Econ Mid term

The figure shows a labor market with a minimum wage equal to $16. In this figure, what area equals the resources lost because of job search?

A. area A

B. area D

C. area B

D. area C

E. area E

C. area B

The figure shows the market for college education in the United States. If the government has a goal of enrolling an efficient number of students each year, the government should provide a voucher to students equaling ________.

A. $11,000

B. $16,000

C. $5,000

D. $13,000

E. $7,000

C. $5,000

The figure shows the market for a good with an external benefit. If the market is competitive and the government takes no action, the equilibrium quantity is ________ units and the equilibrium price is ________ per unit.

A. 10; $100

B. 10; $150

C. 8; $300

D. 10; $250

E. 8; $150

E. 8; $150

The quantity supplied of a good or service is the..

A. one quantity produced at a variety of prices.
B. quantity produced at one price.
C. list of all quantities at different prices, as illustrated by a demand schedule and a demand
curve.
D. list of all quantities at different prices, as illustrated by a supply schedule and a supply curve

B. quantity produced at one price.

In economics, the factor of production "land" includes all of the following except….

A. plastics
B. wild plants
C. animals, birds, and fish
D. oil
E. energy

A. plastics

The figure shows a labor market with a minimum wage equal to $16. In this figure, what area equals the firms' surplus?

A. area A

B. area B

C. area C

D. area D

E. area E

A. area A

Entrepreneurship, as a factor of production, refers to…

A. the value of the firm's stock.

B. the human resource that organizes labor, land, and capital.

C. the human capital accumulated by workers.

D. the technology used by firms.

E. the capital the firm uses.

B. the human resource that organizes labor, land, and capital.

A minimum wage set above the equilibrium wage will ________ the quantity of labor demanded and ________ the quantity of labor supplied.

A. not change; not change

B. decrease; increase

C. increase; increase

D. increase; decrease

E. decrease; decrease

B. decrease; increase

If the United States imposed a quota on the amount of salmon imported from Chile, the result would be ________ salmon prices in the United States and _______ in the quantity of salmon demanded in the United States.

A. lower; an increase

B. lower; a decrease

C. higher; a decrease

D. higher; an increase

E. higher; no change

C. higher; a decrease

Suppose Dan is willing to pay a maximum of $3,000 for a piano, but finds one he can buy for $2,500. Dan's consumer surplus from this piano is…

A. $500.

B. $3,000.

C. $5,500.

D. $2,500.

E. zero because he buys the piano.

A. $500

When a tariff is imposed on a good, the ________ increases.

A. quantity exported

B. domestic quantity purchased

C. domestic quantity produced

D. world price

E. quantity imported

C. domestic quantity produced

Pizza Hut lowers the price of its pizza. The price elasticity of demand for Pizza Hut pizza equals 0.3. What happens to the Pizza Hut's total revenue?

A. nothing

B. it increases

C. it becomes negative

D. it decreases

E. It might change, but more information is needed to determine if it increases, decreases, or

does not change.

D. it decreases

The figure shows the production possibility frontier for a country. Suppose the country is producing at point D and increases production of rice to 15 tons. Given this change, what is the opportunity cost per ton of rice?

A. 3 thousand bottles of wine
B. Nothing, it is a free lunch
C. 12 tons of rice
D. 6 thousand bottles of wine
E. 15 thousand bottles of wine

A. 3 thousand bottles of wine

If the minimum wage is above the equilibrium wage rate, then an increase in the minimum wage ________ employment and ________ unemployment.

A. decreases; increases

B. does not change; increases

C. decreases; decreases

D. increases; decreases

E. increases; increases

A. decreases; increases

A minimum wage set above the equilibrium wage rate
A. shifts the labor supply curve rightward.
B. decreases the quantity of labor services supplied.
C. shifts the labor supply curve leftward.
D. has no effect on the quantity of labor services supplied.
E. increases the quantity of labor services supplied.

E. increases the quantity of labor services supplied

The figure shows the market for iPods. Which of the following shifts the demand curve from D0 to D1?

A. A decrease in the price of Zunes, a
substitute for iPods.
B. A requirement that all students at
universities have an iPod.
C. An increase in people's incomes.
D. A decrease in the price of iPods.
E. An increase in the price of iPods.

