HW4

Marks: --/1
After Robert E. Lee retreated from the Battle of Gettysburg, a
Choose one answer.
a. shortage of Confederate notes immediately resulted, causing
prices to fall.

b. surplus of Confederate notes immediately resulted, causing

prices to rise.
c. surplus of Confederate notes immediately resulted, causing
prices to fall.
d. None of the above.
An increase in government spending causes aggregate demand to
Choose one answer.
a. not change.

b. decrease.

c. increase.

d. Any of the above could be true.

Before the Civil War, President __________ did little to stop southern secession from the Union, which
increased the demand for slavery in southern states.
Choose one answer.
a. James Buchanan

b. James Monroe

c. Jefferson Davis

d. Donald Trump
Compared to the random lottery drafts of Vietnam, the South’s conscription during the Civil War was
__________ efficient, and the North’s conscription was __________ efficient.
Choose one answer.
a. more / more

b. more / less

c. less / less

d. less / more
During the Civil War, the South increased the supply of Confederate Notes. In the market for money,
the equilibrium price level of Confederate Notes
Choose one answer.
a. increased, and equilibrium quantity decreased.

b. increased, and equilibrium quantity increased.

c. did not change, and equilibrium quantity increased.

d. None of the above.

Refer to Figure 4.1 above. Suppose the South trades with the rest of the world, and the world price
equals PA. The full implementation of the Anaconda Plan, during the Civil War, causes Southern
producer surplus to
Choose one answer.
a. decrease by area “b + c + d”

b. increase by area “a + b”

c. decrease by area “b + c”

d. None of the above.

Refer to Figure 4.2 above. The world price equals PC, and this country trades with the rest of the
world. Domestic producer surplus equals
Choose one answer.
a. area “g”, and this country imports the good.

b. area “g”, and this country exports the good.

c. area “c + d + g”, and this country exports the good.

d. None of the above.
Higher tariffs imposed by the North during the Civil War, all else equal, caused short-run output to
Choose one answer.
a. increase, and the short-run price level to decrease.

b. decrease, and the short-run price level to increase.

c. not change, and the short-run price level to increase.

d. None of the above.
 Suppose the world price for widgets is higher than the domestic price. If the country opens to free
world trade, domestic consumer surplus in the widgets market will
Choose one answer.
a. decrease, and domestic producer surplus will decrease.

b. increase, and domestic producer surplus will decrease.

c. increase, and domestic producer surplus will increase.

d. decrease, and domestic producer surplus will increase.

Toward the end of the Civil War, destroyed productive resources in the South, in the short run, caused
the equilibrium price level to
Choose one answer.
a. increase, and output to decrease.

b. decrease, and output to increase.

c. increase, and output to increase.

d. decrease, and output to decrease.

Multiple Choice
Identify the choice that best completes the statement or answers the question.

____ 1. In the market for labor, the random lottery draft of Vietnam caused producer surplus for newly-
enlisted soldiers to
a. decrease, and producer surplus for previously-enlisted soldiers to decrease.
b. decrease, and producer surplus for previously-enlisted soldiers to not change.
c. increase, and producer surplus for previously-enlisted soldiers to decrease.
d. decrease, and producer surplus for previously-enlisted soldiers to increase.
 Figure 14.4

____ 2. Refer to Figure 14.4 above. In the market for soldiers above, the government’s demand for soldiers
is D’, and it chooses to pay a wage of WB, drafting the remaining solders. The all-voluntary force
equals
a. LA.
b. LB.
c. LC - LA.
d. None of the above.
____ 3. Refer to Figure 14.4 above. In the market for soldiers above, the government’s demand for soldiers
is D’, and it chooses to pay a wage of WB, drafting the remaining solders. Consumer surplus equals
a. area “a”
b. area “a + b + c + d”
c. area “a + b + c + d + e”
d. None of the above.
HW5
A profit maximizing monopoly finds it in its best interest to __________ its price when it faces
lower marginal costs of production.
Choose one answer.
a. decrease

b. increase

c. not change

d. Any of the above could be true.

Refer to Figure 5.4 above. A one-price monopoly charges a price equal to

Choose one answer.
a. PA and produces QA units.

b. PC and produces QA units.

c. PA and produces QC units.

d. None of the above.

Refer to Figure 5.4 above. Suppose the above graph is of Standard Oil in the late 1800s. Producer
surplus equals
Choose one answer.
a. area “a + b + c + d + e.”

b. area “i.”

c. area “a + b + c + d + f + g.”

d. None of the above.

John D. Rockefeller and Andrew Carnegie faced __________ demand for their goods. Therefore,
they had __________ incentive to decrease their marginal costs of production.
Choose one answer.
a. inelastic / little

b. elastic / little

c. elastic / great

d. inelastic / great

Marks: 0/1
Suppose the price elasticity of demand for steel in the late 1800s equaled 6. This means that a 1%
decrease in the price of steel caused industry revenue to
Choose one answer.
a. decrease by 6%.

b. decrease by 1%.

c. increase by 5%.

d. decrease by 5%.
Table 5.8 - Schedule of Demand for a Good

Total Marginal Total Cost

Quantity Price Revenue Revenue
0 $12 $0 $1
1 11 11 11 5
2 10 20 10
3 9 27 7 15
4 8 32 21
5 7 35 3 27

Refer to Table 5.8 above. Consumer surplus for the second unit under monopoly equals
Choose one answer.
a. $2.

b. $4.

c. $3.

d. $1.
Marks: 0/1
Table 5.8 - Schedule of Demand for a Good
Total Marginal Total Cost
Quantity Price Revenue Revenue
0 $12 $0 $1
1 11 11 11 5
2 10 20 10
3 9 27 7 15
4 8 32 21
5 7 35 3 27

Refer to Table 5.8 above. The profit-maximizing price that a monopoly charges equals
Choose one answer.
a. $3, and the monopoly produces 9 units.

b. $9, and the monopoly produces 3 units.

c. $5, and the monopoly produces 7 units.

d. $7, and the monopoly produces 5 units.

