an apartment. C. black markets. D. an increase in the quantity supplied of rent-controlled apartments.
D
Suppose after an increase in excise tax on cigarettes, the buyer now pays $10.80 per pack. The supply price per pack (the price received by producers) is $5.30. What is the amount of tax? A. $16.10 B. $13.30 C. $2.30 D. $5.50
D
Suppose the Alaskan king crab harvest is unregulated, and any person with a boat can go offshore, lower a crab pot, and harvest king crab. This common resource will likely be _____ because the marginal social cost of harvesting crabs _____ the market price of crab. A. overfished; is equal to B. overfished; is less than C. efficiently fished; is equal to D. overfished; exceeds
D
The efficient amount of polluting emissions occurs when: A. there is absolutely no damage done to a pristine environment. B. government forces zero emissions no matter what the cost. C. the marginal benefits of polluting emissions exceed the marginal costs of polluting emissions. D. the change in benefits and the change in costs due to an additional unit of emissions are equal.
D
The market for apples is in equilibrium at a price of $0.50 per pound. If the government imposes a price floor in the market at a price of $0.40 per pound, then: A. quantity demanded will decrease. B. quantity supplied will increase. C. there will be a shortage of the good. D. the price floor will not affect the market price or output.
D
The number of seats in a football stadium is fixed at 70,000. The city decides to impose a tax of $10 per ticket. In response, the team management raises the ticket price from $30 to $40 and still sells all 70,000 tickets. The tax caused a change in the consumer surplus of _____, a change in the producer surplus of _____, and a deadweight loss of _____. A. -$700,000; $0; $700,000 B. -$10; $0; $0 C. -$10; $0; $10 D. -$700,000; $0; $0
D
Which of the following is a statement of normative economics? A. an increase in the price of coffee will cause people to buy more tea B. an increase in the price of cotton will cause people to buy more linen C. lower prices for food will reduce farm incomes D. we should increase the price of food
D
Which of the following statements about opportunity cost is FALSE? A. opportunity cost may be larger than monetary cost B. opportunity cost includes both explicit and implicit costs C. the real or opportunity cost of something is what you must give up to get it D. opportunity cost is synonymous with explicit cost
D
Colorado imposes a retail marijuana excise tax at a rate of _____% and earns a _______% sales tax on retail marijuana purchases. Marijuana advocates used _______ as a selling point to get retail marijuana legalized. A. 0,0, community serenity B. 10, 10, a drop in drug crime C. 15, 15, consumer surplus D. 20, 10, producer revenues E. 15, 10, tax revenues for the state
E
When economists refer to transitivity, we are concerned about whether: A. we use transitive or intransitive verbs in our models. B. the price is correct for the value. C. a person's happiness is ordered relatively. D. how much transit costs for individuals is consistent. E. a person's preference ordering is consistent.
E
Which of the following could account for the fact that ice cream prices have recently increased and that consumption of ice cream has declined? A. The price of milk has fallen. B. The supply of ice cream has increased. C. The demand for ice cream has increased. D. The demand for ice cream has decreased. E. The supply of ice cream has decreased.
E
(Figure: Labor Force Participation Rate) Look at the figure Labor Force Participation Rate. During 1970-1985, the labor force participation rate was _______ for women and _______ for men. A. increasing; decreasing B. decreasing; increasing C. decreasing; decreasing D. increasing; increasing
A
After earning your BA, you have to decide whether to take a job that will pay you $45,000 per year or spend an additional two years earning an MBA. If you decide to pursue the graduate degree, your annual expenses for tuition, books, board, and lodging will be $32,000. You have been offered a scholarship for $10,000 per year, but to pay the remaining $22,000 per year, you would have to cash in savings bonds from your grandparents that have been earning $500 in interest per year. The annual opportunity cost of earning your MBA is: A. $67,500 B. $77,000 C. $99,000 D. $77,500
A
At the current level of output, Becca Furniture's marginal cost curve is above the average total cost curve. This means Becca Furniture's average total cost curve: A. must be rising. B. must be flat. C. must be falling. D. may be rising, falling, or flat depending on other things.
