Intermediate Microeconomics
Exam Answer Key
Course Introduction
Intermediate Microeconomics builds on foundational economic principles to examine the behavior of individuals and firms in various market settings. The course explores supply and demand analysis, consumer choice theory, production and cost, market structures such as perfect competition, monopoly, and oligopoly, and the role of government in addressing market failures. Through mathematical models and graphical analysis, students develop a deeper understanding of how economic agents make decisions, how markets allocate resources, and how different factors influence efficiency and welfare in an economy. The course prepares students for advanced economic theory and applications in public policy, business, and beyond.
Recommended Textbook
Microeconomics Private and Public Choice 14th Edition by James D. Gwartney
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Chapter 1: The Economic Approach
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Sample Questions
Q1) The economic way of thinking is
A)a set of historical generalizations that indicates what goods should be produced.
B)a body of statistical data that indicates how an economy should be organized.
C)a set of basic concepts that helps one understand human choices.
D)a set of complex, highly abstract theories that provides persons skilled in statistics with the information necessary to tell others what choices they should make.
Answer: C
Q2) Economic analysis assumes that
A)people act only out of selfish motives.
B)people are motivated by a variety of forces; however, changes in personal benefits and costs affect behavior only when individuals are motivated by selfishness.
C)people are basically unselfish, and their actions are, therefore, difficult to predict.
D)changes in the personal benefits and costs associated with an activity will exert a predictable influence on the behavior of both those who are selfish and those who are unselfish.
Answer: D
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3
Chapter 2: A: Some Tools of the Economist
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Sample Questions
Q1) Based on the idea of opportunity cost, which of the following students would be most likely to drop out of college before completing their degree?
A)a senior mathematics major with a solid B average
B)a junior physical therapy student who has just read about the fantastic job offers available to students with degrees in her area
C)a star college football player in his junior year that just received a $5 million offer from a professional team
D)a junior economics major who wants to attend graduate school
Answer: C
Q2) In voluntary exchange, if the seller of a product gains,
A)the buyer will generally lose an amount greater than the gain to the seller.
B)the buyer must lose an amount equal to what the seller gains.
C)someone else must lose an equal amount.
D)the buyer must also gain; mutual gain provides the foundation for exchange.
Answer: D
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4
Chapter 2: B: Some Tools of the Economist
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Sample Questions
Q1) Explain the idea of capital investment by using the story of Robinson Crusoe. What is sacrificed, and what is gained?
Answer: For Robinson Crusoe, engaging in capital investment involves producing tools now that would increase his consumption possibilities in the future. Examples might include making a net for fishing or constructing a tool that enables him to pick fruit faster. By engaging in these activities, he will not be able to use the time to fish and pick fruit for immediate consumption. He sacrifices consumption and gains the ability to consume more fish and more fruit in the future.
Q2) If a motorist is stranded in front of a pay phone and has only dollar bills, and he ends up buying a quarter from a passerby for $1,
A)the stranded motorist must not understand that four quarters are worth $1.
B)economic theory is unable to explain this transaction.
C)both parties have gained from this exchange.
D)the passerby was made better off and the motorist worse off.
Answer: C
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5
Chapter 3: A: Supply, Demand, and the Market Process
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Sample Questions
Q1) Which of the following best represents the effects of a decrease in the price of tomato juice, other things being equal?
A)An upward movement along the demand curve for tomato juice.
B)A downward movement along the demand curve for tomato juice.
C)A rightward shift in the demand curve for tomato juice.
D)A leftward shift in the demand curve for tomato juice.
Q2) If the quantity of a good supplied is not very sensitive to the price of the good, economists say the supply of the good is relatively
A)inelastic.
B)elastic.
C)robust.
D)inverse.
Q3) If price rises, what happens to supply of a product?
A)It increases.
B)It decreases.
C)It does not change.
D)Uncertain--economic theory has no answer to this question.
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6
Chapter 3: B: Supply, Demand, and the Market Process
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Sample Questions
Q1) A terrible storm wipes out 70 percent of the peanut crop. Explain and show graphically how this will affect the market for peanut butter and the market for jelly, a complementary good.
Q2) Which of the following would most likely decrease the price of beef?
