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- 1. Open EndedRefer to Figure 3-10. If Alice produces only lemonade, she can produce
- 2. Open EndedRefer to Figure 3-4. If Lisa and Bryce each divides his or her time equally between producing jackets and producing sweaters, then total production is... Lisa- 16 jackets and 4 sweaters. Bryce- 10 Jackets and 2 sweaters
- 3. Open EndedThe most obvious benefit of specialization and trade is that they allow us to
- 4. Open EndedTom produces baseball gloves and baseball bats. Steve also produces baseball gloves and baseball bats, but Tom is better at producing both goods. In this case, trade could
- 5. Open EndedCanada and the U.S. both produce wheat and computer software. Canada is said to have the comparative advantage in producing wheat if
- 6. Open EndedEconomists generally support
- 7. Open EndedRefer to Figure 3-20. If Canada and Mexico switch from each country dividing its time equally between the production of Good X and Good Y to each country spending all of its time producing the good in which it has a comparative advantage, then total production of Good X will increase by Canada good x- 8 Mexico's good x- 20
- 8. Open EndedRefer to Figure 3-20. If Canada and Mexico switch from each country dividing its time equally between the production of Good X and Good Y to each country spending all of its time producing the good in which it has a comparative advantage, then total production of Good Y will increase by Canada good y- 16 Mexico good y- 10
- 9. Open EndedKen and Traci are two woodworkers who both make tables and chairs. In one month, Ken can make 3 tables or 18 chairs, whereas Traci can make 8 tables or 24 chairs. Given this, we know that the opportunity cost of 1 table is
- 10. Open EndedSuppose that a worker in Caninia can produce either 2 blankets or 8 meals per day, and a worker in Felinia can produce either 5 blankets or 1 meal per day. Each nation has 10 workers. For many years, the two countries traded, each completely specializing according to their respective comparative advantages. Now war has broken out between them and all trade has stopped. Without trade, Caninia produces and consumes 10 blankets and 40 meals per day and Felinia produces and consumes 25 blankets and 5 meals per day. The war has caused the combined daily output of the two countries to decline by
- 11. Open Ended(Assume that Brad and Theresa can switch between producing wheat and producing beef at a constant rate.) Refer to Table 3-20. What is Brad's opportunity cost of producing one pound of beef? Brad- 10 Brushel of wheat. 12 lbs of beef Theresa- 6 Brushels of wheat. 10 lbs of beef.
- 12. Open Ended(Assume that Brad and Theresa can switch between producing wheat and producing beef at a constant rate.) Refer to Table 3-20. Assume that Brad and Theresa each has 60 minutes available. If each person spends all his or her time producing the good in which he or she has a comparative advantage, then total production is Minutes Needed to Make 1: Brad- 10 Brushel of wheat. 12 lbs of beef Theresa- 6 Brushels of wheat. 10 lbs of beef.
- 13. Open EndedRefer to Table 3-20. At which of the following prices would both Brad and Theresa gain from trade with each other? Minutes Needed to Make 1: Brad- 10 Brushel of wheat. 12 lbs of beef Theresa- 6 Brushels of wheat. 10 lbs of beef.
- 14. Open EndedTrade can make everybody better off because it
- 15. Open EndedThe figure illustrates the market for calculators in a country. Refer to Figure 9-2. With free trade, consumer surplus is
- 16. Open EndedRefer to Figure 9-2. With free trade, producer surplus is
- 17. Open EndedRefer to Figure 9-2. As a result of trade, total surplus increases by
- 18. Open EndedWhen the nation of Duxembourg allows trade and becomes an importer of software,
- 19. Open EndedAssume Leo buys coffee beans in a competitive market. It follows that
- 20. Open EndedAn example of a perfectly competitive market would be the market for
- 21. Open Ended3. Refer to Figure 4-7. The movement from Da to Db in the market for potato chips could be caused by a
- 22. Open EndedMost studies indicate that alcohol and marijuana tend to be
- 23. Open EndedOpponents of alcohol taxes often argue that liquor and marijuana are substitutes so that high liquor prices
- 24. Open EndedIf Max experiences a decrease in his income, then we would expect Max's demand for
- 25. Open EndedIf textbooks and study guides are complements, then an increase in the price of textbooks will result in
- 26. Open EndedWhich of the following events could cause an increase in the supply of ceiling fans?
- 27. Open EndedRefer to Figure 4-18. At a price of $15, there would be a
- 28. Open EndedIf a shortage exists in a market, then we know that the actual price is
- 29. Open EndedRecent forest fires in the western states are expected to cause the price of lumber to rise in the next six months. As a result, we can expect the supply of lumber to
- 30. Open EndedRefer to Figure 4-26. Which of the following movements would illustrate the effect in the market for convertible automobiles of an increase in the price of steel?
