QN=1 (1601) (17131) Moira decides to spend two hours taking a nap rather than attending her

classes. Her opportunity cost of napping is

a. the value of the knowledge she would have received had she attended class.

QN=2 (1605) (17134) The term used to describe a situation in which markets do not allocate
resources efficiently is
b. market failure.

QN=3 (1630) (17113) As a result of a successful attempt by government to cut the economic pie into
more equal slices,
c. the pie gets smaller, and there will be less pie overall.

QN=4 (17175) Refer to Figure 2-8, Panel (a). In order to gain 2 donuts by moving from point L to point M,
(1653) society must sacrifice
c. (iii) 4 cups of coffee.

QN=5 (1656) (17165) When economists make normative statements, they are
b. speaking as policy advisers.

QN=6 (1666) (17151) Refer to Figure 2-2. Alisha regularly buys fruits and vegetables at a grocery
store. Santo regularly pays a lawn-care company to mow his lawn. If the flow of fruits
and vegetables from the grocery store to Alisha is represented by an arrow from Box C
to Box B of this circular-flow diagram, then the money paid by Santo to the lawn-care
company is represented by an arrow
b. from Box B to Box C.

QN=7 (1700) (17186) In a market economy, supply and demand determine

a. both the quantity of each good produced and the price at which it is sold.

QN=8 (1703) (17205) In a market economy, supply and demand are important because they
a. (i) play a critical role in the allocation of the economy’s scarce resources.
b. (ii) determine how much of each good gets produced.
c. (iii) can be used to predict the impact on the economy of various events and policies.
d. All of (i), (ii), and (iii) are correct.

QN=9 (1701) (17223) Which of the following would shift the supply curve for gasoline to the right?
c. An increase in the number of producers of gasoline

QN=10 (1719) (17254) If the quantity demanded of a certain good responds only slightly to a change
in the price of the good, then
b. the demand for the good is said to be inelastic.

QN=11 (1712) (17191) In a market economy,

d. supply and demand determine prices and prices, in turn, allocate the economy’s scarce
resources.

QN=12 (1734) (17263) Scenario 5-1

The supply of aged cheddar cheese is inelastic and the supply of bread is elastic. Both
 goods are considered to be normal goods by a majority of consumers. Suppose that a
large income tax increase decreases the demand for both goods by 10%.

Refer to Scenario 5-1. The price elasticity of supply for aged cheddar cheese could be
c. 0.5.

QN=13 (1764) (17298) Suppose sellers of liquor are required to send $1.00 to the government for
every bottle of liquor they sell. Further, suppose this tax causes the price paid by
buyers of liquor to rise by $0.60 per bottle. Which of the following statements is
correct?
a. (i) The effective price received by sellers is $0.40 per bottle less than it was before the
tax.

QN=14 (1744) (17248) In the market for oil in the short run, demand
b. and supply are both inelastic.

QN=15 (1761) (17301) Suppose there is currently a tax of $50 per ticket on airline tickets. Buyers of
airline tickets are required to pay the tax to the government. If the tax is reduced from
$50 per ticket to $30 per ticket, then
a. the demand curve will shift upward by $20, and the price paid by buyers will decrease
by less than $20.

QN=16 (1765) (17303) Which of the following causes a shortage of a good?

b. (ii) a binding price ceiling

QN=17 (1774) (17282) A price ceiling will only be binding if it is set

c. below equilibrium price.

QN=18 (1771) (17300) A $0.10 tax levied on the buyers of socks will cause the
c. demand curve for socks to shift down by $0.10.

QN=19 (1763) (17275) A shortage results when

c. a binding price ceiling is imposed on a market.

QN=20 (1800) (17340) Consumer surplus is equal to the

a. Value to buyers - Amount paid by buyers.

QN=21 (1783) (17267) Suppose the government has imposed a price floor on cellular phones. Which
of the following events could transform the price floor from one that is binding to one
that is not binding?
b. Traditional land line phones become more expensive.

QN=22 (1777) (17268) If the minimum wage exceeds the equilibrium wage, then
b. the quantity supplied of labor will exceed the quantity demanded.

QN=23 (1793) (17316) Refer to Figure 7-1. If the supply curve is S, the demand curve is D, and the
equilibrium price is $100, what is the producer surplus?

c. $2,500

QN=24 (1781) (17294) A surplus results when

c. a binding price floor is imposed on a market.

QN=25 (1834) (17332) Inefficiency can be caused in a market by the presence of

a. (i) market power.
b. (ii) externalities.
c. (iii) imperfectly competitive markets.
d. All of (i), (ii), and (iii) are correct.

QN=26 (1836) (17374) Positive externalities

b. result in smaller than efficient equilibrium quantity.
QN=27 (1818) (17320) Willingness to pay measures the
d. maximum amount that a buyer will pay for a good.

QN=28 (17356) This figure reflects the market for outdoor concerts in a public park surrounded by residential
(1861) neighborhoods.
Refer to Figure 10-3. What price and quantity combination best represents the optimum price and
number of concerts that should be organized?

b. P2, Q0

QN=29 (1866) (17363) A positive externality

c. is a benefit to someone other than the producer and consumer of the good.

QN=30 (1856) (17377) Suppose that a steel factory emits a certain amount of air pollution, which
constitutes a negative externality. If the market does not internalize the externality,
c. the market equilibrium quantity will not be the socially optimal quantity.

QN=31 (1903) (17423) A lighthouse is typically considered to be a public good because

d. all passing ships are able to enjoy the benefits of the lighthouse without paying.
QN=32 (1901) (17419) When property rights are not well established,
b. markets fail to allocate resources efficiently.

