QN=1 (1626) (17123) Senator Smart, who understands economic principles, is trying to convince

workers in her district that trade with other countries is beneficial. Senator Smart
should argue that trade can be beneficial
a. only if it allows us to obtain things that we couldn't make for ourselves.
b. because it allows specialization, which increases total output.
c. to us if we can gain and the others involved in the trade lose.
d. in only a limited number of circumstances because others are typically self-interested.

QN=2 (1613) (17127) Prices direct economic activity in a market economy by

a. influencing the actions of buyers and sellers.
b. reducing scarcity of the goods and services produced.
c. eliminating the need for government intervention.
d. allocating goods and services produced in the most equitable way.

QN=3 (1608) (17132) You are considering staying in college another semester so that you can
complete a major in economics. In deciding whether or not to stay you should
a. compare the total cost of your education to the total benefits of your education.
b. compare the total cost of your education to the benefits of staying one more
semester.
c. compare the cost of staying one more semester to the benefits of staying one more
semester.
d. compare the total benefits of your education to the cost of staying one more
semester.

QN=4 (1639) (17185) Refer to Table 2-2. What is the opportunity cost to Batterland of increasing
the production of pancakes from 150 to 300?
a. 75 waffles
b. 150 waffles
c. 250 waffles
d. 325 waffles

QN=5 (1655) (17171) In the circular-flow diagram, firms produce

a. (i) goods and services using factors of production.
b. (ii) output using inputs.
c. (iii) factors of production using goods and services.
d. Both (i) and (ii) are correct.

QN=6 (1668) (17174) The production possibilities frontier is a graph that shows the various
combinations of output that an economy
a. should produce.
b. wants to produce.
c. can produce.
d. demands.

QN=7 (1686) (17202) Generally, the market for ice cream would be considered
a. a monopolistic market.
b. a competitive market.
c. more organized than an auction.
d. a market where individual sellers have significant pricing power.

QN=8 (1680) (17222) What will happen in the rice market now if sellers expect higher rice prices in
the near future?
a. The supply of rice will increase.
b. The supply of rice will decrease.
c. The supply of rice will be unaffected.
d. The demand for rice will decrease.

QN=9 (1688) (17216) Today's demand curve for gasoline could shift in response to
a. (i) a change in today's price of gasoline.
b. (ii) a change in the expected future price of gasoline.
c. (iii) a change in the number of sellers of gasoline.
d. All of (i), (ii), and (iii) are correct.

QN=10 (1722) (17228) If the price elasticity of demand for a good is 0.4, then a 10 percent increase in
price results in a
a. 0.4 percent decrease in the quantity demanded.
b. 2.5 percent decrease in the quantity demanded.
c. 4 percent decrease in the quantity demanded.
d. 40 percent decrease in the quantity demanded.

QN=11 (1714) (17260) If the price elasticity of supply is 1.5, and a price increase led to a 1.8%
increase in quantity supplied, then the price increase amounted to
a. 0.67%.
b. 0.83%.
c. 1.20%.
d. 2.70%.

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
a. -1.
b. 0.
c. 0.5.
d. 1.5.

QN=13 (1754) (17284) If a price floor is a binding constraint on a market, then

a. the equilibrium price must be above the price floor.
b. the quantity demanded must exceed the quantity supplied.
c. sellers cannot sell all they want to sell at the price floor.
d. buyers cannot buy all they want to buy at the price floor.

QN=14 (1759) (17289) A legal maximum on the price at which a good can be sold is called a price
a. floor.
b. subsidy.
c. support.
d. ceiling.

QN=15 (1746) (17241) The flatter the demand curve through a given point, the
a. greater the price elasticity of demand at that point.
b. smaller the price elasticity of demand at that point.
c. closer the price elasticity of demand will be to the slope of the curve.
d. greater the absolute value of the change in total revenue when there is a movement
from that point upward and to the left along the demand curve.