A
Bessie wants to calculate the accounting and economic profits of her cattle farm in Nebraska. She pays $30,000 per year in overhead, $80,000 in wages, and $20,000 in insurance. She forgoes $30,000 per year that she could make as a teacher. If her total revenue equals $140,000, that means her accounting profit is _____ and her economic profit is _____. A. $10,000; -$20,000 B. $30,000; -$30,000 C. -$10,000; -$10,000 D. $60,000; $30,000
A
Consider the following statement: "Because researchers have found that people behave in many ways that the economic model does not predict, the model is useless." Which of the following conclusions about this statement is incorrect? A. The statement is true. If the model cannot predict behavior correctly, it cannot be used as the foundation of economics. B. The statement is false. The model still shows how the world works most of the time. C. The statement is false. Many of the behavioral anomalies that researchers have found can be incorporated into the model. D. The statement is false. People and firms with systematic biases tend to lose out to people in the marketplace who are not biased.
A
Firms that offer buyers a money-back guarantee are seeking to exploit the bias called: A. the endowment effect B. hyperbolic discounting C. overconfidence D. the sunk-cost fallacy
A
If a consumer buys more plastic bins and fewer door hooks, the ________ of plastic bins will ________, and the ________ of door hooks will ________. A. marginal utility; fall; marginal utility; rise B. marginal utility; rise; marginal utility; fall C. total utility; fall; marginal utility; rise D. marginal utility; rise; total utility; rise
A
If a perfectly competitive firm is producing a quantity where MC = MR, then profit: A. is maximized. B. can be increased by increasing production. C. can be increased by decreasing production. D. can be increased by decreasing the price.
A
If a perfectly competitive gardening shop sells 30 evergreen bushes at $10 per bush, its marginal revenue is: A. $10. B. more than $10. C. less than $10. D. $300.
A
Technological improvements will: A. shift the production possibility frontier outward B. necessarily lead to increased unemployment C. shift the production possibility frontier inward D. leave the production possibility frontier unchanged
A
The provision of disabled-parking passes to those with disabilities often requires that more than enough spaces be available for those with disabilities. As a result, many of these spaces are vacant quite often when they could be used by able-bodied individuals. Such a situation illustrates the: A. trade-off between efficiency and equity B. power of the market to provide for equilibrium outcomes C. trade-off between efficiency and specialization D. ability of markets to provide efficient and equitable outsomes
A
(Figure: Hot Drinks Sold and Temperature) Look at the figure Hot Drinks Sold and Temperature. If we move from point K to point L in the figure, the outside temperature has ________ and the number of hot drinks sold has ________. A. decreased by 30 degrees; increased by 30 drinks B. increased by 20 degrees; decreased by 20 drinks C. increased by 40 degrees; decreased by 40 drinks D. increased by 30 degrees; decreased by 30 drinks
B
(Figure: Income and Substitution Effects) Look at the figure Income and Substitution Effects. Carlos is consuming his optimal consumption bundle at point A when the price of gasoline falls. The dashed line tangent to I1 shows a hypothetical budget line reflecting: A. the original income, the original price of cell phone minutes, and the new price of gasoline. B. the new price of gasoline in terms of cell phone minutes and a change in income to keep Carlos on the original indifference curve. C. the new price of gasoline in terms of cell phone minutes and a change in income to allow Carlos to reach an indifference curve higher than I1. D. the income and substitution effects.
B
(Figure: Income and Substitution Effects) Look at the figure Income and Substitution Effects. Carlos is consuming his optimal consumption bundle at point A when the price of gasoline falls. The movement from K2 to K3 reflects the _____ the decrease in the price of gasoline. A. total change in quantity demanded due to B. income effect of C. substitution effect of D. income and substitution effects of
B
(Figure: Income and Substitution Effects) Look at the figure Income and Substitution Effects. Carlos is originally consuming his optimal consumption bundle at point A in the figure when the price of gasoline falls. As Carlos moves to his new optimal consumption bundle, we observe that gasoline: A. is not an ordinary good. B. is a normal good. C. is an inferior good. D. and good L are complements.