- 31. Open EndedSuppose the number of buyers in a market increases and a technological advancement occurs also. What would we expect to happen in the market?
- 32. Open EndedWhat would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce steamed milk, which is used to make lattés, and scientists discovered that lattés cause heart attacks?
- 33. Open EndedConsider the market for portable air conditioners in equilibrium. A summer of unseasonably cool weather would cause
- 34. Open EndedWhich of the following changes would not shift the supply curve for a good or service?
- 35. Open EndedSuppose you make jewelry. If the price of gold falls, then we would expect you to
- 36. Open EndedRefer to Figure 4-15. Which of the following would cause the supply curve to shift from Supply A to Supply C in the market for sail boats?
- 37. Open EndedRefer to Figure 4-23. In this market for watermelons, a severe drought occurs which affects the watermelon crop. The equilibrium price
- 38. Open EndedNew cars are normal goods. What will happen to the equilibrium price of new cars if the price of gasoline rises, the price of steel falls, public transportation becomes cheaper and more comfortable, auto-workers accept lower wages, and automobile insurance becomes more expensive?
- 39. Open EndedIf macaroni and cheese is an inferior good, what would happen to the equilibrium price and quantity of macaroni and cheese if consumers' incomes rise?
- 40. Open EndedIf there is a shortage of farm laborers, we would expect
- 41. Open EndedWhich of the following events must cause equilibrium quantity to rise?
- 42. Open EndedRefer to Figure 5-12. Using the midpoint method, the price elasticity of demand between point X and point Y is
- 43. Open EndedHilda's Hair Hysteria earned $3,750 in total revenue last month when it sold 125 haircuts. This month it earned $3,600 in total revenue when it sold 90 haircuts. The price elasticity of demand for Hilda's Hair Hysteria is
- 44. Open EndedThe demand for grape-flavored Hubba Bubba bubble gum is likely
- 45. Open EndedSuppose the price of a bag of tortilla chips decreases from $3.00 to $2.50 and, as a result, the quantity of tortilla chips demanded increases from 200 bags to 300 bags. Using the midpoint method, the price elasticity of demand for tortilla chips in the given price range is
- 46. Open EndedIf the demand for donuts is elastic, then a decrease in the price of donuts will
- 47. Open EndedFor which of the following goods is the income elasticity of demand likely lowest?
- 48. Open EndedRefer to Figure 21-1. If the price of a CD is $12, then the consumer's income amounts to
- 49. Open EndedThe following diagram shows two budget lines: A and B. Which of the following could explain the change in the budget line from A to B?
- 50. Open EndedOn a graph we draw a consumer's budget constraint, measuring the number of apples on the horizontal axis and the number of light bulbs on the vertical axis. If the slope of the budget constraint is -2, then
- 51. Open EndedA decrease in income will cause a consumer's budget constraint to
- 52. Open EndedRefer to Figure 21-12. If the consumer moves from bundle V to bundle X, the
- 53. Open EndedWhen two goods are perfect complements, the indifference curve is
- 54. Open EndedThe consumer's optimum is where
- 55. Open EndedThe goal of the consumer is to
- 56. Open EndedBillie spends all of her income on soccer balls and jeans, and the price of a pair of jeans is three times the price of soccer balls. In order to maximize total utility, Billie should
- 57. Open EndedA consumer maximizes utility when she consumes at a point where
- 58. Open EndedRefer to Figure 7-4. When the price falls from P1 to P2, which area represents the increase in consumer surplus to new buyers entering the market?
- 59. Open EndedConsumer surplus is equal to the
- 60. Open EndedWhen there is a technological advance in the pork industry, consumer surplus in that market will
- 61. Open EndedThe only four consumers in a market have the following willingness to pay for a good: Refer to Table 7-3. If the price is $20, then consumer surplus in the market is
- 62. Open EndedRefer to Figure 7-15. When the price rises from P1 to P2, what area represents the increase in producer surplus?
- 63. Open EndedSuppose consumer income increases. If grass seed is a normal good, the equilibrium price of grass seed will
- 64. Open EndedTotal surplus is equal to
- 65. Open EndedA tax imposed on the buyers of a good will lower the
- 66. Open EndedRefer to Figure 6-21. In the after-tax equilibrium, how much revenue does the government collect from the tax on this good?
- 67. Open EndedRefer to Figure 6-28. Suppose a tax of $6 per unit is imposed on this market. What will be the new equilibrium quantity in this market?
