Microeconomics
Final Exam Questions
Course Introduction
Microeconomics is the branch of economics that studies the behavior of individuals, households, and firms in making decisions regarding the allocation of scarce resources. This course covers fundamental concepts such as supply and demand, elasticity, consumer choice, production and costs, market structures (including perfect competition, monopoly, and oligopoly), and the role of government in the market. Students will learn how market mechanisms operate, how prices are determined, and how economic agents interact within different market environments to achieve equilibrium. The course also explores market failures, public goods, and externalities, providing a foundation for further study in economics and related disciplines.
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) When Mother Theresa won the Nobel Peace Prize, the monetary award was well in excess of $100,000. Did she accept the money? If so, what did she do with it?
Answer: Mother Theresa used the money to help the poor, whom she spent a lifetime assisting. While we consider Mother Theresa to have been one of the most unselfish of people, it is clear that she could have gained more of what she valued if she had more money.
Q2) All but one of the following are elements of the economic way of thinking. Which one is not part of the economic way of thinking?
A)Incentives matter.
B)The value of goods can be determined objectively.
C)Economic thinking is marginal thinking.
D)Information is scarce.
Answer: B
Q3) If scarcity were eliminated,
A)all goods would be free.
B)no one would have to make any choices.
C)everyone could have all they want at no cost.
D)all of the above are true.
Answer: D
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Chapter 2: A: Some Tools of the Economist
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Q1) Suppose you can type a paper in two hours or mow the lawn in four hours, while it takes your friend Ann eight hours to type a paper or two hours to mow the lawn. Which of the following is true?
A)You have a comparative advantage in typing.
B)You have a comparative advantage in mowing the lawn.
C)You and Ann could save time if you mowed her lawn while she typed your paper.
D)You and Ann cannot gain from specialization and trade.
Answer: A
Q2) The owners of private property will
A)use their property for selfish ends, taking no account of the impact their behavior has on others.
B)use their property in ways that others value because the market will generally reward them with profits (or a higher selling price) if they do so.
C)find very little incentive to take care of the property or conserve it for the future.
D)lose profits when they take the wishes of others into consideration.
Answer: B
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Chapter 2: B: Some Tools of the Economist
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Sample Questions
Q1) A department store buys a wool coat for $120 and sets its retail price at $300. The coat costs $85 to produce. When the coat doesn't sell, the store marks the price down to $200, then $100, and finally $70. At $70, Amy buys the coat. What was the coat's true value? Why?
Answer: Since the coat sold for $70, we would have to say that this is its value. In economics, the value of a product is assigned when a trade is made. Retail prices, costs of production, etc. are not relevant when assigning value. Goods are valued based on what individuals will give for them.
Q2) In a market economy,
A)a larger income for one person means a smaller one for another.
B)the government answers all the basic economic questions.
C)a larger income for one person means it is possible for others to earn more too.
D)economic output shrinks as we discover better ways of doing things.
Answer: C
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5
Chapter 3: A: Supply, Demand, and the Market Process
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Q1) When economists say the supply of a product has increased, they mean the
A)supply curve has shifted to the right.
B)price of the product has risen, and consequently, suppliers are producing more of it.
C)supply curve has shifted to the left.
D)amount of the product that consumers are willing to purchase at various prices has increased.
Q2) Which of the following would most likely increase demand for tickets to major league baseball games?
A)a decrease in consumer income
B)an increase in the price of tickets to professional football games, a substitute for baseball games
C)an increase in the price of refreshments sold at the baseball games
D)none of the above
Q3) An increase in supply will cause
A)an increase in demand.
B)a decrease in demand.
C)an increase in quantity demanded.
D)a decrease in quantity demanded.
E)an increase in equilibrium price.
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Page 6
Chapter 3: B: Supply, Demand, and the Market Process
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Q1) Refer to Figure 3-19. If the government mandated a price increase from P to a higher price, then
A)total surplus would decrease.
B)consumer surplus would increase.
C)total surplus would increase, since producer surplus would increase.
D)total surplus would remain unchanged.
Q2) Refer to Figure 3-17. When the price rises from P to P , consumer surplus
A)increases by an amount equal to A.
B)decreases by an amount equal to B + C.
C)increases by an amount equal to B + C.
D)decreases by an amount equal to C.
Q3) Refer to Figure 3-18. When the price falls from P to P , which area represents the increase in consumer surplus to existing buyers?