QN=16 (1768) (17296) Minimum-wage laws dictate the

a. average price employers must pay for labor.
b. highest price employers may pay for labor.
c. lowest price employers may pay for labor.
d. the highest and lowest prices employers may pay for labor.

QN=17 (1742) (17236) An inelastic demand means that

a. consumers hardly respond to a change in price.
b. consumers respond substantially to a change in price.
c. consumers respond directly to a change in income.
d. the change in quantity demanded is equal to the change in price.

QN=18 (1769) (17302) In the final analysis, tax incidence

a. depends on the legislated burden.
b. is entirely random.
c. depends on the forces of supply and demand.
d. falls entirely on buyers or entirely on sellers.

QN=19 (1749) (17229) Knowing that the demand for wheat is inelastic, if all farmers voluntarily did
not plant wheat on 10 percent of their land, then
a. consumers of wheat would buy more wheat.
b. wheat farmers would suffer a reduction in their total revenue.
c. wheat farmers would experience an increase in their total revenue.
d. the demand for wheat would decrease.

QN=20 (1791) (17285) Refer to Table 6-1. Suppose the government imposes a price ceiling of $1 on
this market. What will be the size of the shortage in this market?
a. 0 units
b. 2 units
c. 8 units
d. 10 units

QN=21 (1782) (17279) A government-imposed maximum price at which a good can be sold is called a
price
a. floor.
b. ceiling.
c. support.
d. equilibrium.

QN=22 (1798) (17334) When a buyer’s willingness to pay for a good is equal to the price of the good,
the
a. buyer’s consumer surplus for that good is maximized.
b. buyer will buy as much of the good as the buyer’s budget allows.
c. price of the good exceeds the value that the buyer places on the good.
d. buyer is indifferent between buying the good and not buying it.

QN=23 (1802) (17315) Consumer surplus is

a. the amount a buyer is willing to pay for a good minus the amount the buyer actually
pays for it.
b. the amount a buyer is willing to pay for a good minus the cost of producing the good.
c. the amount by which the quantity supplied of a good exceeds the quantity demanded
of the good.
d. a buyer's willingness to pay for a good plus the price of the good.

QN=24 (1790) (17269) When a tax is imposed on the sellers of a good, the supply curve shifts
a. upward by the amount of the tax.
b. downward by the amount of the tax.
c. upward by less than the amount of the tax.
d. downward by less than the amount of the tax.

QN=25 (1814) (17319) Which of the following statements is not correct?

a. A seller would be eager to sell her product at a price higher than her cost.
b. A seller would refuse to sell her product at a price lower than her cost.
c. A seller would be indifferent about selling her product at a price equal to her cost.
d. Since sellers cannot set the price for their product, they must be willing to sell their
product at any price.

QN=26 (1818) (17320) Willingness to pay measures the

a. amount a buyer is willing to pay for a good minus the amount the buyer actually pays
for it.
b. amount a seller actually receives for a good minus the minimum amount the seller is
willing to accept.
c. maximum amount a buyer is willing to pay minus the minimum amount a seller is
willing to accept.
d. maximum amount that a buyer will pay for a good.

QN=27 (1839) (17367) The term market failure refers to

a. a market that fails to allocate resources efficiently.
b. an unsuccessful advertising campaign which reduces demand.
c. ruthless competition among firms.
d. a firm that is forced out of business because of losses.

QN=28 (1852) (17358) The "invisible hand" leads a market to maximize

a. producer profit from that market.
b. total benefit to society from that market.
c. both equity and efficiency in that market.
d. output of goods or services in that market.

QN=29 (1846) (17348) Which of the following is not correct?

a. Markets allocate scarce resources with the forces of supply and demand.
b. The equilibrium of supply and demand is typically an efficient allocation of resources.
c. Governments can sometimes improve market outcomes.
d. Externalities cannot be positive.

