QN=1 (1615) (17118) When society requires that firms reduce pollution, there is

a. a tradeoff because of reduced incomes to the firms' owners and workers.

b. a tradeoff only if some firms are forced to close.
c. no tradeoff, since the cost of reducing pollution falls only on the firms affected
by the requirements.
d. no tradeoff, since everyone benefits from reduced pollution.

QN=2 (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.
b. the $30 she could have earned if she had worked at her job for those two hours.
c. the value of her nap less the value of attending class.
d. nothing, since she would valued sleep more than attendance at class.

QN=3 (1624) (17120) Productivity is defined as the

a. amount of goods and services produced from each unit of labor input.
b. number of workers required to produce a given amount of goods and services.
c. amount of labor that can be saved by replacing workers with machines.
d. actual amount of effort workers put into an hour of working time.

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 (1656) (17165) When economists make normative statements, they are
a. speaking as scientists.
b. speaking as policy advisers.
c. making claims about how the world is.
d. revealing that they are very liberal in their views of how the world works.

QN=6 (1657) (17166) 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=7 (1677) (17211) Which of the following is an example of a market?

a. (i) a gas station
b. (ii) a garage sale
c. (iii) a barber shop
d. All of (i), (ii), and (iii) are examples of markets.

QN=8 (17207) 3. Refer to Figure 4-4. The graphs show the demand for cigarettes. In
(1685 Panel (b), the leftward arrow is consistent with which of the following events?
)

a. The price of cigarettes increased.

b. A sales tax was placed on cigarettes.
c. The prohibition of cigarette advertisements on television.
d. Tobacco and marijuana are complements and the price of marijuana decreased.

QN=9 (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=10 (1708) (17209) Who gets scarce resources in a market economy?

a. the government
b. whoever the government decides gets them
c. whoever wants them
d. whoever is willing and able to pay the price

QN=11 (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=1 (17261) Refer to Figure 5-12. Over which range is the supply curve in this figure the most
2 elastic?
(1735)
a. Between $16 and $40
b. Between $40 and $100
c. Between $100 and $220
d. Between $220 and $430

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 (1760) (17272) When a binding price floor is imposed on a market

a. (i) price no longer serves as a rationing device.
b. (ii) the quantity supplied at the price floor exceeds the quantity that would have
been supplied without the price floor.
c. (iii) only some sellers benefit.
d. All of (i), (ii), and (iii) are correct.

QN=15 (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=16 (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=17 (1773) (17281) In the housing market, rent controls cause quantity supplied to
a. fall and quantity demanded to fall.
b. fall and quantity demanded to rise.
c. rise and quantity demanded to fall.
d. rise and quantity demanded to rise.

QN=18 (1753) (17235) The most basic tools of economics are

a. demand and supply.
b. price and quantity.
c. monetary and fiscal policy.
d. elasticity of demand and supply.

QN=19 (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=20 (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?
a. $625
b. $1,250
c. $2,500
d. $5,000

QN=21 (1792) (17291) A $2.00 tax levied on the sellers of mailboxes will shift the
supply curve
a. upward by exactly $2.00.
b. upward by less than $2.00.
c. downward by exactly $2.00.
d. downward by less than $2.00.

QN=22 (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=23 (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=24 (1776) (17280) Refer to Figure 6-2. If the government imposes a binding price
ceiling of $8.00 in this market, the result would be a

a. surplus of 20.
b. surplus of 40.
c. shortage of 20.
d. shortage of 40.

QN=25 (1826) (17338) Which of the following events would increase producer surplus?
a. (i) Sellers' costs stay the same and the price of the good increases.
b. (ii) Sellers' costs increase and the price of the good stays the same.
c. (iii) Sellers' costs increase and the price of the good decreases.
d. All of (i), (ii), and (iii) are correct.

QN=26 (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=27 (1823) (17331) 2. Refer to Figure 7-15. If the price decreases from $22 to
$16 due to a shift in the supply curve, consumer surplus increases by

a. $120.
b. $360.
c. $480.
d. $600.