A)lower prices of grains used to produce cattle feed
B)higher prices for chicken, a substitute for beef
C)a cow disease that destroys millions of cattle (and makes their meat unfit for consumption) before they are ready for market
D)an increase in consumer income
Q3) Refer to Figure 3-15. Which area represents the increase in producer surplus when the price rises from P to P due to new producers entering the market?
A)BCE
B)ACF
C)DEF
D)AFEB
Q4) Two students are walking by a department store window that has on display a $400 dress. The English major declares, "I want that dress but can't afford it." The economics major replies, "No, you don't." Explain the logic of this reply.
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Page 7
Chapter 4: A: Supply and Demand: Applications and Extensions
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Sample Questions
Q1) Which of the following will most likely result from rent controls that reduce monthly rental rates below market equilibrium?
A)Shortages and black markets for rental housing will develop.
B)The quality of rental housing will improve.
C)The future supply of rental housing will increase rapidly.
D)Discrimination against minorities and persons with unconventional lifestyles will decline in the rental housing market.
Q2) The marginal tax rate is defined as
A)tax liability divided by taxable income.
B)tax liability multiplied by taxable income.
C)the change in tax liability divided by the change in taxable income.
D)the change in tax liability minus the change in taxable income.
Q3) In the supply and demand model, a subsidy granted to sellers is illustrated by
A)a downward shift in the demand curve, by the per unit amount of the subsidy.
B)an upward shift in the demand curve, by the per unit amount of the subsidy.
C)a downward shift in the supply curve, by the per unit amount of the subsidy.
D)an upward shift in the supply curve, by the per unit amount of the subsidy.
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Page 8
Chapter 4: B: Supply and Demand: Applications and Extensions
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Sample Questions
Q1) Refer to Figure 4-18. In this market, which of the following price controls would be binding?
A)a price ceiling of $2.00, and it would cause a shortage
B)a price ceiling of $5.00, and it would cause a surplus
C)a price floor of $2.00, and it would cause a shortage
D)All of the above are correct.
Q2) Refer to Figure 4-22. Sellers pay how much of the tax per unit?
A)$1.00.
B)$1.50.
C)$2.50.
D)$3.00.
Q3) Refer to Figure 4-20. The equilibrium price in the market before the tax is imposed is A)$8.
B)$6.
C)$5.
D)$3.
Q4) Suppose the U.S. Government banned the sale and production of cigarettes. What are likely effects of this action on the market for cigarettes?
Page 9
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Chapter 5: Difficult Cases for the Market and the Role of Government
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Sample Questions
Q1) Which of the following is the most fundamental function of government?
A)protection of individuals and their property
B)imposing progressive taxes to fund income-transfer programs
C)regulating prices and wages
D)provision of postal services and garbage collection
Q2) Which of the following "goods" is the best example of a pure public good?
A)highways
B)national defense
C)mail delivery
D)welfare programs
Q3) Suppose that the producers of copper are permitted to emit harmful pollutants, free of charge, into the air. How will the price and output of copper products in a competitive market compare with their values under conditions of ideal economic efficiency?
A)The price will be too high, and the output will be too large.
B)The price will be too low, and the output will be too large.
C)The price will be too low, and the output will be too small.
D)The price will be too high, and the output will be too small.
Q4) Is your economics textbook a public or private good? If you conclude that it is a private good, why do we have copyright laws?
Page 10
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Chapter 6: The Economics of Collective Decision-Making
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Sample Questions
Q1) Legislators often gain by bundling a number of projects benefiting local districts at the expense of general taxpayers together on a single bill. Such legislation is called
A)market failure legislation.
B)the rational-ignorance effect.
C)public-goods legislation.
D)pork-barrel legislation.
Q2) Which of the following factors weakens the case for private-sector provision of goods and services relative to public-sector provision?
A)constitutional rules
B)the shortsightedness effect
C)the special-interest effect
D)public goods
Q3) Which one of the following economists has played a central role in the development of the "economics of collective decision making," better known as public choice analysis?
A)Alfred Marshall
B)John Maynard Keynes
C)James Buchanan
D)Milton Friedman
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Chapter 7: Consumer Choice and Elasticity
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Sample Questions
Q1) If the price of apples increases, total expenditures on apples will decline if
A)the demand for apples is inelastic.
