QN=1 (1622) (17133) If Japan chooses to engage in trade, it

a. will only benefit if it trades with countries that produce goods Japan cannot produce.
b. cannot benefit if it trades with less developed countries.
c. should first attempt to produce the good itself.
d. can benefit by trading with any other country.

QN=2 (1609) (17136) Economics deals primarily with the concept of

a. scarcity.
b. money.
c. poverty.
d. banking.

QN=3 (1618) (17119) Trade between countries tends to

a. reduce both competition and specialization.
b. reduce competition and increase specialization.
c. increase competition and reduce specialization.
d. increase both competition and specialization.

QN=4 (1647) (17172) Factors of production are

a. used to produce goods and services.
b. also called output.
c. abundant in most economies.
d. assumed to be owned by firms in the circular-flow diagram.

QN=5 (1643) (17149) Economists sometimes give conflicting advice because

a. graduate students in economics are encouraged to argue with each other.
b. economists have different values and scientific judgment.
c. economists acting as scientists do not like to agree with economists acting as policy
advisers.
d. economics is more of a belief system than a science.

QN=6 (1701) (17223) Which of the following would shift the supply curve for gasoline to the right?
a. An increase in the demand for gasoline.
b. An increase in the price of gasoline.
c. An increase in the number of producers of gasoline
d. An increase in the price of oil, an input into the production of gasoline.

QN=7 (1724) (17253) Demand is said to have unit elasticity if elasticity is

a. less than 1.
b. greater than 1.
c. equal to 1.
d. equal to 0.

QN=8 (1719) (17254) If the quantity demanded of a certain good responds only slightly to a change
in the price of the good, then
a. the demand for the good is said to be elastic.
b. the demand for the good is said to be inelastic.
c. the law of demand does not apply to the good.
d. the demand curve for the good shifts only slightly in response to a change in price.

QN=9 (1723) (17246) Which of the following statements is correct?

a. (i) The demand for flat-screen computer monitors is more elastic than the demand for
monitors in general.
b. (ii) The demand for grandfather clocks is more elastic than the demand for clocks in
general.
c. (iii) The demand for cardboard is more elastic over a long period of time than over a
short period of time.
d. All of (i), (ii), and (iii) are correct.

QN=10 (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=11 (1755) (17283) A price floor

a. is a legal minimum on the price at which a good can be sold.
b. is a legal maximum on the price at which a good can be sold.
c. will generally result in a market shortage.
d. will benefit the consumer, but hurt the supplier.

QN=12 (1751) (17255) The price elasticity of demand for bread

a. (i) is computed as the percentage change in quantity demanded of bread divided by
the percentage change in price of bread.
b. (ii) depends, in part, on the availability of close substitutes for bread.
c. (iii) reflects the many economic, social, and psychological forces that influence
consumers' tastes for bread.
d. All of (i), (ii), and (iii) are correct.

QN=13 (1806) (17317) Market power refers to the

a. side effects that may occur in a market.
b. government regulations imposed on the sellers in a market.
c. ability of market participants to influence price.
d. forces of supply and demand in determining equilibrium price.

QN=14 (1800) (17340) Consumer surplus is equal to the

a. Value to buyers - Amount paid by buyers.
b. Amount paid by buyers - Costs of sellers.
c. Value to buyers - Costs of sellers.
d. Value to buyers - Willingness to pay of buyers.

QN=15 (1810) (17311) Consumer surplus is the

a. amount of a good consumers get without paying anything.
b. amount a consumer pays minus the amount the consumer is willing to pay.
c. amount a consumer is willing to pay minus the amount the consumer actually pays.
d. value of a good to a consumer.

QN=16 (1784) (17273) When a tax is levied on buyers of tea

a. buyers of tea and sellers of tea both are made worse off.
b. buyers of tea are made worse off and the well-being of sellers is unaffected.
c. buyers of tea are made worse off and sellers of tea are made better off.
d. the well-being of both buyers of tea and sellers of tea is unaffected.

QN=17 (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=18 (1837) (17388) The Coase theorem states that

a. taxes are an efficient way for governments to remedy negative externalities.
b. subsidies are an efficient way for governments to remedy positive externalities.
c. industrial policies encourage technology spillovers.
d. in the absence of transaction costs, private parties can solve the problem of
externalities on their own.

