Microeconomics English Homework Answers chap1-chap13Microeconomics 8e Parkin Testbank 2 Answerchap1-chap13 Chapter 1 What Is Economics 1 An inducement to take a particular action is called Answer D 2

lities frontier? Answer: D 4) The opportunity cost of an item is Answer: C 5) The law of increasing opportunity cost states that Answer: B 6) The law of increasing opportunity cost is due to Answer: C 7) The law of increasing opportunity cost implies that the production possibilities frontier is Answer: A 8) The shape of the production possibilities frontier is due to Answer: C 9) An economy is efficient if it is Answer: B 10) Points inside the production possibilities frontier are Answer: A 11) Points outside the production possibilities frontier are Answer: D 12) Economic growth means that Answer: A 13) Which of the following is NOT a factor that shifts the production possibilities frontier outward? Answer: B 14) Which of the following is an example of technological progress that would shift the production possibilities frontier outward? Answer: C 15) Which of the following is an example of a resource that could shift the production possibilities frontier outward? Answer: A 16) Which of the following is an example of a change in institutions that could shift the production possibilities frontier outward? Answer: D 17) The production possibilities frontier shows that Answer: C 18) The opportunity cost of producing a good Answer: D 19) The slope of the production possibilities frontier shows Answer: A 20) Economic growth is shown by a shift of the production possibilities frontier Answer: B Chapter 3 Demand and Supply 1) The law of demand states that Answer: A 2) The law of demand implies that Answer: B 3) The substitution effect of a change in price refers to Answer: C 4) The income effect of a change in price refers to Answer: A 5) A change in the price of a good causes Answer: A 6) The demand curve for a good shows Answer: B 7) Which of the following would shift the demand curve for a good to the right? Answer: C 8) A decrease in the price of a good will cause Answer: A 9) The supply curve for a good shows Answer: D 10) A decrease in the price of a good will cause Answer: B 11) Which of the following would shift the supply curve for a good to the right? Answer: A 12) A decrease in the price of a good will cause Answer: B 13) In a market, equilibrium is reached when Answer: C 14) A surplus occurs when Answer: B 15) A shortage occurs when Answer: A 16) The equilibrium price and quantity in a market are determined by Answer: D 17) If the price of a good is above the equilibrium price, there will be Answer: B 18) If the price of a good is below the equilibrium price, there will be Answer: A 19) Which of the following would cause an increase in the equilibrium price of a good? Answer: C 20) Which of the following would cause a decrease in the equilibrium quantity of a good? Answer: A Chapter 4 Elasticity 1) Elasticity measures Answer: D 2) The price elasticity of demand measures Answer: A 3) The price elasticity of demand is calculated as Answer: B 4) The price elasticity of demand is Answer: D 5) A perfectly inelastic demand curve is Answer: A 6) A perfectly elastic demand curve is Answer: C 7) The flatter the demand curve through a given point, the Answer: B 8) If the price elasticity of demand for a good is greater than 1, the demand for the good is Answer: C 9) If the price elasticity of demand for a good is less than 1, the demand for the good is Answer: A 10) If the price elasticity of demand for a good is equal to 1, the demand for the good is Answer: D 11) The income elasticity of demand measures Answer: B 12) If the income elasticity of demand for a good is negative, the good is Answer: D 13) If the cross-price elasticity of demand for two goods is positive, the goods are Answer: B 14) If the cross-price elasticity of demand for two goods is negative, the goods are Answer: A 15) If the cross-price elasticity of demand for two goods is zero, the goods are Answer: C 16) The price elasticity of supply measures Answer: A 17) If the price elasticity of supply for a good is greater than 1, the supply of the good is Answer: C 18) If the price elasticity of supply for a good is less than 1, the supply of the good is Answer: B 19) If the price elasticity of supply for a good is equal to 1, the supply of the good is Answer: D 20) The more easily producers can switch resources between the production of two goods, the Answer: A Chapter 5 Efficiency and Equity 1) The invisible hand refers to Answer: C 2) The invisible hand principle suggests that Answer: A 3) Markets are efficient because Answer: D 4) The price system is efficient because Answer: B 5) A market failure occurs when Answer: A 6) An externality is Answer: C 7) A positive externality occurs when Answer: A 8) A negative externality occurs when Answer: B 9) The market fails to achieve an efficient allocation of resources when Answer: D 10) A public good is Answer: B 11) A private good is Answer: D 12) A common resource is Answer: A 13) A club good is Answer: C 14) A free rider is Answer: A 15) The tragedy