A)ABD
B)ACF
C)BCED
D)DEF
Q4) Economists maintain that the price of a product has no effect on demand. How can this be true?
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Chapter 4: A: Supply and Demand: Applications and Extensions
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Q1) If the federal government began granting a subsidy of 10 cents per apple to apple growers and as a result the price of apples to consumers falls by 8 cents,
A)the actual benefit of this subsidy goes mostly to consumers.
B)the actual benefit of this subsidy goes mostly to producers.
C)the actual benefit of this subsidy would be shared equally by producers and consumers.
D)nobody would benefit from the subsidy.
Q2) Other things constant, if a labor union is able to successfully increase the wages of autoworkers, there will be
A)an increase in the supply of automobiles causing the price of automobiles to fall.
B)an increase in the supply of automobiles causing the price of automobiles to rise.
C)a decrease in the supply of automobiles causing the price of automobiles to fall.
D)a decrease in the supply of automobiles causing the price of automobiles to rise.
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Chapter 4: B: Supply and Demand: Applications and Extensions
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Sample Questions
Q1) The City of Greenville needs to raise revenue. Alderman Black has proposed a $10 tax on red cars in the city, currently numbering 2,000. Mayor White, who wants more than $20,000 in revenue, proposes taxing these cars at $100 each. Councilwoman Bluestone goes even farther, suggesting a $1,000 per red car tax, arguing that her proposal will raise $2 million. If maximizing tax revenue is the only consideration, which proposal should pass? Why?
Q2) Refer to Figure 4-20. The amount of the tax per unit is
A)$1.
B)$2.
C)$3.
D)$5.
Q3) Refer to Figure 4-25. The price that buyers pay after the tax is imposed is A)P .
B)P .
C)P .
D)impossible to determine from the figure.
Q4) Suppose the United Auto Workers union obtains a substantial wage increase for auto workers. How will this affect the market for automobiles?
Page 9
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Chapter 5: Difficult Cases for the Market and the Role of Government
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Q1) When a firm generates external benefits, a more efficient outcome would result if
A)the firm produced a larger output level.
B)the firm reduced its output level.
C)a tax were levied on the firm equal to the dollar amount of the externalities.
D)price were fixed below the firm's per-unit cost.
Q2) When consumers cannot tell the difference at the time of sale between high-quality products and those with defects, strong sales of the low-quality products will tend to depress price and drive the high-quality products from the market. Economists call this A)the curse of advertising.
B)the imperfect information problem.
C)the brand name problem.
D)an open-access resource.
Q3) What are the two distinguishing characteristics of a public good?
A)nonrivalry in consumption and nonexcludability
B)indivisibility in production and excludability of nonpaying customers
C)provision by government and funding through taxation
D)mass production and comparative advantage
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Chapter 6: The Economics of Collective Decision-Making
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Q1) Of all government spending in the United States, what amount occurs at the federal level?
A)less than 10 percent
B)about half
C)about three-fifths
D)more than 90 percent
Q2) Direct income transfers account for approximately what percentage of total government spending?
A)10 percent
B)30 percent
C)50 percent
D)60 percent
Q3) Payments that users (consumers) are required to make if they want to receive certain services provided by the government are called
A)tax deductions.
B)transfer payments.
C)user charges.
D)sales taxes.
Q4) Is calling a voter rationally ignorant the same as calling her irrational? Explain.
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Chapter 7: Consumer Choice and Elasticity
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Q1) If people spend 30 percent less on movie tickets when movie prices decline 15 percent, the price elasticity of demand for movie tickets at these prices must be A)-3.0.
B)elastic
C)-0.5.
D)inelastic.
Q2) The demand for salt is
A)inelastic because there are few substitutes for salt and it represents a large percentage of a consumer's budget.
B)inelastic because there are many substitutes for salt and it represents a large percentage of a consumer's budget.
C)inelastic because there are few substitutes for salt and it represents a small percentage of a consumer's budget.
D)elastic because there are no substitutes for salt and it represents a large percentage of a consumer's budget.
E)elastic because there are many substitutes for salt and it represents a large percentage of a consumer's budget.
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Chapter 8: A: Costs and the Supply of Goods
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Q1) Using Figure 8-2, calculate the firm's total cost of producing 20 units of output.
A)$8
B)$120
C)$180
D)$240
Q2) As output is expanded, if MC is more than ATC,
A)ATC must be at its minimum.
B)ATC must be at its maximum.
C)ATC must be increasing.