The Panic of 1907 resulted in many bank runs. All else equal, these bank runs caused the short-run
price level to
Choose one answer.
a. decrease, and short-run employment to increase.

b. increase, and short-run employment to increase.

c. increase, and short-run employment to decrease.

d. None of the above.

Who believed that technological advances only temporarily increased society’s welfare, and
eventually population growth would explode leading to starvation and death?
Choose one answer.
a. Thomas Robert Malthus

b. Robert Solow

c. Frederick Taylor

d. Joseph Stiglitz
HW6

As Bonanza farms adopted mass-production technologies in the late 1800s, such as steam-
powered plows, industry revenue to all farmers
Choose one answer.
a. did not change, and consumer surplus in agricultural markets
decreased.

b. increased, and consumer surplus in agricultural markets

increased.
c. decreased, and consumer surplus in agricultural markets
increased.

d. None of the above.

During the late 1800s, labor unions __________ economic efficiency. Today, labor unions
__________ economic efficiency.
Choose one answer.
a. increased / increase

b. decreased / decrease

c. increased / decrease

d. decreased / increase
Had the People’s Party successfully adopted a silver standard, farmers would have
Choose one answer.
a. suffered short-run economic hardship.

b. suffered long-run economic hardship.

c. enjoyed short-run economic relief.

d. enjoyed long-run economic relief.

John Deere was a yeoman farmer in the 1860s who produced food. All else equal, when John
Deere replaced his iron plow with a steel plow, his total revenue
Choose one answer.
a. increased, and the equilibrium price of food did not change.

b. increased, and the equilibrium price of food increased.

c. decreased, and the equilibrium price of food increased.

d. decreased, and the equilibrium price of food did not change.

The Homestead Act of 1862 caused some migration out of cities. All else equal, this migration
caused consumer surplus in the market for city labor to
Choose one answer.
a. increase, and the equilibrium wage to increase.

b. decrease, and the equilibrium wage to increase.

c. increase, and the equilibrium wage to decrease.

d. None of the above.

The West Coast’s version of Ellis Island, build in 1910, was
Choose one answer.
a. Angel Island

b. Indian Island

c. Daby Island

d. None of the above.

HW 9

By the 1920s, most businesses and factories had adopted the cost-cutting, scientific method of
production developed by
Choose one answer.
a. John D. Rockefeller

b. Henry Ford

c. Andrew Carnegie

d. Frederick Taylor
During the late 1920s, the Federal Reserve increased the discount rate. At the original price level, a
Choose one answer.
a. surplus of money existed, so the price level rose.

b. shortage of money existed, so the price level fell.

c. shortage of money existed, so the price level rose.

d. None of the above.

Refer to Figure 9.1 above. A tariff in the above market results in a decrease of consumer surplus
of
Choose one answer.
a. area “e + f + g + h + i”

b. area “b + c + d”

c. area “e”

d. area “a + b + c + d”
Refer to Figure 9.1 above. A tariff in the above market results in tariff revenue to the government
of
Choose one answer.
a. area “f + g + h + i”

b. area “g + h”

c. area “c + d + f + g + h + i”

d. None of the above.

For most of the 1920’s, the government ran budget surpluses. All else equal, these surpluses
caused the equilibrium real interest rate to
Choose one answer.
a. decrease, and investment to increase.

b. decrease, and investment to decrease.

c. increase, and investment to decrease.

d. None of the above.

If the U.S. is on the right-hand side of the Laffer curve, a small increase in tax rates causes income
tax revenue to
Choose one answer.
a. increase.

b. not change.

c. change uncertainly.
 d. decrease.
In the market for loans, suppose that the real interest rate is lower than the equilibrium real
interest rate. Saving is
Choose one answer.
a. greater than investment, and the real interest rate will
fall.

b. less than investment, and the real interest rate will rise.

c. equal to investment, and the real interest rate will rise.

d. None of the above.

Suppose in 1920 an A&P store manager wants to reduce worker shirking. The market wage for
employees is $5 per day, each worker gains $2 from shirking, and the probability of detection is
10%. Assuming a one-period problem, the A&P manager must pay at least
Choose one answer.
a. $35 per day

b. $50 per day

c. $20 per day

d. $25 per day

The Palmer Raids in the early 1920s decreased the supply for labor. All else the same, these raids
caused U.S. firms to be
Choose one answer.
a. better off, and workers who were not deported to be worse
off.

b. worse off, and workers who were not deported to be better

off.
c. worse off, and workers who were not deported to be worse
off.

d. None of the above.

The Revenue Act of 1924 lowered the bottom marginal income tax rate. All else equal, in the
market for labor, this act
Choose one answer.
a. decreased the wage firms paid, and increased producer
surplus.
b. increased the wage firms paid, and increased producer
surplus.
c. increased the wage firms paid, and decreased producer
surplus.

d. None of the above.