B
(Figure: Strawberries and Submarines II) Look at the figure Strawberries and Submarines II. Suppose the economy is now operating at point A. The first submarine, which is achieved at point B, would have an opportunity cost of ________ million tons of strawberries. A. 150 B. 50 C. 400 D. 950
B
(Figure: The Profit-Maximizing Firm in the Short Run) Look at the figure The Profit-Maximizing Firm in the Short Run. If the market price is P4, the firm will produce quantity _____ and _____ in the short run. A. q1; break even B. q3; make a profit C. q4; break even D. q5; lose fixed costs
B
(Table: Labor and Output) Look at the table Labor and Output. The marginal product of the fifth worker is: A. 8 B. 4 C. 3 D. 40
B
(Table: Marginal and Total Benefit) Look at the table. Sed is deciding how many football games he wants to attend this year. If tickets to each football game cost $45, how many games should he attend? A. 0 B. 1 C. 2 D. 5
B
(Table: The Utility of Pecan Rolls) Look at the table The Utility of Pecan Rolls. The marginal utility for the second roll is: A. 35 B. 15 C. 10 D. 5
B
Betty runs a cookie shop where she sells cookies for $1 each. She employs five people, each of whom worked a total of 500 hours last year; she paid them $10 per hour. Her costs of equipment and raw materials add up to $75,000. Her business ability is legendary, and other companies have offered to pay Betty $100,000 to come to work for them. She also knows she could sell her cookie shop for $150,000. The bank in town pays an annual interest rate of 3% on all funds deposited with it. (Scenario: Betty's Cookie Shop) Betty is trying to decide whether to continue selling cookies, and she knows she cannot change the price of a cookie. She should continue selling cookies if: A. her implicit costs are greater than her accounting profits B. her explicit and implicit costs are less than her revenues C. her economic profit is negative D. her economic profit is equal to her accounting profit
B
For a firm producing at any level of output LOWER THAN the most profitable one, an increase in output adds: A. more to total cost than to total revenue. B. more to total revenue than to total cost. C. the same amount to total revenue as to total cost. D. to total revenue but not to total cost.
B
If the accounting profit for a firm is negative: A. the economic profit must be positive B. the economic profit must be negative C. the firm should produce more D. the firm will not own any taxes
B
In the housing market, if homeowners are unwilling to accept the market price because it is less than what they paid for their house: A. there will be a surplus of houses in the market B. there will be a shortage of houses in the market C. the market equilibrium quantity will be exchanged D. the market price will be below its natural equilibrium level
B
In the long run: A. all factors are fixed. B. all factors are variable. C. production choices are more limited than in the short run. D. production is always greater than zero.
B
In the short run, a perfectly competitive firm produces output and earns ZERO economic profit if: A. P < ATC. B. P = ATC. C. P < MC. D. P > ATC.
B
Suppose that in Australia, it takes two hours of labor to harvest 10 bushels of apples and four hours of labor to harvest 10 bushels of tomatoes. Further, suppose that in Brazil it takes 4 hours of labor to harvest 10 bushels of apples and 5 hours of labor to produce 10 bushels of tomatoes. Which of the following statements is TRUE? A. of these two countries, Brazil has a comparative advantage in producing apples B. of these two countries, Brazil has a comparative advantage in producing tomatoes C. Brazil has an absolute advantage in producing both goods D. in trade between these two countries, Australia would gain and Brazil would lose
B
(Figure: Short-Run Costs) Look at the figure Short-Run Costs. At 7 units of output, average fixed cost is approximately _____, and average variable cost is approximately _____. A. $100; $100 B. $10; $135 C. $40; $100 D. $140; $140
C
(Figure: The Profit-Maximizing Firm in the Short Run) Look at the figure The Profit-Maximizing Firm in the Short Run. If the market price is P3, the firm will produce quantity _____ and _____ in the short run. A. q2; make a profit B. q1; break even C. q2; incur a loss D. q4; incur a loss
C
(Figure: The Profit-Maximizing Firm in the Short Run) Look at the figure The Profit-Maximizing Firm in the Short Run. If the market price is less than P2, the firm will _____ in the short run. A. produce q1 and break even B. produce q1 and incur a loss C. shut down D. produce q3 and make a profit
C
(Figure: The Profit-Maximizing Firm in the Short Run) Look at the figure The Profit-Maximizing Firm in the Short Run. M is the _____ curve. A. ATC B. MR C. MC D. AVC
C
A perfectly competitive firm will not produce any output in the short run and will shut down if the price is: A. greater than marginal cost. B. less than marginal cost. C. less than average variable cost. D. greater than average variable cost and less than average total cost.