D)ATC must be constant.
Q3) The normal rate of return on equity capital is also known as
A)the explicit cost of capital.
B)the marginal cost of capital.
C)economic profit.
D)the opportunity cost of capital.
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13
Chapter 8: B: Costs and the Supply of Goods
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Q1) Kim used to work at "The Big One" accounting firm, and she earned $50,000 a year. She saved her money and has now invested $100,000 in her own firm. Profit is $20,000 a year, which Kim receives as her only compensation. She concludes that this is great because a 20 percent return is much better than the 8 percent she could get in another investment (the opportunity cost of the funds). What is wrong with this line of thinking?
Q2) 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?
Q3) Suppose you are planning to open a lemonade stand. List separately all the explicit and implicit costs that might be involved.
Q4) 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?
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14
Chapter 9: A: Price Takers and the Competitive Process
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Q1) FYI Sanitation is currently eight months into a year-long lease contract on a garbage truck at a cost that averages $500 per month. Other variable costs (fuel, workers, etc.) for operating the truck amount to $300 per month. If the monthly revenue from operating the truck is $400, and these conditions are expected to continue into the future, to maximize its profit, FYI Sanitation should
A)stop operating the truck immediately and not renew the lease for next year.
B)continue operating the truck indefinitely.
C)continue operating the truck until the lease expires, then not renew the lease for next year.
D)stop operating the truck now but renew the lease and begin operating the truck again next year.
Q2) The dynamic process of competition
A)is hindered by the self-interest of business decision makers.
B)puts the profit motive of sellers to work for buyers.
C)conflicts with the interest of consumers when businesses pursue profit rather than the public interest.
D)will permit business decision makers to earn long-run economic profit unless they are regulated by government.
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Chapter 9: B: Price Takers and the Competitive Process
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Q1) The competitive price-taker model is usually used to illustrate the competitive process. If firms cannot choose their price, where is the competition?
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) Regarding costs of production, can a firm ever be at a point that is not on the marginal cost curve? Explain.
Q4) When a competitive price-taker market is in long-run equilibrium
A)the firms in the market will earn zero economic profit.
B)the average total cost of the firms in the market will be minimized.
C)every unit of the relevant good that is valued more than its opportunity costs will be produced and sold.
D)all of the above are correct.
Q5) Why is it considered "ideal" for price to just equal marginal cost?
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Chapter 10: Price-Searcher Markets With Low Entry Barriers
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Q1) Sellers in competitive price-searcher markets
A)face competition both from existing firms and potential new entrants.
B)face competition from existing firms but not from potential new entrants.
C)face competition only from potential new entrants and only in the long run.
D)can compete only by product quality since product prices are set by market forces.
Q2) When entry barriers are low, firms in a competitive price-searcher market
A)can expect many new rivals to enter regardless of current profitability.
B)can expect competing firms to enter the market if the activity is profitable.
C)can never earn economic profit.
D)will always be able to earn economic profit.
Q3) In order for a firm to be able to engage in price discrimination, it must be able to
A)identify and separate groups with different price elasticities of demand.
B)prevent resale of the product between customer groups.
C)maximize profits at the point where average total cost is minimized.
D)do both a and b, but not c.
Q4) Why do the airlines charge less for passengers who stay over Saturday night and purchase their tickets two weeks in advance?
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Chapter 11: A: Price-Searcher Markets With High Entry
Barriers
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Q1) The demand and cost conditions in an industry are as depicted in Figure 11-7. In the viewpoint of economic efficiency, what would the ideal price and output be?
A)price, $7; quantity produced, 100
B)price, $10; quantity produced, 170
C)price, $14; quantity produced, 100
D)price, $7; quantity produced, 200
Q2) If the firms in the industry depicted in Figure 11-13 can effectively operate as a cartel, what would the industry's price and output be?
A)price, $10; output, 600
B)price, $20; output, 400
C)price, $25; output, 300
D)price, $30; output, 200
Q3) Which one of the following factors increases the likelihood that a cartel agreement will lead to higher profit for cartel members?
A)free entry into the cartelized market
B)a small number of sellers involved in the cartel agreement
C)the cartel members produce a differentiated product
D)highly unstable demand for the product produced by the cartel
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Chapter 11: B: Price-Searcher Markets With High Entry
Barriers
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Q1) One answer to the problem of natural monopoly is provision of the good by a government-owned and operated firm. Why is that option not used very often?