QN=30 (1880) (17404) When the absence of property rights causes a market failure, the government
can potentially solve the problem
a. (i) by clearly defining property rights.
b. (ii) through regulation.
c. (iii) by supplying the good itself.
d. All of (i), (ii), and (iii) are correct.

QN=31 (1898) (17397) If one person's use of a good diminishes another person's enjoyment of it, the
good is
a. rival.
b. excludable.
c. normal.
d. exhaustible.

QN=32 (1893) (17392) When property rights are not well established,
a. private goods become public goods.
b. markets fail to allocate resources efficiently.
c. the distribution of private goods is unfair.
d. government resources are used inefficiently.

QN=33 (1881) (17412) Which of the following would not be considered a private good?
a. a pair of jeans
b. an apple
c. a Honda Civic
d. cable TV service

QN=34 (1927) (17452) Suppose Jan started up a small lemonade stand business last month. Variable
costs for Jan's lemonade stand now include the cost of
a. (i) building the lemonade stand.
b. (ii) hiring an artist to design a logo for her sign.
c. (iii) lemons and sugar.
d. All of (i), (ii), and (iii) are correct.

QN=35 (1939) (17440) Industrial organization is the study of how

a. labor unions organize workers in industries.
b. profitable firms are in organized industries.
c. industries organize for political advantage.
d. firms' decisions regarding prices and quantities depend on the market conditions they
face.

QN=36 (1936) (17447) The marginal cost curve crosses the average total cost curve at
a. (i) the efficient scale.
b. (ii) the minimum point on the average total cost curve.
c. (iii) a point where the marginal cost curve is rising.
d. All of (i), (ii), and (iii) are correct.
QN=37 (17491) In the figure below, panel (a) depicts the linear marginal cost of a firm in a competitive
(1970) market, and panel (b) depicts the linear market supply curve for a market with a fixed number
of identical firms.

Refer to Figure 14-8. If at a market price of $1.75, 52,500 units of output are supplied to this
market, how many identical firms are participating in this market?

a. 75
b. 100
c. 250
d. 300

QN=3 (17517) Refer to Figure 14-9. If the market starts in equilibrium at point C in panel (b), a decrease in
8 demand will ultimately lead to
(1958)
a. more firms in the industry but lower levels of output for each firm.
b. fewer firms in the market.
c. a new long-run equilibrium at point D in panel (b).
d. lower prices once the new long-run equilibrium is reached.

QN=39 (1953) (17459) At Bert's Bootery, the total cost of producing twenty pairs of boots is $400.
The marginal cost of producing the twenty-first pair of boots is $83. We can conclude
that the
a. average variable cost of 21 pairs of boots is $23.
b. average total cost of 21 pairs of boots is $23.
c. average total cost of 21 pairs of boots is $15.09.
d. marginal cost of the 20th pair of boots is $20.

QN=40 (1989) (17485) Use the information for a competitive firm in the table below to answer the
following questions.

Refer to Table 14-5. If the firm finds that its marginal cost is $11, it should
a. (i) increase production to maximize profit.
b. (ii) increase the price of the product to maximize profit.
c. (iii) advertise to attract additional buyers to maximize profit.
d. None of (i), (ii), and (iii) are correct.

QN=41 (2020) (17521) The deadweight loss that arises from a monopoly is a consequence of the fact
that the monopoly
a. quantity is lower than the socially-optimal quantity.
b. price equals marginal revenue.
c. price is the same as average revenue.
d. earns positive profits.

QN=42 (1997) (17470) Which of the following is not a characteristic of a competitive market?
a. Buyers and sellers are price takers.
b. Each firm sells a virtually identical product.
c. Free entry is limited.
d. Each firm chooses an output level that maximizes profits.

