Which of the following is not a not-for-profit institution?
A)Columbia Broadcasting System (CBS)
B) American Red Cross
C)Salvation Army
D) a public library
E) a typical college or university

Which of the following would indicate that an income tax is progressive?
A) high-income people pay $3,000; low-income people pay $1,000
B) low-income people pay $3,000; high-income people pay $1,000
C) high-income and low-income people all pay $1000 each
D)high-income people pay 20 percent of their income in taxes; low-income people pay 10 percent
E) both high-income and low-income people pay 10 percent of their income in taxes

Household production is more likely to occur when
A) it requires many specialized resources
B) technology makes it easier than market production
C) tax avoidance is undesirable
D) less control over the final product is desirable
E) the opportunity cost of household production is high

Which of the following is an example of an in-kind transfer?
A) welfare payments
B) most Social Security benefits
C) unemployment compensation payments
D) food stamps
E) charitable contributions

Katie had a before-tax income of $40,000 and paid taxes of $6,000. Rinji had a before-tax income of $35,000 and paid taxes of $5,250. Based on this information, the tax system is
A) There is insufficient information to answer the question.
B) progressive
C) based on the benefits received
D) regressive
E) proportional

In the following situation the tax system is

Taxable income
$1,000
$3,000
$9,000
$27,000
Taxes
$100
$200
$400
$800
A) progressive through all levels of income
B) proportional throughout all levels of income
C) regressive throughout all levels of income
D) based on the benefits-received principle
E) there is insufficient information to answer the question

In the United States since World War II, there has been
A) a dramatic increase in the population living in rural areas
B) a decline in the number of women in the labor force
C) a decrease in the opportunity cost of working in the home
D) more specialization of production within households
E) a dramatic increase in the number of married women in the labor force

What part of federal government spending has grown the most slowly in recent decades?
A) national defense
B) welfare
C) interest on the national debt
D) social security and medicare
E) all other forms of federal government spending

Household production still exists because it often requires fewer specialized resources than market production does.
A) True
B) False

The personal income tax is based on the benefits-received principle of taxation.
A) True
B) False

A decrease in demand will cause a(n)
A) increase in supply
B) decrease in supply
C) increase in quantity supplied
D) increase in equilibrium price
E) decrease in equilibrium price

Luxury goods are
A) goods with negative income elasticity
B) income elastic
C) goods with positive price elasticity
D) income inelastic
E) price inelastic

If an increase in price from $1.20 to $2 per unit leads to an increase in quantity supplied from 20 to 100 units,
A) demand is unit elastic
B) demand is elastic
C) supply is elastic
D) supply is inelastic
E) demand is inelastic

For which of the following is demand likely to be most price-elastic?
A) none of the above (they will all have the same elasticity)
B) steak
C) protein foods (including meat, cheese, beans, eggs, fish, etc.)
D) beef (including steak, ribs, hamburger, etc.)
E) meat (including beef, pork, chicken, lamb, etc.)

If the value of the price elasticity of demand is -0.2, this means that a
A) 5 percent decrease in price causes a 1 percent increase in quantity demanded
B) 0.2 percent decrease in price causes a 0.2 percent increase in quantity demanded
C) 20 percent decrease in price causes a 1 percent increase in quantity demanded
D) 0.2 percent decrease in price causes a 1 percent increase in quantity demanded
E) 100 percent decrease in price causes a 200 percent increase in quantity demanded

For which of the following medical goods or services is the income elasticity of demand likely to be largest?
A) emergency services after a car accident
B) face-lifts
C) medical tests to diagnose specific symptoms
D) physical examinations for life insurance applications
E) measles shots

If people have more time to adjust to a price change,
A) demand becomes less elastic, and supply becomes more elastic
B) elasticity of both demand and supply tends toward unity
C) demand becomes more elastic, and supply becomes less elastic
D) both supply and demand become less elastic
E) both supply and demand become more elastic

If an increase in price from $1 to $2 per unit leads to an increase in quantity supplied from 20 to 100 units, then the value of price elasticity of supply is
A) 2
B) 2.67
C) 8
D) 4
E) 0.38

If the price of vanilla ice cream decreases, it is likely that
A) demand for vanilla ice cream will increase
B) demand for vanilla ice cream will decrease
C) demand for chocolate ice cream will increase
D) demand for chocolate ice cream will decrease
E) the quantity demanded of vanilla ice cream will decrease

An increase in the demand for peanut butter could be caused by a(n)
A) decrease in consumer income
B) increase in the supply of peanut butter
C) decrease in the price of bread
D) drought in Georgia that destroyed 30 percent of the peanut crop
E) decrease in the price of bologna