B)the demand for apples is elastic.
C)the quantity of apples purchased is unresponsive to changes in price.
D)there are few good substitutes for apples.
Q2) The price of an airline ticket rises as the amount of time between purchase and flight departure gets smaller. The airlines base the policy on the assumption that A)consumers are not aware of airline prices.
B)consumer demand is unrelated to prices.
C)consumer demand becomes more elastic as departure time approaches.
D)consumer demand becomes more inelastic as departure time approaches.
Q3) Refer to Table 7-1. If the price increases from $1.00 to $1.50,
A)the market demand decreases by 20 units.
B)individual demand curves, when drawn, will shift to the left.
C)the quantity demanded in the market decreases by 2 units.
D)the quantity demanded in the market decreases by 7 units.
Q4) Fred, a poor college student, states: "I eat tuna sandwiches five times a week. When I graduate and get a real job, I will never purchase tuna again." Is Fred planning on breaking the law of demand?
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Chapter 8: A: Costs and the Supply of Goods
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Sample Questions
Q1) A homeowner will be away from her house for six months. The monthly mortgage payment on the house is $1,000. The owner's cost of utilities is $100 if the house is unoccupied but $300 if the owner rents it out. If the owner wishes to minimize her losses from the house while away, she should rent the house for as much as the market will bear, as long as monthly rent is greater than which of the following? (Assume wear and tear to be zero regardless of whether the house is occupied.)
A)$200
B)$300
C)$1,100
D)$1,300
Q2) When total revenue minus total economic cost is equal to zero, the firm is
A)earning above-average economic profit.
B)earning the normal profit rate.
C)losing too much money to stay in business.
D)earning abnormally low profits.
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Chapter 8: B: Costs and the Supply of Goods
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Sample Questions
Q1) Mr. Jones pays his employees by the hour. He believes they purposely work slowly to maximize their personal satisfaction. What can he do to provide them with a stronger incentive to work efficiently?
Q2) James opened a baseball manufacturing operation, and initially the more balls he made, the lower the per-unit cost. Now, as output expands, his per-unit costs are rising. He concludes that diseconomies of scale have set in. Is he correct? Why?
Q3) The AB Manufacturing Company has hired an economist to evaluate its financial situation. She explains to the board of directors that the company is making zero economic profit. Should the company go out of business?
Q4) Andy wants to maximize his grade-point average. Having spent six hours studying for his final exam in economics, Andy calculates his grade and discovers that even with a perfect score on the final, he will not pass the course. He decides to study two more hours so he will not have wasted the first six hours. Is this a good decision? Why or why not?
Q5) The boss observes that her 10 workers produce 1,000 widgets a day. She concludes that she can employ 20 workers and make 2,000 widgets, 30 to make 3,000, or 40 to make 4,000. Explain why this observation is either correct or incorrect.
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Page 14
Chapter 9: A: Price Takers and the Competitive Process
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Sample Questions
Q1) There are 1,000 identical firms in a price-taker industry. In the short run, the total revenues of each firm are less than total costs. What will happen in the long run?
A)Nothing, because each firm is already maximizing its profits.
B)Additional firms will enter the market, and price will be driven down to where each firm will be making just enough to stay in business (cover its variable costs).
C)Additional firms will enter the market, but the price will remain the same because the existing firms will not allow it to decrease.
D)Firms will exit the market, and the product price will rise.
Q2) If the market price in Figure 9-5 increases to $4, what output should the firm produce, and what would be the firm's maximum profit?
A)output, 3; maximum profit, $3 loss
B)output, 5; maximum profit, zero
C)output, 5; maximum profit, slightly less than $5
D)output, 6; maximum profit, slightly less than $6
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Chapter 9: B: Price Takers and the Competitive Process
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Sample Questions
Q1) Why is it considered "ideal" for price to just equal marginal cost?
Q2) In some industries, like insurance, both small and very large firms coexist and compete quite effectively in the market. This indicates that the long-run average total cost curve in these industries
A)is "U" shaped.
B)is downward sloping over all levels of output.