QN=19 (1822) (17328) Raisins and milk are complementary goods. An increase in supply of raisins will
a. increase consumer surplus in the market for raisins and decrease producer surplus in
the market for milk.
b. increase consumer surplus in the market for raisins and increase producer surplus in
the market for milk.
c. decrease consumer surplus in the market for raisins and increase producer surplus in
the market for milk.
d. decrease consumer surplus in the market for raisins and decrease producer surplus in
the market for milk.

QN=20 (1853) (17382) The difference between social cost and private cost is a measure of the
a. loss in profit to the seller as the result of a negative externality.
b. cost of an externality.
c. cost reduction when the negative externality is eliminated.
d. cost incurred by the government when it intervenes in the market.

QN=2 (17349) Refer to Figure 10-2. Suppose that the production of plastic creates a social cost which is
1 depicted in the graph above. What is the socially optimal quantity of plastic?
(1867)
a. 200 units
b. 450 units
c. 500 units
d. 650 units

QN=22 (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=23 (1892) (17409) An overcrowded beach is an example of

a. a positive externality.
b. a Tragedy of the Commons.
c. an environmentally inefficient allocation of resources.
d. an economically unfair allocation of resources.

QN=24 (1909) (17425) The sign on a church in your neighborhood reads “All are welcome at Sunday
Service.” Because the church has limited seating and is usually full, the Sunday Service
 is
a. a private good.
b. a public good.
c. a natural monopoly.
d. a common resource.

QN=25 (1914) (17407) A good is excludable if

a. one person's use of the good diminishes another person's enjoyment of it.
b. the government can regulate its availability.
c. it is not a normal good.
d. people can be prevented from using it.

QN=26 (1930) (17465) Charles’s Car Wash has average variable costs of $2 and average total costs of
$3 when it produces 100 units of output (car washes). The firm's total variable cost is
a. $100.
b. $200.
c. $300.
d. $500.

QN=27 (1937) (17437) XYZ corporation produced 300 units of output but sold only 275 of the units it
produced and discarded the remaining 25 defected units. The average cost of
production for each unit of output produced was $100. Each of the 275 units sold was
sold for a price of $95. Total profit for the XYZ corporation would be
a. -$3,875.
b. $26,125.
c. $28,500.
d. $30,000.

QN=28 (1924) (17449) 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=29 (1980) (17472) 3. Refer to Table 14-7. If the firm is currently producing 14 units, what
would you advise the owners?
a. decrease quantity to 13 units
b. increase quantity to 17 units
c. continue to operate at 14 units
d. increase quantity to 16 units

QN=30 (1984) (17478) 4. Refer to Figure 14-2. This is a competitive market. If the market price
is $10, what is the firm’s total cost?

a. $15
b. $30
c. $35
d. $50

QN=31 (1979) (17497) Profit-maximizing firms in a competitive market produce an output level where
a. marginal cost equals marginal revenue.
b. marginal cost equals average total cost.
c. marginal revenue is increasing.
d. price is less than marginal revenue.

QN=32 (2009) (17522) Financial aid to college students, quantity discounts, and senior citizen
discounts are all examples of
a. consumer surplus.
b. deadweight loss.
c. price discrimination.
d. nonprofit pricing strategies.

QN=33 (2003) (17480) In a perfectly competitive market,

a. no one seller can influence the price of the product.
b. price exceeds marginal revenue for each unit sold.
c. average revenue exceeds marginal revenue for each unit sold.
d. administrative barriers can make it difficult for firms to enter an industry.

QN=34 (2005) (17492) As a general rule, when accountants calculate profit they account for explicit
costs but usually ignore
a. certain outlays of money by the firm.
b. implicit costs.
c. operating costs.
d. fixed costs.

QN=35 (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=36 (2023) (17549) For a profit-maximizing monopolist,

a. P > MR = MC.
b. P = MR = MC.
c. P > MR > MC.
d. MR < MC < P.

QN=37 (2047) (17519) One difference between a perfectly competitive firm and a monopoly is that a
perfectly competitive firm produces where
a. marginal cost equals price, while a monopolist produces where price exceeds marginal
cost.
b. marginal cost equals price, while a monopolist produces where marginal cost exceeds
 price.
c. price exceeds marginal cost, while a monopolist produces where marginal cost equals
price.
d. marginal cost exceeds price, while a monopolist produces where marginal cost equals
price.

QN=38 (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.