The law of demand says that as the price of a good rises,
A) buyers recognize that price may be even higher in the future, and so they buy now
B) buyers purchase less in hopes that the price will fall in the future
C) buyers purchase less, in part because their real income has fallen
D) buyers purchase more, in part because the price of a substitute has risen
E) buyers purchase more, in part because it has higher status at a higher price

Which of the following is the reason supply curves typically slope upward?
A) Opportunity cost of production increases as quantity supplied increases.
B) Supply increases as opportunity cost decreases.
C) Price increases as supply decreases.
D) Quantity supplied is unrelated to price.
E) The income and substitution effects of a price change.

In what way is consumer demand different from consumer wants?
A) Demand is only for necessities.
B) Demand is only for luxuries.
C) Demand takes into account the ability to pay.
D) Consumer wants are only for luxuries.
E) Consumer wants are only for necessities.

Which of the following is not true regarding a change in quantity demanded?
A) A change in quantity demanded is shown by a movement along a given demand curve.
B) The demand curve shifts whenever the quantity demanded changes.
C) A change in the price of a good, other things constant, will lead to a change in quantity demanded.
D) The lower the price of a product, other things constant, the higher the quantity demanded.
E) A shift of the supply curve might cause a change in quantity demanded

If supply decreases along a given demand curve,
A) an excess quantity demanded will be created, increasing the equilibrium price and causing equilibrium quantity to fall
B) an excess quantity supplied will be created, lowering the equilibrium price and causing equilibrium quantity to rise
C) an excess quantity demanded will be created, raising the equilibrium price and quantity
D) an excess quantity supplied will be created, lowering the equilibrium price and quantity
E) price will fall, shifting the demand curve outward, raising the equilibrium quantity

The demand for medical care
A) is perfectly elastic
B) varies directly with the price of that care
C) decreases as income increases, indicating that medical care is an inferior good
D) is sensitive to the time component of cost
E) is completely insensitive to price; that is, demand is perfectly inelastic

If the price of a good is 0, a consumer will
A) consume all units that have positive total utility
B) consume until total utility becomes 0
C) consume an infinite quantity
D) consume all units with positive marginal utility
E) consume the entire amount supplied

If MUx/Px > MUy/Pyx, the consumer can increase utility by buying more of good x.
A) True
B) False

Consumer surplus can be used to compare the effects of any of the following except for different
A) market structures
B) levels of medical care benefits
C) production technologies, such as capital-intensive versus labor-intensive
D) public programs
E) tax structures

If MUx/Px > MUy/Py, the consumer can increase utility by buying less of good y, which means the MUy will rise.
A) False
B) True

Which of the following statements concerning utility is correct?
A) The utility of goods can be measured while the same is not true for services
B) It is possible to precisely measure the utility an individual receives from consuming a particular good or service
C) It is always possible to determine whether Dalene or Juloy gets more utility from consuming two units of the same good
D) It is only useful if there is no scarcity
E) Utility is a subjective measure of satisfaction an individual receives from consuming a good or service

Suppose a glass of orange juice has a price of $2 and a glass of soft drink has a price of $1. If the consumer is maximizing utility,
A) consumers would buy more soda drink than orange juice
B) the consumer would buy twice as much orange juice as soft drink
C) both must have equal MU
D) juice must have higher MU than soda drink
E) the soft drink must have higher MU than juice

Suppose a glass of orange juice has a price of $2 and a glass of soft drink has a price of $1. If the consumer is maximizing utility,
A) consumers would buy more soda drink than orange juice
B) the consumer would buy twice as much orange juice as soft drink
C) both must have equal MU
D) juice must have higher MU than soda drink
E) the soft drink must have higher MU than juice

A decrease in price along the elastic segment of a demand curve will
A) decrease total utility and consumer surplus and increase consumer expenditure and marginal utility
B) decrease total utility, consumer surplus, and consumer expenditure and increase marginal utility
C) increase total utility, marginal utility, consumer surplus, and consumer expenditure
D) increase consumer surplus through a decrease in consumer expenditure
E) decrease consumer surplus through an increase in consumer expenditure

Utility is
A) the monetary value to consumers of goods and services
B) the desire to consume goods and services
C) the profit consumers earn from consuming goods and services
D) the cost of acquiring goods and services
E) the sense of pleasure or satisfaction derived from consuming goods and services

Sally is allocating her budget between two goods, A and B. If Sally has used up the budget on a combination of A and B for which MUA/PA exceeds MUB/PB, she can increase total utility by buying
A) more B and more A
B) less B without changing her consumption of A
C) more A and less B
D) more A without changing her consumption of B

