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 leads to shortage

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.