Q2) Under what conditions can a monopolist have potentially lower costs and possibly charge a lower price than would exist if the market were competitive?
A)when the monopolist operates on the inelastic portion of the demand curve
B)when the monopolist is a profit maximizer rather than a revenue maximizer
C)when substantial diseconomies of scale are present
D)when substantial economies of scale are present
Q3) Why does the U.S. government maintain a monopoly in the delivery of first-class mail? Does the Postal Service nevertheless face other forms of competition?
Q4) As Adam Smith indicated, the trouble with monopoly is that
A)firms have no incentive to produce efficiently.
B)regardless of what is produced, the firm will use too many resources.
C)a producer has no incentive to keep his costs down.
D)the monopolist "understocks" the market and charges too high a price.
Q5) Monopoly is a word derived from Greek origins that means, roughly, single seller. Why is the definition of monopoly as single seller inadequate in economic terms?
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Chapter 12: The Supply of and Demand for Productive Resources
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Q1) Which of the following is an example of an investment in human capital?
A)a law student who works as a waiter in the summer
B)on-the-job training received by an apprentice welder
C)payments into a retirement pension plan by a skilled laborer
D)all of the above are correct.
Q2) Generally, the supply of a resource in the short run will be
A)more elastic than in the long run.
B)less elastic than in the long run.
C)equally elastic as the supply of the resource in the long run.
D)directly related to the elasticity of demand for the product that the resource helps produce.
Q3) Other things constant, if the demand for a product is inelastic, the demand for a resource used as an input will tend to be
A)inelastic as well.
B)basically elastic.
C)of unitary elasticity.
D)the inverse of the elasticity coefficient of the product.
Q4) There is an Italian soccer player who makes more than $10 million a year. Why?
Page 20
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Chapter 13: Earnings, Productivity, and the Job Market
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Q1) Given the amount of time and other costs of investing in human capital that it takes to earn a Ph.D., why are college professors paid less than other occupations that require similar or lesser amounts of human capital?
Q2) Suppose the mean earnings of two groups differ. Which of the following would be the logical conclusion?
A)The group with the lowest earnings must be the victim of employment discrimination.
B)The group with the lowest earnings must be less productive.
C)The group with the highest earnings is more highly motivated and materialistic.
D)Without consideration of preferences and productivity factors, differences in unadjusted mean earnings do not necessarily reflect employment discrimination.
Q3) Which of the following is most likely to cause the productivity of labor to increase?
A)higher money wages
B)a higher rate of investment in human and nonhuman capital
C)more flexible working hours and improved retirement plans
D)an increase in the proportion of the workforce that belongs to a labor union
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Chapter 14: Investment, the Capital Market, and the Wealth of Nations
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Q1) If the interest rate is 5 percent, the net present value of $200 to be received two years from now is
A)$165.29.
B)$181.41.
C)$200.
D)$210.
Q2) A company that mines coal on federally owned land is about to be told by the federal government that, beginning in five years, it must abandon the mine it expected to operate for another twenty years. This will mean a reduction in accounting profits beginning in five years. If the announcement of this ruling was made tomorrow, the price of the firm's stock would fall
A)in about five years, just before the reduction in accounting profits was to begin.
B)gradually, as the reduction in the firm's accounting profit drew near.
C)immediately by the full amount of the discounted value of the decrease in future profit.
D)immediately because some investors would panic irrationally, whereas smart investors would put the same value on the stock as before, up to the time of the decline in accounting profit.
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Page 22
Chapter 15: Income Inequality and Poverty
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Q1) Why don't we divide the economic pie evenly so that each person receives the same income?
Q2) As shown in Figure 15-1, the degree of unequal income distribution is measured by the area between the
A)Lorenz curve and the horizontal axis.
B)Lorenz curve and the vertical axis.
C)Perfect equality line and the origin.
D)Perfect equality line and the Lorenz curve.
Q3) If complete equality of income were legislated, which of the following would economics predict?
A)People would become richer.
B)Society would gain utility from the extra goods produced.
C)Individuals would willingly work longer hours and thus produce more.
D)The incentive to produce and perform efficiently would be virtually eliminated.
Q4) Compared to low-income families, a larger proportion of high-income families
A)is headed by a person with a college degree.
B)has both a husband and a wife who work full time.
C)is headed by a person between the ages of 35 and 64.
D)is all of the above.
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Chapter 16: Appendix: Government Spending and Taxation
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Q1) "I am in favor of increasing the corporate income tax. Businesses should shoulder a larger share of the tax burden." This statement is
A)essentially correct.
