Economics multiple choice questions

| August 14, 2017

Due in the lab no later than Tuesday, April 30, 2013. The early submission deadline is Friday, April 26. Early submissions will receive 2 extra credit
points. Late Homework will not be
accepted under any circumstances.
Answers must be submitted on a General Purpose NCS Answer Sheet No.
229633 available in the ASU Bookstore. The Answer Sheet must be completed in
pencil and contain your name and 10 digit ASU IdentificationNumber.

Price per foot in height

Height in feet demanded

Manny’s demand

Moe’s demand

Jack’s demand

$0

5 feet

4 feet

3 feet

$5

4 feet

3 feet

2 feet

$10

3 feet

2 feet

1 foot

$15

2 feet

1 foot

0 feet

$20

1 foot

0 feet

0 feet

1.
Manny, Moe and Jack constitute the market for a retaining wall which is
considered to be a public good.
The price per foot in height of the retaining wall and their demand for
the retaining wall is described in the table above. If the cost to supply the public good is $30
per foot, what is the efficient height of the retaining wall assuming that
it is a public good?
A) Since the government will
pay for the public good, 12 feet is optimal because that is what is demanded at
a price of zero to Manny, Moe and Jack.
B) Zero because no one is
willing and able to pay $30.
C) One foot in height.
D) Two feet in height.
E) Three feet in height.

2.
Manny, Moe and Jack constitute the market for a retaining wall which is
considered to be a private good.
The price per foot in height of the retaining wall and their demand for
the retaining wall is described in the table above. If the price of the wall is $10 per foot,
what is the efficient height of the retaining wall assuming that the
retaining wall is a private good?
A) 9 feet
B) 3 feet
C) 5 feet
D) 12 feet
E) 6 feet

3. We
hear so much about the depletion of the ozone, the destruction of the rain
forest, the pollution of the oceans and rivers, and the depletion of wildlife
because
a. private individuals and businesses lack the
time to take full account of these issues.
b. private individuals and businesses don’t care
about our environment.
c. scientists are looking to make names for
themselves and thereby gain a lot of publicity.
d. the media focuses on negative stories.
e. private individuals and businesses lack
incentives to take full account of the consequences of their actions.

4. An
externality exists when
a. some of the costs of producing a product
affect people unable, within a market system, to influence how much of a
product should be produced.
b. only the buyers and sellers are affected by
the production of a product or service.
c. every person in a market system has a chance
to influence how much of a product should be produced.
d. the benefits from consuming the service
affect only the purchasers of that service.
e. the costs of producing a service affect only
the sellers of that service.

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5. In
the figure above, assume that Dm and Ds represent the market- and social-demand
curves, respectively. The market-determined equilibrium quantity and price will
be, respectively,
a. Q2 and P1.
b. Q1 and P1.
c. Q2 and P2.
d. Q1 and P2.
e. Q2 and P3.
6. In
the figure above, assume that Dm and Ds represent the market- and social-demand
curves, respectively. Which of the following is an accurate conclusion?
a. The external costs associated with providing
the good are equal to P2 per unit.
b. The external benefits associated with
providing the good are equal to P2 per unit.
c. The
external benefits associated with providing the good are equal to P3 minus P2 per unit.
d. The external costs associated with providing
the good are equal to P3 minus P1.
e. The external benefits associated with
providing the good are equal to P3 minus P1 per unit.

Output Private Marginal External

per Hour Marginal Cost Benefit Cost

1 $5.00 $10.00 $ .10
2 5.20 9.25 .20
3 5.45 8.50 .35
4 5.75 7.75 .60
5 6.10 7.00 .90
6 6.50 6.50 1.40
7 7.20 6.00 2.00
8 8.00 5.50 2.80

7. In
the table above, if the equilibrium were determined by a free market, it would
be
a. 7 units, $9.20
b. 6 units, $6.50
c. 6 units, $7.90
d. 5 units, $7.
e. 4 units, $7.15

8. In
the table above, the socially optimal equilibrium would be
a. 6 units, $7.90
b. 7 units, $4
c. 5 units, $7
d. 7 units, $8
e. 6 units, $6.50

9. Why
are chickens and cows not listed on the endangered species list?
a. People want to eat chickens and cows.
b. People cannot own a chicken or a cow.
c. Chickens and cows reproduce regularly.
d. Private property rights exist for chicken and
cows.
e. People will pay to have chicken or beef.
10. Public
radio raises its funding by staging telethons where no programs are aired for a
period of time as the station solicits contributions. The stations have trouble
raising money because
a. the government assigns private property
rights to goods.
b. the consumption of a good cannot be limited
to the person who purchased it.
c. the broadcasts are private.
d. people do not act in their own self-interest.
e. a monopoly produces a good.

11. Which
of the following is the best example of a public good?
a. A beer
b. highways
c. An appendectomy
d. A retirement home
e. A soccer ball

Production
Possibilities Schedule

Country X Country Y

Choice Sugar Coffee Sugar Coffee

A 200 0 100 0

B 160 40 80 30

C 120 80 60 60

D 80 120 40 90

E 40 160 20 120

F 0 200 0 150

12. In
the table above, if trade were to occur, which of the following is true?
a. Country X should export sugar to country Y,
and country Y should export coffee to country X.
b. Country X should export coffee to country Y,
and country Y should export sugar to country X.
c. Country Y should export sugar and coffee to
country X.
d. Country X should export coffee to country Y,
but the two countries should not exchange sugar.
e. Country X should export sugar and coffee to
country Y.