C
Adam has a monthly income of $20 that can be spent on books (B) and pencils (P). The price of a book is $5 and the price of a pencil is $0.50. Which of the following bundles of books and pencils lies on Adam's budget line? A. 3 books and 5 pencils B. 1 book and 40 pencils C. 2 books and 20 pencils D. zero books and 20 pencils
C
After three years at an expensive college, Pierre, who is rational, realizes that he doesn't want to finish school but really wants to be a chef because he will be much happier. The tuition cost of attending college and culinary school are the same but staying in college for another year will lower his happiness. When Pierre tells them that he will leave college for culinary school, his parents insist that he stay for one more year to get his degree. Which of the following is true? A. Pierre's parents are correct: if he leaves college, it is as though he has wasted three years of tuition. B. Pierre's parents are wrong: the marginal cost to Pierre of another year of college is less than the marginal benefit of college. C. Pierre's parents are wrong: the marginal cost to Pierre of another year of college is greater than the marginal benefit of college. D. It is impossible to tell who is correct.
C
Assume that the marginal utilities for the first three units of a good consumed are 200, 150, and 125, respectively. The total utility when two units are consumed is: A. 150 B. 200 C. 350 D. 475
C
If a perfectly competitive firm is producing a quantity where MC > MR, then profit: A. is maximized. B. can be increased by increasing production. C. can be increased by decreasing production. D. can be increased by decreasing the price.
C
Two neighbors, Malika and Sasha, are separated by a white picket fence. Each neighbor has a garden that grows tomatoes and peppers. How could Malika and Sasha gain from trade? A. Sasha could trade peppers to Malika in exchange for tomatoes if Malika was the more efficient grower of peppers B. Sasha could trade tomatoes to Malika in exchange for peppers if Sasha was the more efficient grower of peppers C. Malika could trade peppers to Sasha in exchange for tomatoes if Malika was the more efficient grower of peppers D. Malika could trade tomatoes to Sasha in exchange for peppers if Malika was the more efficient grower of peppers
C
Two players play a game in which the first mover is given $10 and sends the other player an offer of how to split the money between the two of them. The second player then can accept or reject that offer, and if it is rejected, both players get nothing. If the first mover is aware that the second mover gets upset when treated unfairly, what split should the first mover choose? A. $10 for the first mover, $0 for the second mover. B. $9 for the first mover, $1, for the second mover. C. $5 for the first mover, $5 for the second mover. D. $1 for the first mover, $9 for the second mover.
C
Which of the following best describes the principle of diminishing marginal utility? As an individual consumes more of a good: A. the total utility obtained will eventually fall. B. the total utility obtained will eventually become negative. C. the addition to total utility obtained from the nth unit of the good will be less than that obtained from the immediately preceding unit of the good. D. the marginal utility will eventually become negative.
C
(Figure: A Perfectly Competitive Firm in the Short Run) Look at the figure A Perfectly Competitive Firm in the Short Run. The firm will produce in the short run if the price is at least as high as point: A. F B. E C. N D. P
D
(Figure: A Perfectly Competitive Firm in the Short Run) Look at the figure A Perfectly Competitive Firm in the Short Run. The firm's total economic profit at its most profitable level of output is: A. 0GHB. B. EFJS. C. EGHS. D. FGLK.