A. A decrease in the price of Zunes, a substitute for iPods

Taco Bell firm raises the price of its tacos. The price elasticity of demand for Taco Bell tacos equals 5.0. What happens to the Taco Bell's total revenue?

A. nothing

B. it decreases

C. it becomes negative

D. it increases

E. It might change, but more information is needed to determine if it increases, decreases, or does not change.

B. it decreases

Suppose the Chinese government helps Chinese textile firms pay the cost of producing textiles. This payment is considered a(n) ________.

A. export subsidy and creates a deadweight loss in China
B. export subsidy and increases producer surplus in the United States
C. quota and creates a deadweight loss in China
D. tariff and creates a deadweight loss in the United States
E. tariff and increases consumer surplus in the United States

A. export subsidy and creates a deadweight loss in China

Canada has nationalized health care, so that everyone, regardless of their ability to pay, has some access to health care. Based on this observation, Canada has decided that "everyone, regardless of their ability to pay" is the answer to what microeconomic question?

A. For whom will health care be produced?

B. What type of health care will be produced and in what quantity?

C. Must we offer health care?

D. How will health care be produced?

E. Why will we offer health care?

A. For whom will health care be produced?

Which of the following statements best describes the study of economics? Economics studies how

A. to create incentives so that scarcity does not exist.

B. firms make profits.

C. to organize production so that scarcity does not occur.

D. we make choices in the face of scarcity.

E. businesses reach decisions.

D. we make choices in the face of scarcity.

Which of the following helps explain why the law of supply exists?

A. Sellers realize that if the price increases, they make larger profits and do not need to change
their production.
B. Larger outputs result in lower costs of production.
C. The law of demand.
D. The law of increasing opportunity cost.
E. The costs of production remain constant throughout all levels of output

D. The law of increasing opportunity cost

A tax on income from land in Montana is borne entirely by landowners because the

A. supply of land is perfectly elastic.

B. demand for land is perfectly inelastic.

C. supply of land is perfectly inelastic.

D. deadweight loss from the tax would otherwise be infinite.

E. demand for land is perfectly elastic

C. supply of land is perfectly inelastic.

Consider the market for running shoes shown on the right. A tariff of _____ is imposed and causes the amount of shoes imported to ______ pairs.

A. $20; decrease from 4 million to 3 million

B. $40; decrease from 5 million to 2 million

C. $60; decrease from 4 million to 2 million

D. $20; decrease from 4 million to 2 million

E. $40; decrease from 4 million to 2 million

D. $20; decrease from 4 million to 2 million

Which of the following is NOT considered capital?

A. A computer used by your instructor for presentations in class.

B. The furniture in the President's office.

C. An assembly line at a General Motors plant.

D. Stocks and bonds that are sold by Pepsico.

E. A nail gun used for building houses.

D. Stocks and bonds that are sold by Pepsico

Scarcity exists because

A. some individuals have low income.

B. people take too much leisure time.

C. human wants exceed the resources available to satisfy them.

D. some people make bad economic decisions.

E. the costs of production are high

C. human wants exceed the resources available to satisfy them

The figure shows the market for education, a good possessing an external benefit. In order to attain the efficient number of students, a government subsidy must equal ________ per student.

A. $10,000

B. $8,000

C. $6,000

D. $2,000

E. $16,000

C. $6,000

The price of the good multiplied by the quantity sold is its…

A. total revenue.

B. total cost.

C. total spending.

D. total income.

E. total quantity.

A. total revenue

Suppose everybody paid the same total amount of tax regardless of their income. This type of tax system would be

A. regressive.

B. marginal.

C. efficient.

D. proportional.

E. progressive.

A. regressive

The figure shows the market for sports drinks. If the price of sports drinks decreases (with all other factors influencing buying plans unchanged), which of the following is true?

i. There will be a movement from point A to point B.

ii. The law of demand must be applied.

iii. There will be a shift from D0 to D1.

iv. There will be a shift from D0 to D2.

B. i and ii

If a quota is imposed on imports of shrimp into the United States, U.S. consumer surplus from shrimp will ________ and U.S. producer surplus from shrimp will ________.