C)exhibits constant returns to scale over a wide range of output.
D)exhibits diseconomies of scale beginning at a low rate of output.
Q3) Amy runs a business in a market where all firms are price takers. Bill suggests that she lower her price to attract even more business. Should Amy follow Bill's suggestion, or should she even consider raising her price?
Q4) When a firm is operating in a price-taker market, marginal revenue is
A)equal to price.
B)always less than price.
C)equal to zero when the market is in long-run equilibrium.
D)equal to the change in output divided by the change in total revenue.
Q5) Regarding costs of production, can a firm ever be at a point that is not on the marginal cost curve? Explain.
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Chapter 10: Price-Searcher Markets With Low Entry Barriers
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Q1) When a competitive price-searcher market is in long-run equilibrium, the firms in the market will earn
A)substantial economic profits.
B)zero economic profits.
C)significant economic losses.
D)an above-normal accounting rate of return.
Q2) Many small U.S. cities are served by only one or two airlines. If a price increase in these markets allows other airlines to quickly and easily enter the market and compete, economists would call these markets
A)contestable markets.
B)high entry markets.
C)conventional markets.
D)monopolistic markets.
Q3) If a price-searcher firm can sell nine units at a price of $20, or it can sell ten units at a price of $17, what is the marginal revenue of the tenth unit?
A)-$10
B)$10
C)$17
D)$20
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Page 17
Chapter 11: A: Price-Searcher Markets With High Entry
Barriers
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Sample Questions
Q1) Laws designed to prevent monopoly and promote competition are known as A)antitrust laws.
B)statutory amendments.
C)fair-pricing legislation.
D)breakup bills.
Q2) At the profit-maximizing level of production, the monopoly in Figure 11-20 will have total revenue of
A)$308
B)$187
C)$216
D)$306
E)$272
Q3) If the output in the industry is produced by a monopolist, at what price will the good sell and what quantity will be produced in Figure 11-8?
A)price, $10; quantity produced, 100
B)price, $15; quantity produced, 50
C)price, $15; quantity produced, 75
D)price, $20; quantity produced, 50
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Chapter 11: B: Price-Searcher Markets With High Entry
Barriers
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Sample Questions
Q1) Which of the following is the best explanation of why a lack of information is a problem when the government wants to impose price regulation on a monopolist?
A)the government does not have information about which firms are monopolies.
B)firms that are monopolies do not have information about their level of profit or about potential competition.
C)consumers do not have information about which firms are competitive and which firms are monopolies.
D)regulators do not have information about the demand and marginal costs of the firms that they regulate.
Q2) In which of the following industries would we expect collusion to be most effective?
A)retail gasoline, where most gas is sold by a large number of small dealers
B)crude oil production, where most oil is sold by a small number of large sellers
C)housing construction, an industry dominated by local firms that produce unique products
D)soybean production, where there are large numbers of farmers in many countries
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Page 19
Chapter 12: The Supply of and Demand for Productive Resources
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Q1) When an employer pays the cost of educating a worker, it is likely that the employer
A)is demonstrating altruistic motives.
B)is pursuing some objective other than profit-maximization.
C)hopes to recapture its investment in the form of increased labor productivity.
D)receives reimbursement from the government for the cost of the education.
Q2) Troll Corporation sells dolls for $10.00 each in a market that is perfectly competitive. Increasing the number of workers from 100 to 101 would cause output to rise from 500 to 550 dolls per day. The marginal revenue product for the 101st worker is
A)$10.00.
B)$500.
C)$5,000.
D)$1,010.
Q3) Which of the following is the best example of an investment in human capital?
A)an increase in the number of hours worked per week by a worker in an unskilled laboring job
B)the purchase of company stock by a worker
C)a summer internship at a law firm for someone going to law school
D)payments into a retirement pension plan by a skilled laborer
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Chapter 13: Earnings, Productivity, and the Job Market
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Q1) Which of the following is the clearest evidence of employment discrimination against minority employees?
A)The average wages of minority workers are lower than the average wages of whites.
B)The average wages of minority employees are lower than the average wages of whites with similar productivity characteristics.
C)The mean number of years of schooling of minority workers is lower than that of whites.