13. In
the table above, if trade were to occur, what is the most country Y is willing
to pay for 1 unit of sugar?
a. 1/2 unit of coffee
b. 3/2 units of coffee
c. 2/3 unit of coffee
d. 1 unit of coffee
e. 150 units of coffee

14. In
the table above, if trade were to occur, what is the least country X is willing
to accept for 1 unit of sugar?
a. 3/2 units of coffee
b. 1/2 unit of coffee
c. 2/3 unit of coffee
d. 1 unit of coffee
e. 200 units of coffee

15. In
the table above, assume that before specialization and trade, both countries
were producing at production possibility C. Now if each country specializes
according to comparative advantage, what will be the gains from trade?
a. 20 units of coffee and 10 units of sugar
b. 20 units of sugar and 10 units of coffee
c. 10 units of sugar
d. 80 units of coffee and 90 units of sugar
e. 20 units of coffee

16. A
world-renowned brain surgeon can type twice as fast as her secretarial
assistant. Which of the following best describes the idea of comparative
advantage in this situation?
a. The secretary has an absolute advantage in
typing.
b. The surgeon should work weekends and evenings
to stay up on her typing and fire the assistant.
c. The surgeon should do her own typing to save
money.
d. The surgeon should spend her time doing brain
surgery and allow her secretary to do the typing because the surgeon has a
comparative advantage in typing.
e. The surgeon should spend her time doing brain
surgery and allow her secretary to do the typing because the secretary has a
comparative advantage in typing.

17. The
United States is a major trading partner for many nations because of the
a. size of the U.S. economy and its relatively
high level of income.
b. free market benefits of capitalism.
c. commitment of the United States to help
immigrants by both importing from and exporting to their countries of origin.
d. active participation of the United States in
both the International Monetary Fund and the World Bank.
e. protection to shipping offered by the U.S.
strategic presence in vital commercial areas, such as the Middle East.
18. Which
of the following statements about international trade restrictions is true?
a. They typically benefit foreign producers at
the expense of domestic consumers.
b. They ensure that countries will specialize in
those products which they can produce most efficiently.
c. In the majority of cases they harm consumers.
d. They ensure that only efficient producers
survive.
e. They ensure that higher-quality goods are
provided at lower prices.

19. Typically,
restrictions to “save domestic jobs” simply redistribute jobs by
creating
a. conditions that favor domestic labor unions
at the expense of employment in nonunionized industries.
b. employment in the protected industry and
reducing employment elsewhere.
c. inflation in the overall economy.
d. pockets of full employment and unemployment
corresponding to free trade zones.
e. employment in nonprotected industries and
reducing employment in the protected industry.

20. If the
world price of a good is lower than its domestic equilibrium price, the country
will
a. export a quantity of the good equal to the
difference between the quantity demanded domestically and the quantity supplied
domestically.
b. import a quantity of the good equal to the
difference between the quantity demanded domestically and the quantity supplied
by foreign producers.
c. import a quantity of the good equal to the
difference between the quantity demanded domestically and the quantity supplied
domestically.
d. import a quantity of the good equal to the
difference between the quantity demanded by foreign consumers and the quantity
supplied by foreign producers.
e. import a quantity of the good equal to the
difference between the quantity demanded by foreign consumers and the quantity
supplied domestically.

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21. Refer
to the figure above. With no international trade, the domestic equilibrium
price per ton of corn is
a. P3.
b. P2.
c. None of these answers are true.
d. P1.
e. between P1 and P3.

22. Refer
to the figure above. How much corn would be imported if the world equilibrium
price is P1?
a. Q5 – Q3
b. None
c. Q3 + Q1
d. Q5 – Q1
e. Q3 – Q1

23. Refer
to the figure above. If the world price of corn is P1 and a tariff equal to P2 – P1 is
imposed on each ton of imported corn, which of the following is not
true?
a. Imports will decrease to Q4 – Q2.
b. The government will collect (P2-P1)(Q4-Q2)
in revenue.
c. There will be a loss of domestic consumer
surplus.
d. There will be a loss of domestic producer
surplus.
e. The price will increase.

24. Assume
that the world price of corn is P1 in the
figure above. What would be the effect on imports of corn if a tariff equal to
P3 – P1 is
imposed on each ton of imported corn?
a. Imports of corn would be reduced by an amount
equal to Q4 – Q2.
b. Imports of corn would be reduced by an amount
equal to Q5 – Q3.
c. Imports of corn would be completely eliminated.
d. Imports of corn would be reduced by an amount
equal to Q4 – Q3.
e. Imports of corn would be reduced by an amount
equal to Q3 – Q1.

25. Refer
to the figure above. If the world equilibrium price is P1 and a quota of (Q4-Q2) is imposed
a. price will be P2.
b.
domestic
producers will supply Q2.
c.
total
tariff revenue is zero.
d. domestic consumers will lose consumer surplus
e. All of these answers are true.

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