A. increase; not change

B. increase; increase

C. decrease; decrease

D. increase; decrease

E. decrease; increase

E. decrease; increase

If an import quota is imposed on imports of shrimp into the United States, U.S. consumer surplus from shrimp will ________ and U.S. total surplus from shrimp will ________.

A. increase; not change

B. decrease; increase

C. increase; decrease

D. increase; increase

E. decrease; decrease

E. decrease; decrease

For a government subsidy on a good with an external benefit to result in the efficient amount of output being produced, what must be done?

A. The government must produce the product.
B. Private production without the subsidy must be prohibited.
C. The size of marginal external benefit must be accurately determined.
D. The quantity demanded must be decreased to the efficient amount.
E. Private production and private consumption must both be directly subsidized.

C. The size of marginal external benefit must be accurately determined.

Pizza is a normal good. In the figure, the shift in the demand curve from D to D2 can be the result of..

A. a decrease in the price of soda, a complement to pizza.

B. a decrease in income.

C. an increase in the cost of producing pizza.

D. a study that shows that pizza is a very healthy food.

E. an increase in the price of hamburgers, a substitute for pizza.

B. a decrease in income

The figure shows the market for iPods. Which of the following creates a movement from point A to point B?

A. An increase in the price of iPods.

B. An increase in people's incomes.

C. A decrease in the price of Zunes, a substitute for iPods.

D. A requirement that all students at universities have an iPod.

E. A decrease in the price of iPods

E. A decrease in the price of iPods.

The figure shows the market for biologists. The government decides to set a minimum wage for biologists of $18 per hour. After this minimum wage is in effect, the firms' surplus equals ________.

A. $1,800
B. $200
C. $900
D. $400
E. $800

D. $400

A tax for which the average tax rate decreases as income increases is defined as

A. a proportional tax.

B. a regressive tax.

C. a progressive tax.

D. an efficient quantity tax.−

E. a sales tax.

B. a regressive tax

If the average tax rate falls as income increases, the tax is

A. progressive.

B. regressive.

C. proportional.

D. vertically unfair.

E. impossible to determine with the information given.

B. regressive

When a third-string professional quarterback earns more than a police officer, society answers the ________ question.

A. for whom

B. how

C. what

D. social interest vs. self-interest

E. why

A. for whom

If the government provides a subsidy to producers, what is the effect of this policy in a supply and demand diagram?

A. The supply curve shifts leftward and the price rises.

B. The supply curve shifts leftward and the price falls.

C. The demand curve shifts rightward and the price rises.

D. The demand curve shifts leftward and the price rises.

E. The supply curve shifts rightward and the price falls.

E. The supply curve shifts rightward and the price falls

Which economic question depends on the incomes that people earn and the prices they pay for goods and services?

A. Where?

B. Why?

C. For whom?

D. What?

E. How?

C. For whom?

A government subsidy paid to a firm

i. increases the demand for the good.

ii. has no effect on the supply of the good.

iii. leads to an increase in the equilibrium quantity.

D. iii only.

During a time of high unemployment, a country can increase the production of one good or service

A. without decreasing the production of something else.

B. and must increase the production of something else.

C. but the opportunity cost is infinite.

D. but must decrease the production of something else.

E. by using resources in the production process twice.

A. without decreasing the production of something else

The figure shows the production possibility frontier for a country. Suppose the country is producing at point A. What is the opportunity cost of increasing the production of rice to 12 tons?

A. 12 tons of rice

B. 15 thousand bottles of wine

C. Nothing, it is a free lunch

D. 9 thousand bottles of wine

E. 6 thousand bottles of wine

C. Nothing, it is a free lunch

The figure shows the market for iPods. Which of the following shifts the demand curve from D0 to D2?

A. A requirement that all students at universities have an iPod.

B. A decrease in people's incomes if iPod are a normal good.

C. An increase in the price of iPods.

D. A decrease in the price of Zunes, a substitute for iPods.

E. A decrease in the price of iPods.

A. A requirement that all students at universities have an iPod

Assume that the government passes a tax so that every individual must pay $100. This tax is a…

A. regressive tax.

B. progressive tax.

C. proportional tax.

D. marginal tax.

E. type of tax that is impossible to determine without more information.

A. regressive tax

John has a marginal benefit of $7 for 1 slice of pizza, $5 for a second slice, $3 for a third slice, $1 for a fourth slice, and $0.50 for a fifth slice. The price of pizza is $1.50 per slice. Which of the following statements is correct?