B)false; businesses already shoulder most of the tax burden in the United States.
C)false; economic analysis indicates that the individual should pay more taxes and businesses less.
D)misleading; all taxes, including those levied on businesses, are paid by people.
Q2) Because of which provision in the tax code did more than one-third of all taxpayers either have a zero tax liability or actually receive money from the IRS in 2006?
A)Earned Income Tax Credit
B)Standard Deduction
C)Marginal Tax Rate
D)Families with Low Income Credit
Q3) Discuss how size of government can negatively affect economic growth.
Q4) As real incomes grow, what happens to federal tax revenues as a share of the economy?
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24
Chapter 17: Appendix: the Economics of Social Security
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Q1) Which of the following tends to increase the attractiveness of a retirement system based on savings and investment rather than pay-as-you-go principles?
A)a persistent increase in the number of workers relative to the number of retirees
B)a large number of workers relative to the number of retirees
C)a reduction in the number of workers relative to the number of retirees
D)a persistent increase in the life expectancy of retirees.
Q2) When the Social Security system enters its deficit years and the bonds held in the trust fund are drawn down,
A)overall taxes will be reduced as the trust funds are used to pay benefits to retirees.
B)the payroll taxes used to finance Social Security benefits can be reduced because the trust funds will be sufficient to pay the retirement benefits of the baby boom generation.
C)taxes will have to be raised (or additional funds will have to be borrowed) in order to redeem the bonds held in the trust fund.
D)income taxes will have to be reduced in order to keep the revenues and expenditures of the Social Security system in balance.
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Q1) Which of the following is true?
A)Most stockholders own stock because they want to participate in the daily decision making of the firms that they own.
B)The shareholders of a large well-established firm can be reasonably sure that they will earn a real rate of return of about 7 percent in the future.
C)The potential losses of shareholders are limited to the amount of their investment.
D)Ownership of a corporate bond provides the bondholder with an ownership right to a fraction of the firm's future profits.
Q2) The theory that stock prices reflect all available information and that the future movement of stock prices is unpredictable is called the
A)random walk theory.
B)inefficient market theory.
C)technical analysis theory.
D)charting theory.
Q3) Does it ever make sense to purchase a stock that has never paid a dividend? Explain.
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26
Chapter 19: Appendix: Great Debates in Economics: Keynes
Versus Hayek
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Q1) The General Theory of John Maynard Keynes exerted a major impact on macroeconomics during the 20 century primarily because
A)it provided the only logically consistent view of what caused the Great Depression.
B)it provided a reasonable explanation of what went wrong during the Great Depression and what could be done to prevent it from happening again.
C)it explained how gross domestic product could be measured and why this was important.
D)it derived the conditions necessary for maximum efficiency of resource use and explained how these conditions could be achieved through central planning.
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Chapter 20: Appendix: the Crisis of 2008: Causes and Lessons for the Future
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Q1) Compared to the 1970s and early 1980s, household debt as a share of income in 2007 has
A)increased at a steady rate over time.
B)remained about the same.
C)more than doubled.
D)decreased slowly over time.
Q2) Which of the following was an underlying cause of the economic crisis of 2008?
A)a failure of government to impose regulations on Fannie Mae, Freddie Mac, and other mortgage lenders
B)the imposition of government regulations on Fannie Mae, Freddie Mac, and other lending institutions that eroded the conventional lending standards in place prior to the mid-1990s
C)greedy mortgage lenders who extended risky loans to sub-prime borrowers even though the regulators were trying to limit these loans
D)federal housing regulations that made it difficult for Fannie Mae, Freddie Mac, and other lending institutions to obtain sufficient loanable funds for the finance of housing construction
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Chapter 21: Appendix: Lessons From the Great Depression
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Q1) Which of the following resulted from the Smoot-Hawley trade bill of 1930?
A)The stock market began a steady recovery from the crash of October 1929.
B)Many countries responded by imposing higher tariffs on American products, and the volume of international trade fell sharply.
C)Imports decreased, while exports increased, resulting in an overall increase in GDP and tariff revenues.
D)The unemployment rate, which had been rising, began to steadily decline as jobs were protected by the trade restrictions.
Q2) The National Industrial Recovery Act essentially legalized
A)labor unions.
B)business cartels.
C)minimum wage laws.
D)import tariffs.
Q3) 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.