D
(Figure: Kurt's Consumer Equilibrium ). Assume Kurt currently consumes at point C. If income remains unchanged, Kurt could gain more utility by choosing point ________, all other things held equal. A. B B. A C. F D. E
D
(Figure: Marginal Benefits and Marginal Costs) Look at the figure Marginal Benefits and Marginal Costs. As shown, more time spent studying economics adds points to economics scores (MB) but subtracts points from accounting scores (MC). The marginal benefit of studying economics when Claudia studies for 6 hours is ________ points and the marginal cost is ________ points. A. 40; 0 B. 30; 10 C. 20; 20 D. 10; 30
D
(Figure: Revenues, Costs, and Profits for Tomato Producers III) Look at the figure Revenues, Costs, and Profits for Tomato Producers III. The market for tomatoes is perfectly competitive. If market price of a bushel of tomatoes is $18, in the short run the farmer's profit-maximizing output is _____ bushels. A. 2 B. 3 C. 4 D. 5
D
(Figure: The Profit-Maximizing Firm in the Short Run) Look at the figure The Profit-Maximizing Firm. O is the ____ curve. A. ATC B. MR C. MC D. AVC
D
(Table: Bundles of X and Y) Look at the table Bundles of X and Y. According to the table: A. bundle D is preferred to bundles A and B. B. the consumer is indifferent among bundles A, B, and C. C. bundles C and D are both preferred to bundles A and B. D. bundle C is preferred to all other bundles.
D
A perfectly competitive firm will earn a profit and will continue producing the profit-maximizing quantity of output in the short run if the price is: A. less than the average fixed cost. B. less than marginal cost. C. greater than average variable cost but less than average total cost. D. greater than average total cost.
D
Daisy incurs $7,200 per month in fixed costs operating her floral shop. She pays her employees $9.00 per hour and has three assistants, each working 120 hours per month. Her other variable costs are $800 per month. What are Daisy's total variable costs and total costs each month? A. Total variable costs are $800; total costs are $8,000. B. Total variable costs are $800; total costs are $11,240. C. Total variable costs are $3,240; total costs are $11,240. D. Total variable costs are $4,040; total costs are $11,240.
D
Economists generally agree that people are most likely to change their behavior when they: A. live in a world without opportunity costs B. live in a world without scarcity C. are asked to do so voluntarily D. are given incentives to do so
D
Economists would most likely agree with which one of the following statements? A. when transactions occur voluntarily, the seller gains and the buyer loses B. market economies generate economic growth, but they do not promote efficiency C. if people make wise decisions, they can avoid incurring any opportunity cost D. people usually exploit opportunities to make themselves better off
D
If a decision maker chooses an option that leaves him or her better off (for sure) than choosing another available option, he or she is: A. using bounded rationality B. basing the decision on risk aversion C. making an irrational decision D. making a rational decision
D
Latisha has maximized her utility by consuming both strawberry shakes and hamburgers. The price of hamburgers exceeds that of strawberry shakes. Which of the following statements necessarily must be correct at her current consumption point? A. The total utility from strawberry shakes exceeds the total utility from hamburgers. B. The total utility from hamburgers exceeds the total utility from strawberry shakes. C. The marginal utility from the last strawberry shake exceeds the marginal utility from the last hamburger. D. The marginal utility from the last hamburger exceeds the marginal utility from the last strawberry shake.
D
One point on a standard indifference curve is 8 cookies and 2 brownies; another is 6 cookies and 4 brownies. Which of the following combinations of cookies and brownies could lie on this indifference curve? A. 6 cookies and 10 brownies B. 7 cookies and 6 brownies C. 4 cookies and 4 brownies D. 4 cookies and 8 brownies
D
The models used in economics: A. are of necessity unrealistic and not related to the real world B. are usually limited to variables that are directly related C. are essentially not reliable because they are not testable in the real world D. emphasize basic relationships by abstracting from complexities in the everyday world
D
Which of the following is true of a Giffen Good? A. Demand for this good increases as income increases, and decreases as income decreases. B. Demand for this good decreases as income increases, and increases as income decreases. C. A normal good for which income effect outweighs the substitution effect and the demand curve slopes upwards. D. An inferior good for which income effect outweighs the substitution effect and the demand curve slopes upwards
D