E) more B and less A

Which of the following statements cannot be made regarding consumer preferences?
A) Pat enjoys her second cotton candy less than her first.
B) Arnie enjoys two cotton candies more than Pat enjoys one cotton candy.
C) Arnie enjoys two cotton candies more than one cotton candy.
D) Bill and Arnie enjoy their second cotton candy less than they do their first.
E) Bill enjoys his second cotton candy as much as the first.
Points Earned: 0.0/5.0

Suppose Enid could increase her total utility by purchasing one more book and one less video rental. Which of the following is true?
A) The marginal utility per dollar spent on books exceeds that of video rentals.
B) The marginal utility of video rentals is negative.
C) The marginal utility of books exceeds the marginal utility of video rentals.
D) The marginal utility of video rentals exceeds the marginal utility of books.
E) Total utility is at a maximum.

Suppose Jerry consumes three hamburgers at McDonald's one evening. He figured the last one was just worth the price he paid for it. If the hamburgers he buys have a price of $1, then
A) he was irrational
B) he earned $1 consumer surplus on the third hamburger alone
C) he may have earned consumer surplus on the first two hamburgers
D) he would have earned consumer surplus if he had eaten one more hamburger
E) he earned no consumer surplus

The difference between the maximum amount a person is willing to pay for a given quantity of a good and the amount actually paid for that quantity is called
A) the income effect
B) consumer surplus
C) price discrimination
D) producer surplus
E) the substitution effect

If price equals 0, then consumer surplus
A) is equal to marginal utility
B) cannot be determined
C) is maximized
D) is 0
E) is price times quantity

When a firm is experiencing diminishing marginal returns, marginal cost is
A) constant
B) rising
C) zero
D) rising at first, then falling
E) falling

Long-run average costs are the same as long-run total costs
A) True
B) False

The Toys-R-Danger-Us Toy Company can produce 500 water pistols for a total cost of $1,400. The company can also produce 1,000 water pistols for a total cost of $3,000, but it would have costs of $200 even if it produced no water pistols. Which of the following is true?
A) Total cost is increasing at a constant rate.
B) Variable cost is positive and decreasing as output increases.
C) Marginal cost is positive and increasing as output increases.
D) Fixed cost is positive and decreasing as output increases.
E) Total cost is increasing at a decreasing rate.

If total cost at Q = 0 is $100 and total cost at Q = 10 is $500, then average variable cost at Q = 10 is
A) $500
B) $50
C) $40
D) $400
E) $10

At McDonald's, economies of scale at the plant (or restaurant) level occur
A) over the range of output for which that restaurant's average cost curve is upward sloping
B) at all levels of output
C) over the range of output for which that restaurant's average cost curve is horizontal
D) only in the short run
E) over the range of output for which that restaurant's average cost curve is downward sloping

A variable cost is one that changes
A) in the long run only
B) in the short run only
C) year to year
D) as output changes
E) month to month

An example of an uncontrollable resource that contributes to diseconomies of scale for a movie theater is
A) a single lobby in the theater
B) bigger, more noticeable newspaper ads
C) public roads congested with traffic
D) concession stand staff
E) volume discounts from movie distributors

Suppose I have $1,000 to put into a one-year CD. Community Bank offers 5 percent interest, Floatbank offers 5.25 percent, and Squidbank offers 5.40 percent. If I place my money in Squidbank, my economic profit on the investment is
A) 5 percent
B) 5.40 percent
C) 0.40 percent
D) -0.40 percent
E) 0.15 percent

Marginal product is defined as
A) the increase in revenue that occurs when an additional unit of a resource is added
B) the amount of additional resources needed to increase output by one unit when all resources are increased by the same amount
C) the increase in output that occurs when all resources are increased by the same proportion
D) the amount of additional money needed to increase output by one unit when all resources are held constant
E) the increase in output that occurs when an additional unit of a resource is added, holding all other resources constant

Which of the following reflects diseconomies of scale?
A) Short-run marginal cost increases as output increases.
B) Short-run average cost increases as output increases.
C) Marginal product decreases as output increases.
D) Long-run marginal cost increases as output increases.
E) As output doubles, long-run total cost more than doubles.

Which of the following is a long-run adjustment?
A) Texaco buys more crude oil to refine into gasoline.
B) General Motors increases its orders for steel.
C) Glow Electric disassembles one of its nuclear power plants.
D) A new economics professor is hired on campus.
E) Microsoft cuts back its hiring of new graduates