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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 health-care expenditures and producers to supply health-care services more efficiently?
A)an increase in out-of-pocket expenditures by health-care consumers
B)decreased reliance on personal Medical Savings Accounts and health-care expenditures from the accounts
C)decreased reliance on the purchase of catastrophic health insurance coverage and less reliance on insurance with first-dollar coverage and small co-payments
D)the establishment of a national health-care system that would provide coverage to all people
Q2) Why is the current U.S. tax-treatment of health insurance purchased through one's employer discriminatory?
A)Health insurance should not be a tax-deductible expense for anyone.
B)The system gives preferential tax treatment to self-employed individuals.
C)The system imposes higher taxes on the direct purchase of health insurance because it is not tax deductible.
D)The system gives preferential tax treatment to people who purchase health insurance directly from a provider.
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Chapter 23: Appendix:education: Problems and Performance
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Q1) During the 2009-2010 school year, how many students attended charter schools?
A)250,000
B)700,000
C)1,100,000
D)1,600,000
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) Charter schools are
A)privately funded schools
B)typically religious schools
C)non-traditional schools funded and operated by the government
D)government operated schools that compete with private schools by charging tuition and providing competitive services.
Q4) What are charter schools? How do they differ from voucher programs?
31
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Chapter 24: Appendix: Earnings Differences Between Men and Women
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Q1) "If it were not for employment discrimination against women, the average earnings of men and women would be equal." Is this statement true or false?
Q2) Which of the following factors are likely to lead to an increase in the female/male earnings ratio in the future?
A)As the labor force participation of women increases, their years of work experience will become more similar to men.
B)In recent years, a higher proportion of women have been preparing for careers in the professions.
C)As the proportion of families headed by a female parent increases, the average hours worked per week of female employees will decline.
D)Both a and b are correct.
Q3) Between 1960 and 1980, the female/male annual earnings ratio of full-time workers ____. Between 1980 and 2009, the female/male annual earnings ratio of full-time workers ____.
A)changed very little; fell
B)changed very little; rose
C)fell; changed very little
D)rose; changed very little
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Chapter 26: Appendix: the Question of Resource Exhaustion
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Q1) Technological advances in agriculture (such as chemical fertilizers and harvesting equipment) have helped to preserve and grow forest land because they
A)reduce the amount of land needed to grow food.
B)result in a larger population.
C)are made from timber.
D)None of the above.
Q2) An example of a renewable resource is A)coal.
B)oil.
C)timber.
D)diamonds.
Q3) Doomsday projections have generally
A)been correct.
B)been incorrect, but with better technology and the ability to predict the future, these forecasts have become much more accurate in the last few decades.
C)been inconsistent. Some projections came true, others failed.
D)been wrong.
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Chapter 25: Appendix: Do Labor Unions Increase the Wages of Workers
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Q1) The share of the labor force that was unionized increased from approximately 10 percent in 1930 to more than 30 percent in 1955. During these 25 years, the share of national income allocated to labor (in contrast to capital)
A)remained virtually constant.
B)increased approximately 10 percent.
C)increased between 15 and 25 percent.
D)increased 17.6 percent.
Q2) In 2008, approximately what percent of the nonagricultural workforce belonged to a union?
A)2 percent
B)12 percent
C)35 percent
D)98 percent
Q3) Which of the following is most likely to belong to a union?
A)a government employee
B)a salesperson
C)a chef at a four-star restaurant
D)a taxi driver
Q4) What common goals, if any, do labor and management share?
Q5) In a strike, what does the union have to lose? What does management lose?
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Chapter 27: Appendix: Difficult Environmental Cases and the
Role of Government
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Q1) Which of the following is the most efficient way to reduce pollution emissions?
A)emission standards that cap allowable pollution
B)government pollution charges or taxes
C)legislated regulations limiting the quantity of emissions allowed by each firm
D)enforcement of property rights, when those rights are well-defined and transaction costs are low
Q2) (I) Richer people are more willing to make sacrifices to gain greater environmental quality. (II) Poor countries are not as resilient when faced with the threats caused by environmental degradation.
A)Both I and II are true.
B)I is true; II is false.
C)I is false; II is true.
D)Both I and II are false.
Q3) When a park is funded by visitors but not by taxpayers in general,
A)there will be too few parks because most people will not pay to use a park.
B)visitors will be better served because poor service would lead to reductions in revenues.
C)park budgets will decline.
D)park quality will decline.
Page 35
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