Test Bank Principles of MicroEconomics, 13e Karl Case, Ray Fair, Sharon Oster All Chapters, Answers

Test Bank Principles of MicroEconomics, 13e Karl Case, Ray Fair, Sharon Oster (All Chapters, Answers at the end)

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.1) Which transaction takes place in the factor market? 1) _______

• You buy bananas at the grocery store.
• The Kim family sells land to banana producers so they can increase their production.
• You lease office space from Regus for important meetings.
• You pay for maids to come clean your house twice a month.

Movement Along a Supply Curve 2) Which statement results in a change in quantity supplied? 2) _______

• The market for electricity is deregulated so now any company can sell electricity .
• To take advantage of the increased price of roses around Valentine’s day, Flirty Flowers

decides to plant more roses.

• After a hurricane hit Houston, the production of oil declined by 25% .
• Sharp Points, a scissors manufacturer, switches to producing knives because the price of

knives increased.

3) Which of the following is a microeconomic topic? 3) _______

• The economy of Uganda is at full employment .
• Increased government spending has decreased the budget surplus.
• Smoothies ‘R Us currently has 30 open positions and cannot find people to fill them.
• Congress enacts tougher immigration laws to reduce unemployment .

4) Which of the following shifts the demand curve? 4) _______

• Hinrik believes there will soon be a shortage of toilet paper, so he stocks up and buys

four packages the next time he goes grocery shopping,

• The market for electricity is deregulated so now any company can sell electricity .
• The price of jet fuel, an input for air travel, rises .
• An increase in the federal minimum wage increases the costs of workers .

Micro vs. Macroeconomics 5) Which of the following is a macroeconomic topic? 5) _______

• Production of airplanes in Europe has declined in the past five years.
• Increased government spending has decreased the budget surplus .
• Increasing costs of gasoline have caused shipping costs to increase.
• Hiking Sports has decided to pay for all their employees’ health insurance.

Movement Along a Demand Curve 6) Which statement results in a change in quantity demanded? 6) _______

• After several articles are released about the nutritional benefits of kale, kale sales

increase by 15%.

• Toyota opens a new factory in Dallas and millions of workers relocate to the area .
• Chips-N-More experiences a significant decline in sales after it raises the price of their

products.

• After the price of cycling shoes decreases, people buy more bicycles .

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7) The table shows the income share for each household quintile and the cumulative shares.Households (quintile) Income (%) Income (cumulative %) First 8.4 8.4 Second 13.7 Third 39.3 Fourth 23.6 Fifth What is the income (%) for the third quintile? What is the income (cumulative %) for the fourth quintile?

7) _______

A) 17.2%, 40.8% B) 17.2%, 62.9% C) 25.6%, 62.9% D) 25.6%, 40.8%

Consumer Surplus and Pricing 8) The table shows the willingness to pay for five consumers in the market for dog collars.Consumer Highest Price Willing to Pay Antwone 21 Nevaeh 16 Valentina 11 Matias 6 Rudra 1

What is the consumer surplus when the price is $16? When the price is $5.5?

8) _______

A) $5.00, $32.00 B) $18.50,

$32.00

C) $18.50,

$30.00

D) $5.00, $30.00

Efficiency in Output Levels 9) The graph shows the demand curve (D), marginal revenue curve (MR) and marginal cost curve (MC) for a firm that is a monopoly. In the short run and long run, marginal cost equals average total cost (ATC).

Assume that the area of A=10, B=10, C=27, D=10, and E=28. What is the total surplus at the monopolist's profit-maximizing price? At the efficient price and quantity, what is total surplus?

9) _______

A) $57, $85 B) $37, $0 C) $85, $57 D) $20, $37

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The Lorenz Curve and the Gini Coefficient 10) The graph shows a Lorenz curve.

For Iniquus, the area of A=375 and the area of B=750. What is the Gini coefficient? Suppose that in Aequus, the area of A=210 and the area of B=915. What is the Gini coefficient? Which country has more income inequality?Please round your final answer to two decimal places.

10) ______

• 0.50, 0.23, Iniquus B) 0.50, 0.23, Aequus
• 0.33, 0.19, Iniquus D) 0.33, 0.23, Aequus

11) Yesterday, a banker paid $0.61 for a bond that pays out $5,000 in one year (with no risk).Today, the price of the bond increased to $3,850. Since yesterday, the interest rate ________ (increased/decreased) from ________ to ________.Please round your final answer to two decimal places.

11) ______

• decreased, 39.00%, 23.00% B) decreased, 63.93%, 29.87%
• increased, 29.87%, 63.93% D) increased, 23.00%, 39.00%

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Market Failure 12) The graph shows the market for dental cleaning.

Assume that the area of A=87, B=60, C=13, D=17, E=3, F=94, and G=21. At Q3 ________ exceeds the ________ of dental cleaning. What is consumer surplus? What is producer surplus? What is the deadweight loss?

12) ______

• marginal benefit, marginal cost, $87, $94, $16
• marginal benefit, marginal cost, $160, $114, $21
• marginal cost, marginal benefit, $87, $94, $16
• marginal cost, marginal benefit, $160, $114, $21

Diminishing Marginal Utility 13) The table shows three consumers utility from consuming frozen yogurt bars.

Number of Frozen Yogurt Bars Athos's Total Utility Porthos's Total Utility Aramis's Total Utility

0 0 0 0

1 38 3 16

2 61 8 32

3 78 20 48

4 92 36 64

5 97 60 80

Athos's utility illustrates ________ (diminishing/increasing/constant) marginal utility, Parthos's utility illustrates ________ (diminishing/increasing/constant) marginal utility, and Aramis's utility illustrates ________ (diminishing/increasing/constant) marginal utility.

13) ______

• diminishing, constant, increasing B) diminishing, increasing, constant
• increasing, diminishing, constant D) increasing, constant, diminishing

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