QN=28 (1873) (17347) An externality is

a. the costs that parties incur in the process of agreeing and following through on a
bargain.
b. the uncompensated impact of one person's actions on the well-being of a
bystander.
c. the proposition that private parties can bargain without cost over the allocation
of resources.
d. a market equilibrium tax.

QN=29 (1847) (17352) An externality is the impact of

a. society's decisions on the well-being of society.
b. a person's actions on that person's well-being.
c. one person's actions on the well-being of a bystander.
d. society's decisions on the poorest person in the society.
QN=3 (17383) This figure reflects the market for outdoor concerts in a public park
0 surrounded by residential neighborhoods.
(1857) Refer to Figure 10-3. The social cost curve is above the supply curve because

a. it takes into account the external costs imposed on society by the concert.
b. it takes into account the effect of local noise restrictions on concerts in parks surrounded by
residential neighborhoods.
c. concert tickets are likely to cost more than the concert actually costs the organizers.
d. residents in the surrounding neighborhoods get to listen to the concert for free.

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

a. the owner of the lighthouse is able to exclude beneficiaries from enjoying the
lighthouse.
b. there is rarely another lighthouse nearby to provide competition.
c. a nearby port authority cannot avoid paying fees to the lighthouse owner.
d. all passing ships are able to enjoy the benefits of the lighthouse without paying.

QN=32 (1911) (17422) Without government intervention, public goods tend to be

a. overproduced and common resources tend to be overconsumed.
b. overproduced and common resources tend to be underconsumed.
c. underproduced and common resources tend to be overconsumed.
d. underproduced and common resources tend to be underconsumed.

QN=33 (1904) (17415) Government policy can potentially raise economic well-being
a. in all markets for goods and services.
b. in economic models, but not in reality.
c. when a good does not have a price attached to it.
d. never.

QN=34 (1916) (17438) John has decided to start his own lawn-mowing business. To
purchase the mowers and the trailer to transport the mowers, John withdrew
$1,000 from his savings account, which was earning 3% interest, and borrowed
an additional $2,000 from the bank at an interest rate of 7%. What is John's
annual opportunity cost of the financial capital that has been invested in the
business?
a. $30
b. $140
c. $170
d. $300

QN=35 (1949) (17460) Economic profit is equal to

a. total revenue minus the explicit cost of producing goods and services.
b. total revenue minus the opportunity cost of producing goods and services.
c. total revenue minus the accounting cost of producing goods and services.
d. average revenue minus the average cost of producing the last unit of a good or
service.

QN=36 (1918) (17442) The curves below reflect information about the cost structure of a
firm. Use the figure to answer the following questions
Refer to Figure 13-5. Curve A is U-shaped because of
a. diminishing marginal product.
b. increasing marginal product.
c. the fact that increasing marginal product follows decreasing marginal product.
d. the fact that decreasing marginal product follows increasing marginal product.

QN=37 (1974) (17493) 5. Refer to Table 14-5. The maximum profit available to this
firm is
a. $2.
b. $3.
c. $4.
d. $5.

QN=38 (1954) (17469) If a firm experiences constant returns to scale at all output levels,
then its long-run average total cost curve would
a. slope downward.
b. be horizontal.
c. slope upward.
d. slope downward for low output levels and upward for high output levels.

QN=39 (1952) (17448) Refer to Figure 13-9. The firm experiences economies of scale at
which output levels?

a. (i) output levels less than M

b. (ii) output levels between M and N
c. (iii) output levels greater than N
d. All of (i), (ii), and (iii) are correct as long as the firm is operating in the long run.
QN=40 (1999) (17518) A competitive market is in long-run equilibrium. If demand
increases, we can be certain that price will
a. rise in the short run. Some firms will enter the industry. Price will then rise to
reach the new long-run equilibrium.
b. rise in the short run. Some firms will enter the industry. Price will then fall to
reach the new long-run equilibrium.
c. fall in the short run. All, some, or no firms will shut down, and some of them
will exit the industry. Price will then rise to reach the new long-run equilibrium.
d. not rise in the short run because firms will enter to maintain the price.