D)The average hours worked by minority employees exceeds the hours worked by whites.
Q2) Two workers are employed in the same job by the same firm; however, they are paid different wage rates. This could be explained by differences in
A)the income effect
B)the price of the firm's output
C)their marginal products due to differences in ability
D)working conditions
E)risk
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21
Chapter 14: Investment, the Capital Market, and the Wealth of Nations
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Q1) At a discount rate of 10 percent, what is the net present value of an investment expected to yield $1,000 per year (to be received at year end) for the next two years?
A)$1,859.41
B)$1,801.23
C)$1,735.54
D)$1,527.78
Q2) The yield that one can expect to receive on loanable funds without taking significant risk is called the
A)risk premium.
B)pure interest yield.
C)inflationary premium.
D)nominal interest yield.
Q3) Economic profit provides an incentive for persons investing in human and physical capital to
A)undertake investment projects yielding an uncertain return.
B)discover and develop beneficial (productive) investment opportunities.
C)produce products that increase the value of resources.
D)do all of the above.
Q4) In a barter economy that had no form of currency, how could interest exist?
Page 22
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Chapter 15: Income Inequality and Poverty
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Q1) The amount of additional earnings that must be paid explicitly in taxes or implicitly in the form of a reduction in income supplements is known as the
A)marginal income tax rate.
B)implicit marginal tax rate.
C)explicit benefit-reduction rate.
D)supplemental income tax rate.
Q2) Suppose you had the choice of attending two universities. University A pays all of its professors the same wage and awards the same raises. University B pays each professor according to market wages and productivity. Which university would you rather attend and why?
Q3) Which of the following groups are overrepresented among those with low incomes?
A)youthful inexperienced workers
B)college students working on graduate degrees
C)single-parent families
D)all of the above
Q4) Andy observes that the income distribution between the richest and poorest people in the population has remained fixed for decades. He concludes that the rich stay rich and the poor stay poor. Is this a valid conclusion, or has Andy missed something?
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Page 23
Chapter 16: Appendix: Government Spending and Taxation
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Q1) Under the progressive income tax system in the United States, as real incomes rise,
A)a smaller share of income is taxed at higher rates.
B)there is no change in the share of income taxed at higher rates.
C)a larger share of income is taxed at higher rates.
D)none of the above are true.
Q2) Which of the following is true regarding U.S. federal government expenditures?
A)National defense has fallen from 52.2 percent of the federal budget in 1960 to 21 percent in 2008.
B)Federal expenditures on income transfers and health care have risen from 21.5 percent of the budget in 1960 to 57.7 percent in 2008.
C)Corrected for inflation, the average person today pays more federal taxes in one week than the average person in 1900 paid in an entire year.
D)All of the above are true.
Q3) Which of the following provides the bulk of revenue for the federal government?
A)corporate income taxes and grants from state and local governments
B)personal income and payroll taxes
C)user charges and funds borrowed from the general public
D)corporate income and sales taxes
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Chapter 17: Appendix: the Economics of Social Security
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Q1) In approximately what year will Social Security outlays begin to exceed revenues?
A)2008
B)2017
C)2050
D)3030
Q2) The payments made to the beneficiaries of the Social Security program are financed by
A)insurance premiums previously paid into the system by the beneficiaries.
B)current receipts derived from the Social Security payroll tax.
C)income derived from funds that were previously invested in stocks and bonds.
D)governmental savings accounts based on the amount of funds the recipient previously paid into the system.
Q3) In 2009, the Social Security payroll tax did not apply to annual income above
A)$15,000.
B)$32,000.
C)$106,800.
D)$200,000.
Q4) Briefly explain why the Social Security system will face a "crisis" in the coming years.
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25
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Q1) The variation in the rate of return one can expect from ownership of stocks will generally be smaller if
A)all of the funds are invested in a specific sector of the economy such as the automobile industry.
B)a diverse set of stocks is held over a lengthy period of time such as 30 or 40 years.
C)all of the funds are invested in a single stock.
D)the funds are invested for a relatively short period of time.
Q2) The current market value of a stock option contract to purchase 1,000 shares of IBM stock at a price of $100 that can be exercised five years from now would
A)increase if the expected future price of IBM stock rose.