QN=43 (2022) (17542) Refer to Table 15-5. If the monopolist faces a constant marginal cost of $2,
how much output should the firm produce?
a. 3 units
b. 4 units
c. 5 units
d. 6 units

QN=44 (2038) (17520) Which of the following statements is correct?

a. The demand curve facing a competitive firm is horizontal, as is the demand curve
facing a monopolist.
b. The demand curve facing a competitive firm is downward sloping, whereas the
demand curve facing a monopolist is horizontal.
c. The demand curve facing a competitive firm is horizontal, whereas the demand curve
facing a monopolist is downward sloping.
d. The demand curve facing a competitive firm is downward sloping, as is the demand
curve facing a monopolist.

QN=45 (2040) (17558) A monopoly market

a. always maximizes total economic well-being.
b. always minimizes consumer surplus.
c. generally fails to maximize total economic well-being.
d. generally fails to maximize producer surplus.

QN=46 (2092) (17625) The simplest type of oligopoly is

a. monopoly.
b. duopoly.
c. monopolistic competition.
d. oligopolistic competition.
QN=47 (2149) (17653) Labor markets are different from most other markets because labor demand is
a. represented by a vertical line on a supply-demand diagram.
b. represented by an upward-sloping line on a supply-demand diagram.
c. such an elusive concept.
d. derived.

QN=48 (2118) (17627) An agreement among firms regarding price and/or production levels is called
a. an antitrust market.
b. a free-trade arrangement.
c. collusion.
d. a Nash agreement.

QN=49 (2168) (17703) 3. Refer to Figure 21-7. Which of the following statements is correct?

a. Bundle A is preferred equally to bundle E.

b. Bundle A is preferred equally to bundle C.
c. Bundle B contains more cake than bundle C.
d. The bundles along indifference curve Indifference Curve 2 are preferred to those along
indifference curve Indifference Curve 3.

QN=50 (2110) (17634) As the number of sellers in an oligopoly becomes very large,
a. (i) the quantity of output approaches the socially efficient quantity.
b. (ii) the price approaches marginal cost.
c. (iii) the price effect is diminished.
d. All of (i), (ii), and (iii) are correct.
[id=1626, Mark=1]1. B

[id=1613, Mark=1]2. A

[id=1608, Mark=1]3. C

[id=1639, Mark=1]4. A

[id=1655, Mark=1]5. D

[id=1668, Mark=1]6. C

[id=1686, Mark=1]7. B

[id=1680, Mark=1]8. B

[id=1688, Mark=1]9. B

[id=1722, Mark=1]10. C

[id=1714, Mark=1]11. C

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

[id=1754, Mark=1]13. C

[id=1759, Mark=1]14. D

[id=1746, Mark=1]15. A

[id=1768, Mark=1]16. C

[id=1742, Mark=1]17. A

[id=1769, Mark=1]18. C

[id=1749, Mark=1]19. C

[id=1791, Mark=1]20. C

[id=1782, Mark=1]21. B

[id=1798, Mark=1]22. D

[id=1802, Mark=1]23. A

[id=1790, Mark=1]24. A

[id=1814, Mark=1]25. D

[id=1818, Mark=1]26. D

[id=1839, Mark=1]27. A

[id=1852, Mark=1]28. B

[id=1846, Mark=1]29. D
[id=1880, Mark=1]30. D

[id=1898, Mark=1]31. A

[id=1893, Mark=1]32. B

[id=1881, Mark=1]33. D

[id=1927, Mark=1]34. C

[id=1939, Mark=1]35. D

[id=1936, Mark=1]36. D

[id=1970, Mark=1]37. D

[id=1958, Mark=1]38. B

[id=1953, Mark=1]39. B

[id=1989, Mark=1]40. D

[id=2020, Mark=1]41. A

[id=1997, Mark=1]42. C

[id=2022, Mark=1]43. B

[id=2038, Mark=1]44. C

[id=2040, Mark=1]45. C

[id=2092, Mark=1]46. B

[id=2149, Mark=1]47. D

[id=2118, Mark=1]48. C

[id=2168, Mark=1]49. B

[id=2110, Mark=1]50. D