A. John will purchase 3 slices of pizza and have consumer surplus of $4.50.

B. John will purchase 3 slices of pizza and have consumer surplus of $10.50.

C. John will purchase 2 slices of pizza and have consumer surplus of $3.00.

D. John will purchase 2 slices of pizza and have consumer surplus of $1.50.

E. John will purchase 4 slices of pizza and have consumer surplus of $12.00

B. John will purchase 3 slices of pizza and have consumer surplus of $10.50.

Along a linear (straight line) downward sloping demand curve, demand is unit elastic a…

A. the highest price.

B. the midpoint.

C. the lowest price.

D. all points on the linear demand curve.

E. None of the above because linear demand curves are never unit elastic

B. the midpoint.

At the midpoint of a linear, downward sloping demand curve, the price elasticity of demand is…

A. less than one but greater than zero.

B. greater than one.

C. equal to one.

D. zero.

E. infinite.

C. equal to one.

In the figure, the shift in the demand curve from D to D1 can be the result of…

A. an increase in the number of teenagers, all of whom demand more pizza than do other age groups.

B. a decrease in the price of a sub sandwich, a substitute for pizza.

C. an increase in the price of soda, a complement to pizza.

D. new technology that increases the profit from producing pizza.

E. a decrease in income if pizza is normal good

A. an increase in the number of teenagers, all of whom demand more pizza than do other age groups.

The figure shows the market for college education in the United States. If the government provides a subsidy to colleges to enroll the efficient number of students, the amount of the subsidy per student equals ________ and each student pays ________ per year.

A. $5,000; $11,000
B. $16,000; $13,000
C. $5,000; $13,000
D. $7,000; $13,000
E. $11,000; $16,000

A. $5,000; $11,000

The richest 20 percent of individuals in the United States receive about ________ of the nation's total income.
A. 20 percent
B. 23 percent
C. 50 percent
D. 90 percent
E. 10 percent

C. 50 percent

To be part of the supply for a good, a producer must be
A. only willing to supply the good.
B. only able to supply the good.
C. both able and willing to supply the good.
D. both able and willing to supply the good, and have already identified a buyer.
E. both able and willing to supply the good, and have already sold the good.

C. both able and willing to supply the good.

Which of the following describes the economic meanings of cost and price?

A. Cost refers to the price that buyers must pay to buy the good.

B. Cost is what must be given up to produce a good, and price is what a seller receives when the good is sold.

C. Cost refers to what the buyers pay for the good, and price refers to what sellers receive when the good is sold.

D. They are the same, and both mean what is received when a good is sold.

E. Cost is exchange worth, and price is dollar worth.

B. Cost is what must be given up to produce a good, and price is what a seller receives when the good is sold.

The price of a cowboy hat is $100. Willie is willing to pay $130, Waylon is willing to pay $100, and Merle is willing to pay $85. All of the following statements are true EXCEPT:

A. Only Willie and Waylon will purchase the cowboy hat.

B. The sum of consumer surplus will be $30.

C. Merle's consumer surplus is $15.

D. Waylon's consumer surplus is $0.

E. Willie's consumer surplus is $30.

C. Merle's consumer surplus is $15.

The figure shows the market for sports drinks. If the price of bottled water (a substitute for sports drinks) ____________.

A. increases, then the demand curve for
sports drinks shifts from D0 to D2.
B. decreases, then the demand curve for
sports drinks shifts from D0 to D1.
C. increases, then the demand curve for
sports drinks shifts from D0 to D1.
D. increases, then there will be a
movement from point B to point A.
E. increases, then there will be a
movement from point A to point B.

C. increases, then the demand curve for sports drinks shifts from D0 to D1.

When a social security tax is imposed on workers, employment ________ and when a social security tax is is imposed on employers, employment ________.

A. decreases; does not change

B. increases; increases

C. increases; decreases

D. decreases; decreases

E. decreases; increases

D. decreases; decreases

The figure shows a labor market with minimum wage equal to $16. In this figure, what area equals the deadweight loss?
A. area A
B. area B
C. area C
D. area D
E. area E

C. area C

When unskilled teens earn less than college graduates, society answers the ________ question.