B)increase if the expected future price of IBM stock fell.
C)decrease if the expected future price of IBM stock rose.
D)remain unchanged regardless of the expected future price of IBM stock.
Q3) Which of the following would be most likely to push stock prices higher?
A)higher interest rates and the expectation of larger future corporate profits
B)higher interest rates and the expectation of smaller future corporate profits
C)lower interest rates and the expectation of larger future corporate profits
D)lower interest rates and the expectation of smaller future corporate profits
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Chapter 19: Appendix: Great Debates in Economics: Keynes Versus Hayek
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Q1) According to the Keynesian view, capitalism
A)is a highly productive form of economic organization that works best when government intervention is least.
B)experiences booms and busts because of the instability of private investment that is driven by fickle changes in business optimism.
C)experiences booms and busts that are primarily the result of inappropriate monetary policy.
D)experiences fluctuations in aggregate demand that cannot be controlled with fiscal policy.
Q2) Adam Smith stated, "The man of system is apt to be very wise in his own conceit. He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board." Which is true of this statement?
A)Keynes would tend to agree with the statement; Heyek would disagree with it.
B)Keynes would tend to disagree with the statement; Hayek would agree with it.
C)As the rap video indicates, both Keynes and Hayek strongly agree with this statement.
D)As the rap video indicates, both Keynes and Hayek strongly disagree with this statement.
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Chapter 20: Appendix: the Crisis of 2008: Causes and Lessons for the Future
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Q1) Fannie Mae and Freddie Mac's dominance of the secondary mortgage market during 1995-2008 encouraged mortgage originators to
A)extend only 30-year, fixed-rate mortgages.
B)require higher down payments in order to obtain a home mortgage.
C)loosen lending standards as long as the mortgages were acceptable to Fannie Mae and Freddie Mac.
D)scrutinize the credit-worthiness of borrowers more carefully.
Q2) Beginning in 2002, Federal Reserve policy
A)switched its focus from price stability to stimulating real GDP and reducing unemployment.
B)kept interest rates artificially high, driving housing prices upward.
C)kept interest rates artificially low, driving housing prices downward.
D)switched its focus from stimulating real GDP and reducing unemployment to price stability.
Q3) When housing prices fell during 2007, the mortgage default rate
A)declined as well.
B)responded in a similar manner as during other recent recessions.
C)increased substantially.
D)changed very little.
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Chapter 21: Appendix: Lessons From the Great Depression
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Q1) The Agricultural Adjustment Act, passed in 1933, was an effort to
A)keep agricultural prices high by increasing supply.
B)keep agricultural prices low by increasing supply.
C)keep agricultural prices high by decreasing supply.
D)keep agricultural prices low by decreasing supply.
Q2) An analysis of large declines in the stock market since the Great Depression indicates that
A)the stock market crash in October 1929 was more severe than subsequent crashes.
B)a prolonged recession will always follow a large decline in the stock market.
C)almost all stock market crashes since the Great Depression were followed by short recessions of 12 to 18 months, and in some cases, no recession at all.
D)the only way to recover from a stock market crash is through government spending, increased regulation, and tax-increases.
Q3) The New Deal policies of the Great Depression resulted in
A)a reduction in unemployment and an increase in real output.
B)a stable economic environment and an increase in investment.
C)economic uncertainty and prolonged unemployment.
D)a quick end to the depression once the policies had taken effect.
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Chapter 22: Appendix: the Economics of Healthcare
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Q1) Which of the following would encourage consumers to economize on their use of healthcare and producers to provide it more efficiently?
A)a reduction in out-of-pocket healthcare expenditures
B)government subsidies that encourage people to purchase health insurance policies with first-dollar coverage and small co-payments
C)Medicare reform that at least partially substituted defined benefits (funds that could be used to pay for healthcare or the purchase of insurance) for the present cost reimbursement system
D)all of the above
Q2) Which of the following would help to avert a healthcare crisis?