QN=33 (1894) (17413) Which of the following is not a public good?

b. patented technological knowledge

QN=34 (1928) (17432) Jane decides to open her own business and earns $50,000 in accounting profit
the first year. When deciding to open her own business, she turned down three
separate job offers with annual salaries of $30,000, $40,000, and $45,000. What is
Jane's economic profit from running her own business?
c. $5,000

QN=35 (1945) (17434) Suppose that for a particular firm the only variable input into the production
process is labor and that output equals zero when no workers are hired. In addition,
suppose that when the firm hires 2 workers, the total cost of production is $100.
When the firm hires 3 workers, the total cost of production is $120. In addition,
assume that the variable cost per unit of labor is the same regardless of the number of
units of labor that are hired. What is the firm's fixed cost?
b. $60

QN=36 (1938) (17446) Which of the following measures of cost is best described as "the increase in
total cost that arises from an extra unit of production?"
d. marginal cost

QN=37 (1971) (17471) Suppose that a firm operating in a perfectly competitive market sells 400 units
of output at a price of $4 each. Which of the following statements is correct?
(i) Marginal revenue equals $4.
(ii) Average revenue equals $100.
(iii) Total revenue equals $1,600.
c. (i) and (iii) only

QN=38 (1959) (17511) Suppose that in a competitive market the equilibrium price is $2.50. What is
marginal revenue for the last unit sold by the typical firm in this market?
c. exactly $2.50

QN=39 (1957) (17435) Economists normally assume that the goal of a firm is to
(i) sell as much of their product as possible.
(ii) set the price of the product as high as possible.
(iii) maximize profit.
c. only (iii) is true.
QN=40 (2009) (17522) Financial aid to college students, quantity discounts, and senior citizen
discounts are all examples of
c. price discrimination.

QN=41 (1992) (17473) Which of the following represents the firm's long-run condition for exiting a
market?
c. exit if P < ATC

QN=42 (2011) (17546) A profit-maximizing monopolist charges a price of $14. The intersection of the
marginal revenue curve and the marginal cost curve occurs where output is 15 units
and marginal cost is $7. What is the monopolist’s profit?
d. Not enough information is given to determine the answer.

QN=43 (2049) (17578) A monopolistically competitive market has characteristics that are similar to
c. both a monopoly and a competitive firm.

QN=44 (2027) (17539) If a monopolist sells 100 units at $8 per unit and realizes an average total cost
of $6 per unit, what is the monopolist's profit?
a. $200

QN=45 (2043) (17528) Suppose when a monopolist produces 75 units its average revenue is $10 per
unit, its marginal revenue is $5 per unit, its marginal cost is $6 per unit, and its average
total cost is $5 per unit. What can we conclude about this monopolist?
d. The monopolist is not currently maximizing profits; it should produce fewer units and
charge a higher price to maximize profits.

QN=46 (2062) (17599) Which of the following is a commonly-cited benefit of advertising?

a. Advertising can be a signal of the quality of a product.

QN=47 (2105) (17622) After initial success, the OPEC cartel saw the price of oil and the revenues of its
members decline due, in part, to
d. OPEC members failing to produce their agreed-upon production levels.

QN=48 (2149) (17653) Labor markets are different from most other markets because labor demand is
d. derived.

QN=49 (2167) (17687) Just as the theory of the competitive firm provides a more complete
understanding of supply, the theory of consumer choice provides a more complete
understanding of
a. demand.

QN=50 (2122) (17607) Which of the following statements is correct?

a. (i) If duopolists successfully collude, then their combined output will be equal to the
output that would be observed if the market were a monopoly.
b. (ii) Although the logic of self-interest decreases a duopoly’s price below the monopoly
price, it does not push the duopolists to reach the competitive price.
c. (iii) Although the logic of self-interest increases a duopoly’s level of output above the
monopoly level, it does not push the duopolists to reach the competitive level.
d. All of (i), (ii), and (iii) are correct.
[id=1601, Mark=1]1. A

[id=1605, Mark=1]2. B

[id=1630, Mark=1]3. C

[id=1653, Mark=1]4. C

[id=1656, Mark=1]5. B

[id=1666, Mark=1]6. B

[id=1700, Mark=1]7. A

[id=1703, Mark=1]8. D

[id=1701, Mark=1]9. C

[id=1719, Mark=1]10. B

[id=1712, Mark=1]11. D

[id=1734, Mark=1]12. C

[id=1764, Mark=1]13. A

[id=1744, Mark=1]14. B

[id=1761, Mark=1]15. A

[id=1765, Mark=1]16. B

[id=1774, Mark=1]17. C

[id=1771, Mark=1]18. C

[id=1763, Mark=1]19. C

[id=1800, Mark=1]20. A

[id=1783, Mark=1]21. B

[id=1777, Mark=1]22. B

[id=1793, Mark=1]23. C

[id=1781, Mark=1]24. C

[id=1834, Mark=1]25. D

[id=1836, Mark=1]26. B

[id=1818, Mark=1]27. D

[id=1861, Mark=1]28. B

[id=1866, Mark=1]29. C
[id=1856, Mark=1]30. C

[id=1903, Mark=1]31. D

[id=1901, Mark=1]32. B

[id=1894, Mark=1]33. B

[id=1928, Mark=1]34. C

[id=1945, Mark=1]35. B

[id=1938, Mark=1]36. D

[id=1971, Mark=1]37. C

[id=1959, Mark=1]38. C

[id=1957, Mark=1]39. C

[id=2009, Mark=1]40. C

[id=1992, Mark=1]41. C

[id=2011, Mark=1]42. D

[id=2049, Mark=1]43. C

[id=2027, Mark=1]44. A

[id=2043, Mark=1]45. D

[id=2062, Mark=1]46. A

[id=2105, Mark=1]47. D

[id=2149, Mark=1]48. D

[id=2167, Mark=1]49. A

[id=2122, Mark=1]50. D