QN=4 (17559) Refer to Figure 15-8. The deadweight loss caused by a profit-maximizing
1 monopoly amounts to
(2010)

a. $150.
b. $200.
c. $250.
d. $500.

QN=42 (1990) (17506) 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=43 (2028) (17534) Which of the following is an example of a barrier to entry?

(i) A key resource is owned by a single firm.
(ii) The costs of production make a single producer more efficient than a large
number of producers.
(iii) The government has given the existing monopoly the exclusive right to
produce the good.
a. (i) and (ii)
b. (ii) and (iii)
c. (i) only
d. All of these examples are barriers to entry.

QN=44 (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=45 (2041) (17531) Monopolies use their market power to

a. charge prices that equal minimum average total cost.
b. increase the quantity sold as they increase price.
c. charge a price that is higher than marginal cost.
d. dump excess supplies of their product on the market.

QN=46 (2152) (17639) If a firm experiences diminishing marginal productivity of labor,

the marginal product
a. increases as total product increases.
b. decreases as total product increases.
c. increases as total product decreases.
d. decreases as total product decreases.

QN=47 (2066) (17571) Cartels are difficult to maintain because

a. (i) antitrust laws are difficult to enforce.
b. (ii) cartel agreements are conducive to monopoly outcomes.
c. (iii) there is always tension between cooperation and self-interest in a cartel.
d. All of (i), (ii), and (iii) are correct.

QN=48 (2104) (17618) A profit-maximizing firm in a monopolistically competitive

market is characterized by which of the following?
a. Average revenue exceeds marginal revenue.
b. Marginal revenue exceeds average revenue.
c. Average revenue is equal to marginal revenue.
d. Revenue is always maximized along with profit.

QN=49 (2088) (17610) A special kind of imperfectly competitive market that has only
two firms is called
a. a two-tier competitive structure.
b. an incidental monopoly.
c. a doublet.
d. a duopoly.

QN=50 (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.
[id=1615, Mark=1]1. A
[id=1601, Mark=1]2. A
[id=1624, Mark=1]3. A
[id=1639, Mark=1]4. A
[id=1656, Mark=1]5. B
[id=1657, Mark=1]6. B
[id=1677, Mark=1]7. D
[id=1685, Mark=1]8. C
[id=1686, Mark=1]9. B
[id=1708, Mark=1]10. D
[id=1722, Mark=1]11. C
[id=1735, Mark=1]12. A
[id=1754, Mark=1]13. C
[id=1760, Mark=1]14. D
[id=1742, Mark=1]15. A
[id=1749, Mark=1]16. C
[id=1773, Mark=1]17. B
[id=1753, Mark=1]18. A
[id=1746, Mark=1]19. A
[id=1793, Mark=1]20. C
[id=1792, Mark=1]21. A
[id=1784, Mark=1]22. A
[id=1798, Mark=1]23. D
[id=1776, Mark=1]24. C
[id=1826, Mark=1]25. A
[id=1839, Mark=1]26. A
[id=1823, Mark=1]27. B
[id=1873, Mark=1]28. B
[id=1847, Mark=1]29. C
[id=1857, Mark=1]30. A
[id=1903, Mark=1]31. D
[id=1911, Mark=1]32. C
[id=1904, Mark=1]33. C
[id=1916, Mark=1]34. C
[id=1949, Mark=1]35. B
[id=1918, Mark=1]36. D
[id=1974, Mark=1]37. D
[id=1954, Mark=1]38. B
[id=1952, Mark=1]39. A
[id=1999, Mark=1]40. B
[id=2010, Mark=1]41. C
[id=1990, Mark=1]42. D
[id=2028, Mark=1]43. D
[id=2047, Mark=1]44. A
[id=2041, Mark=1]45. C
[id=2152, Mark=1]46. B
[id=2066, Mark=1]47. C
[id=2104, Mark=1]48. A
[id=2088, Mark=1]49. D
[id=2149, Mark=1]50. D