A. social interest versus self interest−

B. how

C. for whom

D. why

E. what

C. for whom

If an import quota is imposed on imports of shrimp into the United States, U.S. producer surplus from shrimp will ________ and U.S. total surplus from shrimp will ________.

A. decrease; increase

B. decrease; decrease

C. increase; increase

D. increase; decrease

E. increase; not change

D. increase; decrease

When the federal government decides to pay senators more than it pays soldiers, it answers the ________ question.

A. why

B. how

C. where

D. what

E. for whom

E. for whom

The personal distribution of income in the United States shows that

A. the poorest 60 percent of individuals receive approximately 50 percent of total income.

B. the richest 20 percent of individuals receive approximately 50 percent of total income.

C. the poorest 20 percent of individuals receive approximately 20 percent of total income.

D. income is equally distributed.

E. the richest 20 percent of individuals receive approximately 25 percent of total income.

B. the richest 20 percent of individuals receive approximately 50 percent of total income.

Mary is willing to pay $50 for a Christmas tree, John is willing to pay $45 and Jeff is willing to pay $40. The price of a tree is $40. The total consumer surplus for Mary, John and Jeff taken together is..

A. $135.

B. $120.

C. $40.

D. $15.

E. $95

D. $15.

The figure shows a labor market with minimum wage equal to $16. In this figure, after taking account of search costs, what area equals the workers' surplus?

A. area A

B. area B

C. area C

D. area D

E. area E

D. area D

When the government uses a private subsidy in a market with an external benefit, to reach the efficient quantity of production, the subsidy must be equal to the marginal

A. private benefit.

B. social benefit.

C. external cost.

D. cost of production.

E. external benefit.

E. external benefit.

Moving along the production possibilities frontier itself illustrates

A. the existence of unemployment of some factors of production.

B. how free lunches can be exploited through trade.

C. the existence of tradeoffs.

D. how tradeoffs need not occur if the economy is efficient.

E. the benefits of free lunches.

C. the existence of tradeoffs.

A newspaper printing press is an example of

A. a capital good.

B. a factor of production.

C. something that influences labor productivity.

D. a good that was once an output of the production process.

E. All of the above are correct.

E. All of the above are correct.

Consider the market for running shoes shown on the right. As a result of the tariff imposed, ______ collect(s) tariff revenue of ____.

A. the government; $80 million

B. firms; $80 million

C. firms; $40 million

D. the government; $120 million

E. the government; $40 million

E. the government; $40 million

The sales tax in Dutchess County, New York, is 7.5 percent. This sales tax is

A. proportional.

B. fair because everyone pays the same tax.

C. regressive.

D. an example of the benefit principle of taxation.

E. progressive.

C. regressive

The figure above shows Diane's demand curve for soda. The price of a soda is $1.00. Diane's total benefit from consuming 15 sodas is

A. $0.

B. $15.00.

C. $11.25.

D. $26.25.

E. None of the above answers is correct

D. $26.25

The figure shows the production possibility frontier for a country. Suppose the country is producing at point E. What would be the opportunity cost to increase the production of wine to 9 thousand bottles?

A. Nothing, it is a free lunch

B. 12 tons of rice

C. 15 thousand bottles of wine

D. 3 tons of rice

E. 9 thousand bottles of wine

D. 3 tons of rice

The figure shows the market for college education in the United States. If the government does not intervene in this market, the deadweight loss equals ________ per year.

A. $224 billion

B. $7 billion

C. $14 billion

D. $280 billion

E. $28 billion

C. $14 billion

Because human wants are insatiable and unlimited while available resources are limited, people are said to face the problem of

A. why to produce.

B. scarcity.

C. social interest versus self interest.−

D. microeconomics.

E. macroeconomics

B. scarcity.

An example of a capital good is

A. a fiber optic cable TV system.

B. an iPod.

C. an insurance policy.

D. a hair cut.

E. a slice of pizza.

A. a fiber optic cable TV system.

Suppose the Oakland Raiders football team increases their season ticket prices and total revenue from ticket sales falls, but not to zero.