A)requiring employers to pick up 100 percent of the healthcare costs for their employees
B)discouraging medical savings accounts since these provide additional funds for medical care, and therefore, they are likely to drive up medical prices
C)discouraging the purchase of health insurance plans with small co-payments
D)structural changes that would increase the competitiveness of the health insurance and medical services markets
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Chapter 23: Appendix:education: Problems and Performance
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Q1) A school voucher program targeted towards low- and middle-income families would cause
A)racial and economic segregation among schools to rise.
B)per-pupil funding in the public schools to fall.
C)salaries for outstanding teachers to rise.
D)competition between public and private schools to fall.
Q2) What is a major objection that is usually raised against a voucher system?
A)Students attending private schools tend to outperform their public school counterparts on standardized tests.
B)Voucher programs would primarily benefit low-income families.
C)Voucher programs will create a more heterogeneous student population.
D)Voucher programs would drain funds away from the public schools, and thereby cause their quality to decrease.
Q3) Competition between public and private schools is ____ at the college level than at the elementary and secondary level.
A)weaker
B)of similar intensity
C)stronger
D)less important
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Chapter 24: Appendix: Earnings Differences Between Men and Women
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Q1) The earnings difference between single men and women is A)significantly more than the earnings difference between married men and women. B)significantly less than the earnings difference between married men and women. C)about the same as the earnings difference between married men and women. D)none of the above.
Q2) Which of the following would constitute the strongest evidence of employment discrimination against female employees?
A)The average wage of female workers is lower than the average wage of males. B)The average wage of female employees is lower than the average wage of males with similar productive characteristics.
C)The mean number of years of schooling of female workers is lower than that of males. D)The average hours worked by female employees is less than the average hours worked by males.
Q3) In 2007, the labor force participation rate of women was
A)20.6 percent.
B)40.6 percent.
C)60.6 percent.
D)80.6 percent.
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Chapter 26: Appendix: the Question of Resource Exhaustion
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Q1) According to water resource economists
A)water is seldom in short supply anywhere in the world.
B)we are not running out of water, but specific places do run short of water, given the status of their water supply arrangements and ease (or lack of) transferability of water among users.
C)the world is running out of water, just as it is running out of accessible oil.
D)there is no workable way to make water markets function properly, because in the end, we can't make more water the way we can make more bread or automobiles.
Q2) When a highly valued resource cannot be easily traded, as is often true with water flowing in a river, then
A)it will not be hoarded by the rich, but will be available to all on an equal basis.
B)we can expect shortages from time to time, and conflicts over access to its use.
C)its price will be low as a result.
D)markets in the resource will clear more easily, without greed and profit to get in the way.
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Chapter 25: Appendix: Do Labor Unions Increase the Wages of Workers
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Q1) In a strike, what does the union have to lose? What does management lose?
Q2) Which of the following statements is true?
A)The share of income going to labor has increased during periods when union membership has increased as a proportion of the U.S. labor force.
B)Inflation in the United States has tended to accelerate as the proportion of the U.S. labor force that is unionized has increased.
C)Higher wages in the unionized sectors of an economy will also push up wages in the nonunion sectors.
D)High real wages cannot be achieved and sustained without increases in output per worker hour.
Q3) The percent of workers belonging to a union in the United States
A)has been continuously declining since the 1950s.
B)has been continuously increasing since the 1950s.
C)has remained fairly constant since the 1950s.
D)rose sharply from 1950 to 1970 but has declined since.
Q4) List some factors that might make the threat of a strike more effective.
Q5) Why is it that the airline pilots union will likely be stronger and more effective than the fruit pickers union?
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Chapter 27: Appendix: Difficult Environmental Cases and the
Role of Government
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Q1) Individual transferable quotas (ITQs) have been shown to A)increase the value of fisheries but reduce the safety of fishers as the season is shortened.
B)end overfishing by making the use of efficient technology illegal.
C)increase the safety of fishing but not the value to consumers of the product.
D)increase the value to consumers of the product and raise the price received by fishers.
Q2) An economist would argue that global warming is
A)unquestionably a human-generated problem that should be stopped immediately at all costs.
B)simply fear mongering, for there is no scientific evidence that the average temperature on earth is changing.
C)likely to cause massive starvation as temperatures on earth rise, reducing agricultural productivity.
D)a serious issue that may best be addressed primarily by making changes as problems occur in the future.
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