Question 1  

The short-run impact of the San Francisco earthquake on the housing market shifted 

short-run supply curve of housing leftward. 

long-run supply curve of housing leftward. 

short-run supply curve of housing rightward. 

long-run supply curve of housing rightward. 

Question 2  

The effect of a rent ceiling set above the equilibrium price 

is powerful, eliminating price as a regulator of quantity supplied and quantity demanded. 

is powerful, strengthening price as a regulator of quantity supplied and quantity demanded. 

encourages the development of black markets. 

is essentially nonexistent. 

Question 3  

One common effect of rent ceilings in big cities 

that landlords build more apartments. 

that landlords charge key money, high payments charged to new tenants for new locks and keys. 

to equalize the quantity of apartments demanded and the quantity supplied in neighborhoods. 

to reduce the search activity by those seeking shelter. 

Question 4  

If the minimum wage is set above the equilibrium wage, a supply and demand diagram of the low-skilled labor market will show unemployment as 

a vertical distance. 

a horizontal distance. 

the area of a rectangle. 

the area of a triangle. 

Question 5  

Suppose the demand for wine is elastic and that initially 5 million bottles of wine are produced and consumed in the United States. If the government levies an excise tax of $2 per bottle of wine, the government will collect 

more than $10 million in tax revenues. 

$10 million in tax revenues. 

less than $10 million in tax revenues. 

an amount that may be more than, equal to, or less than $10 million in tax revenues depending on the precise elasticity of demand. 

Question 6  

As the quantity of a good consumed increases, its marginal utility ________ and its total utility ________. 

increases; increases 

increases; decreases 

decreases; increases 

decreases; decreases 

Question 7  

Brian consumes only pizza and soda. When the price of a soda is $2 and the price of a slice of pizza is $4, Brian maximizes his utility by buying 5 sodas and 10 slices of pizza. If the marginal utility of the 5th soda is 100 units of utility, then the marginal utility of the 10th slice of pizza must be ________ units of utility. 

200 

100 

50 

More information is needed to determine the marginal utility of the 10th slice of pizza. 

Question 8  

We can explain the paradox of value as follows: The consumer surplus from water, which is cheap, is ________ than the consumer surplus from gold, which is expensive; the total utility from gold is ________ than the total utility from water; and the marginal utility per dollar spent on water ________ the marginal utility per dollar spent on gold. 

greater; less; equals 

smaller; less; equals 

greater; greater; greater than 

less; greater; greater than 

Question 9  

The variables that determine a household's budget line are 

its preferences and income. 

its preferences and prices. 

prices and income. 

None of the above is correct. 

Question 10  

Inga's graph of her budget line has apples per week on the vertical axis and loaves of bread per week on the horizontal. A fall in the price of an apple shifts the 

horizontal intercept leftward. 

horizontal intercept rightward. 

vertical intercept downward. 

vertical intercept upward. 

Question 11  

A higher wage rate has a ________. 

substitution effect and an income effect 

substitution effect but no income effect 

neither a substitution effect nor an income effect 

an income effect but no substitution effect 

Question 12  

An indifference curve shows combinations of goods ________. 

which the consumer prefers equally 

that are affordable 

that are inside or on the budget line 

that have the same relative price 

Question 13  

The most important goal of the firm is to 

maximize its revenues. 

maximize its sales volume. 

maximize its profits. 

minimize its costs. 

Question 14  

Typically a firm's opportunity costs are 

only its explicit costs. 

only its implicit costs. 

the sum of its explicit costs and its implicit costs. 

neither its explicit costs nor its implicit costs. 

Question 15  

An electrician quits her current job, which pays $40,000 per year. She can take a job with another firm for $45,000 per year or work for herself. The opportunity cost of working for herself is 

$5,000. 

$40,000. 

$45,000. 

$85,000. 

Question 16  

A firm's market constraints include the conditions under which it can 

convert inputs into outputs. 

buy its inputs and sell its outputs. 

issue stock. 

produce the inputs to production. 

Question 17  

Gilda's Art Gallery rewards its employees with stock each year the gallery makes profits. This stock allows the employees to own part of the gallery. This practice is known as 

the principle-agent problem. 

incentive pay. 

minimizing implicit costs. 

minimizing explicit costs. 

Question 18  

If Acme, Inc. organizes production using managerial hierarchy, Acme, Inc. is using 

a command system. 

an incentive system. 

an efficient system. 

None of the above answers is correct. 

Question 19  

A large part of the principal-agent problem stems from the desire of 

agents to work hard. 

agents to avoid working. 

principals to work hard. 

principals to avoid working. 

Question 20  

The owner of a proprietorship has ________ liability and ________ required to use all of his or her entire wealth to pay for the firm's losses. 

limited; might be 

limited; is not 

unlimited; might be 

unlimited; is not 

Question 21  

With rent controls, which of the following is most likely to occur? 

decreased search activity 

black market activity 

a building boom 

a housing surplus 

Question 22  

An effective minimum wage is a price 

ceiling that results in a shortage of low-skilled labor. 

ceiling that results in a surplus of low-skilled labor. 

floor that results in a shortage of low-skilled labor. 

floor that results in a surplus of low-skilled labor. 

Question 23  

Diminishing marginal utility is 

an assumption of utility theory. 

an implication of utility theory. 

a result of the law of supply. 

a result of the law of demand. 

Question 24  

Shaniq buys only soda and pizza and is buying the amounts that maximize her utility. The marginal utility from a soda is 30 and the price of a soda is $2. The marginal utility from a slice of pizza is also 30. The price of a slice of pizza must be 

$30. 

$2. 

$1. 

some amount that cannot be calculated without more information. 

Question 25  

The variables that determine a household's budget line are 

its preferences and income. 

its preferences and prices. 

prices and income. 

None of the above are correct.