QN=3 (17708) 3. Refer to Figure 21-4. In graph (a), if income is equal to $120, the price of good Y is
9
(2200)

a. $1
b. $2
c. $3
d. $4

QN=40 (1636) (17150) A demand curve shows the relationship

a. between income and quantity demanded.
b. between price and income.
c. between price and quantity demanded.
d. among income, price, and quantity demanded.
QN=41 (1637) (17182) Which of the following is not an example of a positive, as opposed to
normative, statement?
a. Higher gasoline prices will reduce gasoline consumption.
b. Equality is more important than efficiency.
c. Trade restrictions lower our standard of living.
d. If a nation wants to avoid inflation, it will restrict the growth rate of the quantity of
money.

QN=42 (1638) (17161) Refer to Figure 2-2. Boxes C and D represent

a. households and firms.

b. the goods and services market and the factors of production market.
c. the goods and services market and the financial market.
d. households and government.

QN=43 (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=44 (1644) (17183) A model can be accurately described as a

a. theoretical abstraction with very little value.
b. device that is useful only to the people who created it.
c. realistic and carefully constructed theory.
d. simplification of reality.

QN=45 (1646) (17184) Which of the following transactions does not take place in the markets for
factors of production in the circular-flow diagram?
a. a landowner leases land to a farmer
b. a farmer hires a teenager to help with harvest
c. a retired farmer sells his combine to a new farmer
d. a woman buys corn for dinner

QN=46 (1671) (17180) The slope of a line is equal to

a. the change in the value of x divided by the change in the value of y.
b. the change in the value of y divided by the change in the value of x.
c. the horizontal distance divided by the vertical distance.
d. the value of y divided by the value of x.

QN=47 (1672) (17167) Refer to Figure 2-7. In order to reach point C, the economy would have to
a. (i) acquire more resources or experience a technological advance.
b. (ii) begin using its available resources more efficiently than it is currently using them.
c. (iii) shift resources away from the production of ribeye steaks and toward production
of books.
d. None of (i), (ii), and (iii) are correct; the economy will never be able to reach point C.

QN=48 (1673) (17155) The two basic reasons why economists often appear to give conflicting advice
to policymakers are differences in
a. opinions and education.
b. opinions and values.
c. scientific judgments and education.
d. scientific judgments and values.

QN=49 (1676) (17190) Which of the following would most likely serve as an example of a monopoly?
a. a bakery in a large city
b. a bank in a large city
c. a local cable television company
d. a small group of corn farmers

QN=50 (1679) (17188) Soup is an inferior good if

a. The demand for soup falls when the price of a substitute for soup rises.
b. The demand for soup rises when the price of soup falls.
c. The demand curve for soup slopes upward.
d. The demand for soup falls when income rises.
[id=1622, Mark=1]1. D

[id=1609, Mark=1]2. A

[id=1618, Mark=1]3. D

[id=1647, Mark=1]4. A

[id=1643, Mark=1]5. B

[id=1701, Mark=1]6. C

[id=1724, Mark=1]7. C

[id=1719, Mark=1]8. B

[id=1723, Mark=1]9. D

[id=1746, Mark=1]10. A

[id=1755, Mark=1]11. A

[id=1751, Mark=1]12. D

[id=1806, Mark=1]13. C

[id=1800, Mark=1]14. A

[id=1810, Mark=1]15. C

[id=1784, Mark=1]16. A

[id=1791, Mark=1]17. C

[id=1837, Mark=1]18. D

[id=1822, Mark=1]19. B

[id=1853, Mark=1]20. B

[id=1867, Mark=1]21. C

[id=1852, Mark=1]22. B

[id=1892, Mark=1]23. B

[id=1909, Mark=1]24. D

[id=1914, Mark=1]25. D

[id=1930, Mark=1]26. B

[id=1937, Mark=1]27. A

[id=1924, Mark=1]28. B

[id=1980, Mark=1]29. D
[id=1984, Mark=1]30. C

[id=1979, Mark=1]31. A

[id=2009, Mark=1]32. C

[id=2003, Mark=1]33. A

[id=2005, Mark=1]34. B

[id=2040, Mark=1]35. C

[id=2023, Mark=1]36. A

[id=2047, Mark=1]37. A

[id=2110, Mark=1]38. D

[id=2200, Mark=1]39. C

[id=1636, Mark=1]40. C

[id=1637, Mark=1]41. B

[id=1638, Mark=1]42. B

[id=1639, Mark=1]43. A

[id=1644, Mark=1]44. D

[id=1646, Mark=1]45. D

[id=1671, Mark=1]46. B

[id=1672, Mark=1]47. A

[id=1673, Mark=1]48. D

[id=1676, Mark=1]49. C

[id=1679, Mark=1]50. D