This fact means that the demand for Raiders tickets is

A. perfectly elastic.

B. perfectly inelastic.

C. inelastic.

D. elastic.

E. unit elastic

D. elastic

Scarcity means we must

A. produce less.

B. consume less.

C. make choices.

D. work more.

E. earn more

C. make choices.

Suppose the current equilibrium wage rate for lifeguards in Houston is $7.85 an hour. A minimum wage law that creates a price floor of $8.50 an hour leads to

A. no changes in the lifeguard market.

B. a shortage of lifeguards in Houston.

C. a change in the quantity of lifeguards supplied but no change in the quantity of lifeguards demanded.

D. an increase in the number of lifeguards employed.

E. a surplus of lifeguards in Houston.

E. a surplus of lifeguards in Houston.

The U.S. government provides payments to U.S. cotton producers to help defray the cost of cotton production. This _______ results in ______ of cotton in the United States and _______ in other countries.

A. export subsidy; underproduction; overproduction

B. tariff; overproduction; underproduction

C. tariff; underproduction; overproduction

D. export subsidy; overproduction; underproduction

E. quota; overproduction; underproduction

D. export subsidy; overproduction; underproduction

Which of the following statements is correct for the price elasticity of demand along a linear, downward sloping demand curve?

A. At high prices, demand is elastic but at low prices demand is inelastic.

B. At low prices, demand is elastic but at high prices demand is inelastic.

C. The price elasticity of demand is not defined for a linear demand curve because the slope is constant.

D. The price elasticity of demand is constant because the slope is constant.

E. None of the above answers is correct.

A. At high prices, demand is elastic but at low prices demand is inelastic.

KFC raises the price of its grilled chicken. The price elasticity of demand for KFC grilled chicken is 0.8. What happens to the KFC's total revenue?

A. nothing

B. it decreases

C. it becomes negative

D. it increases

E. It might change, but more information is needed to determine if it increases, decreases, or does not change

D. it increases

The production possibilities frontier is a graph showing the…

A. exact point of greatest efficiency for producing goods and services.

B. minimum combinations of goods and services that can be produced.

C. maximum combinations of goods and services that can be produced.

D. tradeoff between free lunches.

E. resources available for the economy's production use

C. maximum combinations of goods and services that can be produced

Which of the following is an example of consumer surplus?

A. Sue would have paid $15 for a new compact disc but paid only $10.

B. Mary buys a paper tablet for $2 and finds the same good at another store for $1.50.

C. Jose buys a hamburger for $2 and tells you he would not have paid a penny more.

D. John believes the price he paid for his computer was too high.

E. Anne finds a mountain bike for which she is willing to pay a maximum of $550 and the price of the bike is $600.

A. Sue would have paid $15 for a new compact disc but paid only $10

After long hair for men became popular, barbers found that their incomes fell. In an attempt to boost their incomes, many barbers raised the price of a haircut and yet their total revenue fell even more. What can explain this result?

A. The demand for haircuts by barbers became inelastic after the increase in price.

B. The demand for haircuts by barbers is inelastic because most people need haircuts.

C. The demand for haircuts by barbers is elastic because of many substitutes.

D. Haircuts are inferior products.

E. None of the above can explain the phenomenon

C. The demand for haircuts by barbers is elastic because of many substitutes

Of the following, who gains with a quota?

A. the government of the importing nation

B. the foreign exporter of the good or service

C. the government of the exporting nation

D. the importer of the good or service

E. domestic buyers of the good or service

D. the importer of the good or service

A marginal benefit curve…

A. is the same as a demand curve.

B. is U shaped.−

C. is a vertical line at the efficient quantity.

D. is the same as a supply curve.

E. slopes upwards.

A. is the same as a demand curve.

When governments tax capital income, the equilibrium quantity of capital…

A. does not change because the supply of capital is perfectly inelastic.

B. does not change because the supply of capital is perfectly elastic.

C. might increase or decrease depending on whether the demand for capital is inelastic or

elastic.