- 68. Open EndedWhich of the following is correct? A tax burden
- 69. Open EndedIf the government removes a $1 tax on sellers of gasoline and imposes the same $1 tax on buyers of gasoline, then the price paid by buyers will
- 70. Open EndedRefer to Figure 8-13. Suppose the government places a $5 per-unit tax on this good. The per-unit burden of the tax on sellers is
- 71. Open EndedTaxes cause deadweight losses because taxes
- 72. Open EndedThe demand for chicken wings is more elastic than the demand for razor blades. Suppose the government levies an equivalent tax on chicken wings and razor blades. The deadweight loss would be larger in the market for
- 73. Open EndedIf the government levies a $5 tax per ticket on buyers of NFL game tickets, then the price paid by buyers of NFL game tickets would
- 74. Open EndedRefer to Figure 6-22. Buyers pay how much of the tax per unit?
- 75. Open EndedAssume the demand for cigarettes is relatively inelastic, and the supply of cigarettes is relatively elastic. When cigarettes are taxed, we would expect
- 76. Open EndedIf the labor supply curve is nearly vertical, a tax on labor
- 77. Open EndedRefer to Figure 6-21. Suppose buyers, rather than sellers, were required to pay this tax (in the same amount per unit as shown in the graph). Relative to the tax on sellers, the tax on buyers would result in
- 78. Open EndedRefer to Figure 8-13. Suppose the government places a $5 per-unit tax on this good. The amount of deadweight loss resulting from this tax is
- 79. Open EndedSuppose that the demand for light bulbs is inelastic, and the supply of light bulbs is elastic. A tax of $2 per bulb levied on light bulbs will increase the price paid by buyers of light bulbs by
- 80. Open EndedSuppose a tax of $4 per unit is imposed on a good, and the tax causes the equilibrium quantity of the good to decrease from 2,000 units to 1,700 units. The deadweight loss of the tax is
- 81. Open EndedDeadweight loss is the
- 82. Open EndedAn example of a price floor is
- 83. Open EndedRefer to Figure 6-2. The price ceiling
- 84. Open EndedRefer to Figure 10-17. How large would a corrective tax need to be to move this market from the equilibrium outcome to the socially-optimal outcome?
- 85. Open EndedOnce tradable pollution permits have been allocated to firms,
- 86. Open EndedRefer to Figure 10-1. This graph represents the tobacco industry. The socially optimal price and quantity are
- 87. Open EndedThe Ogallala aquifer is a large underground pool of fresh water under several western states in the United States. Any farmer with land above the aquifer can at present pump water out of it. Which of the following statements about the aquifer is correct?
- 88. Open EndedMarkets do not ensure that the air we breathe is clean because
- 89. Open EndedWithout government intervention, public goods tend to be
- 90. Open EndedMost lighthouses are operated by the government because
- 91. Open EndedWhich of the following is NOT an example of a negative externality?
- 92. Open EndedAbe owns a dog; the dog's barking annoys Abe's neighbor, Jenny. Suppose that the benefit of owning the dog is worth $200 to Abe and that Jenny bears a cost of $400 from the barking. Assuming Abe has the legal right to keep the dog, a possible private solution to this problem is that
- 93. Open EndedA good is excludable if
- 94. Open EndedThe U.S. military defends Jacob from foreign attackers. The fact that Jacob enjoys this protection does not detract from others Americans' enjoyment of it. For this reason, we say that national defense is
- 95. Open EndedWhich of the following goods is not excludable and not rival in consumption?
- 96. Open EndedA rain barrel is a container that captures and stores rainwater for landscape and garden use during dry periods. Rain barrels provide an external benefit to the community through water conservation. What can the government do to equate the equilibrium quantity of rain barrels and the socially optimal quantity of rain barrels?
- 97. Open EndedSuppose the nation of Kenistonia has a tax system in which individuals pay a marginal tax of 10% on all income between $0 and $50,000, then a marginal tax of 25% on all income above $50,000. You live in Kenistonia, and last year you earned $90,000. It is now tax day--what is your total tax bill?
- 98. Open EndedLarry's Lunchcart is a small street vendor business. If Larry makes 15 pretzels in his first hour of business and incurs a total cost of $16.50, his average total cost per pretzel is
- 99. Open EndedRiva crafts and sells hard cider as a part-time job. She can bottle and sell four cases in a week. She is considering hiring her friend Atul to help her. Together, Riva and Atul can bottle and sell seven cases per week. What is Atul's marginal product?
- 100. Open EndedTom quit his $65,000 a year corporate lawyer job to open up his own law practice. In Tom's first year in business his total revenue equaled $150,000. Tom's explicit cost during the year totaled $85,000. What is Tom's economic profit for his first year in business?