D. increases because of the international mobility of capital.

E. decreases.

E. decreases

Value is…

A. the price we pay for a good.

B. the difference between the price paid for a good and the marginal cost of producing that unit of the good.

C. the cost of resources used to produce a good.

D. objective so that it is determined by market forces, not preferences.

E. the marginal benefit we get from consuming another unit of a good or service.

E. the marginal benefit we get from consuming another unit of a good or service.

In general, as the consumption of a good or service increases, the marginal benefit from consuming that good or service

A. increases.

B. stays the same.

C. at first decreases and then increases.

D. decreases.

E. at first increases and then decreases.

D. decreases

The figure shows the production possibilities frontier for a country. If the economy is operating at point B, then the opportunity cost of another million gallons of milk is

A. 1 gallon of ice cream for a gallon of milk.

B. 4 gallons of ice cream for a gallon of milk.

C. 1/3 of a gallon of ice cream for a gallon of milk.

D. zero because after producing another million gallons of milk then zero gallons of ice cream are produced.

E. 3 gallons of ice cream for a gallon of milk

E. 3 gallons of ice cream for a gallon of milk

Goods and services produced in the United States and sold in other countries are called

A. capital goods.

B. export goods and services.

C. consumption goods and services.

D. import goods and services.

E. government goods and services.

B. export goods and services.

The figure shows the market for college education in the United States. If the government intervenes in the market and provides a subsidy to colleges to enroll the efficient number of students, the amount of the subsidy equals ________ per student.

A. $11,000

B. $5,000

C. $13,000

D. $7,000

E. $16,000

B. $5,000

What is the reason that all economic issues and problems occur?

A. People seek only their own self interest.−

B. All nations use some form of money to buy and sell goods and services.

C. Human wants exceed the resources available to satisfy them.

D. Powerful governments are able to control production and consumption.

E. Humans are always wasteful and inefficient in production and consumption.

C. Human wants exceed the resources available to satisfy them.

The graph shows the labor market for teenagers in Atlanta. If the government sets a minimum wage of $6 an hour, the number of teenagers employed is ________.

A. 5,000

B. 3,000

C. 7,000

D. less than 3,000

E. 4,000

B. 3,000

The production possibilities frontier is a boundary that separates

A. affordable production points from unaffordable points.

B. fair combinations of goods and services that can be consumed from unfair ones.

C. the combinations of goods that can be produced from the combinations of services.

D. attainable combinations of goods and services that can be produced from unattainable ones.

E. equitable combinations of goods and services that can be produced from inequitable ones

D. attainable combinations of goods and services that can be produced from unattainable ones.

When a Social Security tax is imposed on workers, employment ________ and when a Social Security tax is imposed on employers, employment ________.

A. increases; decreases

B. decreases; increases

C. decreases; does not change

D. decreases; decreases

E. increases; increases

D. decreases; decreases

If the supply of capital is perfectly elastic, the incidence of a tax on capital income is

A. paid entirely by the suppliers of capital.

B. shared equally between firms that demand capital and the suppliers of capital.

C. paid entirely by firms that demand capital.

D. unknown.

E. shared but not equally between firms that demand capital and the suppliers of capital.I

C. paid entirely by firms that demand capital.

The productive resource that organizes labor, land, and capital is..

A. entrepreneurship.

B. financial capital.

C. capital.

D. government.

E. human capital.

A. entrepreneurship

Total revenue equals…

A. price.

B. cost x price.

C. quantity sold-cost.

D. profit-cost.

E. price x quantity sold

E. price x quantity sold

Points inside the PPF are all…

A. unattainable and have some unemployed resources.

B. unaffordable.

C. attainable and have some unemployed resources.

D. attainable and have fully employed resources.

E. unattainable and have fully employed resources.

C. attainable and have some unemployed resources.

The figure shows the production possibilities frontier for a country. The opportunity cost of a gallon of milk between combination point A and B is

A. 1/3 of a gallon of ice cream for a gallon of milk.

B. zero because at point A zero milk is being produced.

C. 1 gallon of ice cream for a gallon of milk.

D. 4 gallons of ice cream for a gallon of milk.

E. 3 gallons of ice cream for a gallon of milk.

A. 1/3 of a gallon of ice cream for a gallon of milk.

Payments to the factors of production are…

A. rent, wages, profit or loss, and bonus.
B. rent, interest, bonds, and profit or loss.
C. land, labor, capital, and entrepreneurship.
D. rent, mortgage, interest, and bonds.
E. rent, wages, interest, and profit or loss.

E. rent, wages, interest, and profit or loss.