- 101. Open EndedSonia opened a yoga studio where she teaches classes and sells yoga clothing. Variable costs for Sonia's yoga studio include the cost of the
- 102. Open EndedIf Franco's Pizza Parlor knows that the marginal cost of the 500th pizza is $3.50 and that the average total cost of making 499 pizzas is $3.30, then
- 103. Open EndedEconomies of scale occur when a firm's
- 104. Open EndedThe Big Blue Sky jet company has long-run total costs of $20 million if it produces 5 jets and long-run total costs of $24 million if it produces 6 jets. The Big Blue Sky jet company is experiencing
- 105. Open EndedThe minimum points of the average variable cost and average total cost curves occur where the
- 106. Open EndedRefer to Figure 14-1. The firm will earn a positive economic profit in the short run if the market price is
- 107. Open EndedWhich of the following industries is least likely to exhibit the characteristic of free entry?
- 108. Open EndedWhich of the following statements best reflects a price-taking firm?
- 109. Open EndedA competitive market is in long-run equilibrium. If demand decreases, we can be certain that price will
- 110. Open EndedRefer to Figure 14-3. If the market price is $10, what is the firm's total revenue?
- 111. Open EndedRefer to Figure 14-3. The firm will earn zero economic profit if the market price is
- 112. Open EndedIn a competitive market the current price is $5. The typical firm in the market has ATC = $5.50 and AVC = $4.50.
- 113. Open EndedWhich of these types of costs can be ignored when an individual or a firm is making decisions?
- 114. Open EndedComparing marginal revenue to marginal cost
- 115. Open EndedMr. Rogers sells colored pencils. The colored-pencil industry is competitive. Mr. Rogers hires a business consultant to analyze his company's financial records. The consultant recommends that Mr. Rogers increase his production. The consultant must have concluded that Mr. Roger's
- 116. Open EndedRefer to Table 14-11. If the firm is producing 3 units of output, it should produce
- 117. Open EndedA perfectly competitive firm produces where
- 118. Open EndedDrug companies are allowed to be monopolists in the drugs they discover in order to
- 119. Open EndedAfter the patent runs out on a brand name drug, generic drugs enter the market. What happens next in the market?
- 120. Open EndedWhich of the following is not a reason for the existence of a monopoly?
- 121. Open EndedRefer to Figure 15-7. In order to maximize profits, the monopolist should produce
- 122. Open EndedRefer to Figure 15-7. In order to maximize profits, the monopolist should charge a price of
- 123. Open EndedRefer to Figure 15-7. A profit-maximizing monopolist would earn profits of
- 124. Open EndedRefer to Table 15-19. If a monopolist faces a constant marginal cost of $5, how much output should the firm produce in order to equate marginal revenue with marginal cost?
- 125. Open EndedWhen a certain monopoly sets its price at $8 it sells 64 units. When the monopoly sets its price at $10 it sells 60 units. The marginal revenue for the firm over this range is
- 126. Open EndedRefer to Figure 15-11. Which area represents the deadweight loss from monopoly?
- 127. Open EndedConsider a profit-maximizing monopoly pricing under the following conditions. The profit-maximizing price charged for goods produced is $12. The intersection of the marginal revenue and marginal cost curves occurs where output is 10 units and marginal cost is $6. The socially efficient level of production is 12 units. The demand curve and marginal cost curves are linear. What is the value of the deadweight loss created by the monopolist?
- 128. Open EndedThe deadweight loss that arises from a monopoly is a consequence of the fact that the monopoly
- 129. Open EndedSuppose executives at an art museum know that 100 adults are willing to pay $12 for admission to the museum on a weekday. Suppose the executives also know that 200 students are willing to pay $8 for admission on a weekday. The cost of operating the museum on a weekday is $2,000. Refer to Scenario 15-9. How much profit will the museum earn if it engages in price discrimination?
- 130. Open EndedWhich of the following is not an example of price discrimination?
- 131. Open EndedThe reason to regulate utilities instead of using antitrust laws to promote competition is that a utility is usually a
- 132. Open EndedThe firm has total fixed costs of $9 and a constant marginal cost of $3 per unit. The firm will maximize profit with (theres a chart)
- 133. Open EndedA monopolistically competitive market is characterized by
- 134. Open EndedSuppose that monopolistically competitive firms in a certain market are earning positive profits. In the transition from this initial situation to a long-run equilibrium,
- 135. Open EndedWhich of the following examples illustrates an oligopoly market?
- 136. Open EndedRefer to Table 17-13. If both stores follow a dominant strategy, Lopes's annual profit will grow by
- 137. Open EndedA group of firms that act in unison to maximize collective profits is called a
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