of the commons occurs when Answer: B 16) Government intervention can improve market outcomes if Answer: B 17) Government intervention can improve market outcomes by Answer: D 18) A price ceiling is Answer: C 19) A price floor is Answer: A 20) Deadweight loss is Answer: D Chapter 6 Government Actions in Markets 1) A tax on a good Answer: D 2) A price ceiling is Answer: B 3) A price floor is Answer: C 4) A binding price ceiling causes Answer: A 5) A binding price floor causes Answer: B 6) A tax on a good causes Answer: A 7) A tax on a good is shared between consumers and producers, depending on Answer: C 8) A subsidy on a good Answer: C 9) A binding price ceiling on a good Answer: B 10) A binding price floor on a good Answer: A 11) A tax on a good causes a deadweight loss because Answer: D 12) A subsidy on a good causes a deadweight loss because Answer: D 13) The incidence of a tax refers to Answer: B 14) The incidence of a tax depends on Answer: A 15) A tax on a good is more likely to be borne by consumers than producers if Answer: A 16) A tax on a good is more likely to be borne by producers than consumers if Answer: C 17) A tax on a good is shared equally between consumers and producers if Answer: D 18) A subsidy on a good is more likely to be received by consumers than producers if Answer: B 19) A subsidy on a good is more likely to be received by producers than consumers if Answer: C 20) A subsidy on a good is shared equally between consumers and producers if Answer: D Chapter 7 Global Markets in Action 1) International trade benefits a country by Answer: D 2) The principle of comparative advantage states that Answer: A 3) The gains from trade arise from Answer: B 4) If a country has a comparative advantage in producing a good, then Answer: C 5) If a country has a comparative disadvantage in producing a good, then Answer: A 6) The world price of a good is Answer: B 7) With free trade, a country will export a good if Answer: C 8) With free trade, a country will import a good if Answer: A 9) A tariff is Answer: D 10) A tariff causes Answer: B 11) An import quota is Answer: A 12) An import quota causes Answer: D 13) A voluntary export restraint is Answer: C 14) A voluntary export restraint causes Answer: A 15) An embargo is Answer: B 16) An embargo causes Answer: C 17) The infant industry argument for protectionism states that Answer: C 18) The national security argument for protectionism states that Answer: B 19) The unfair competition argument for protectionism states that Answer: A 20) The protection as a bargaining chip argument for protectionism states that Answer: D Chapter 8 Production and Cost 1) The production function shows Answer: A 2) The marginal product of labor is Answer: B 3) The law of diminishing marginal returns states that Answer: C 4) The cost of producing a good Answer: D 5) Fixed costs are Answer: A 6) Variable costs are Answer: B 7) Total cost is Answer: C 8) Marginal cost is Answer: D 9) The average fixed cost curve Answer: A 10) The average variable cost curve Answer: B 11) The average total cost curve Answer: C 12) The marginal cost curve Answer: D 13) The long-run average total cost curve shows Answer: A 14) Economies of scale occur when Answer: B 15) Diseconomies of scale occur when Answer: C 16) The minimum efficient scale is Answer: A 17) The long-run average cost curve is U-shaped because of Answer: C 18) The long-run average cost curve is flatter at small levels of output because of Answer: B 19) The long-run average cost curve is steeper at large levels of output because of Answer: D 20) A natural monopoly occurs when Answer: A Chapter 9 Perfect Competition 1) A perfectly competitive market has Answer: D 2) A price taker is Answer: A 3) The demand curve for a perfectly competitive firm is Answer: B 4) The marginal revenue curve for a perfectly competitive firm is Answer: A 5) For a perfectly competitive firm, price equals Answer: C 6) For a perfectly competitive firm, marginal revenue equals Answer: D 7) The profit-maximizing output for a perfectly competitive firm occurs where Answer: C 8) If a firm in a perfectly competitive market is making a profit, Answer: A 9) If a firm in a perfectly competitive market is making a loss, Answer: B 10) In the long run, a firm in a perfectly competitive market will earn Answer: A 11) In the long run, a firm in a perfectly competitive market will produce at Answer: C 12) In the long run, a perfectly competitive market will produce at Answer: B 13) In the long run, a perfectly competitive market will earn Answer: A 14) Which of the following is NOT a characteristic of a perfectly competitive market? Answer: D 15) A monopoly is a market with Answer: A 16) A monopolist is a firm that Answer: C 17) A monopolist's demand curve is Answer: B 18) A monopolist's marginal revenue curve is Answer: D 19) A monopolist maximizes profit by producing the quantity where Answer: A 20) A monopolist earns Answer: B Chapter 10 Monopoly and Antitrust Policy 1) A monopoly is a market with Answer: C 2) A monopolist is a firm that Answer: A 3) A monopolist's demand curve is Answer: B 4) A monopolist's marginal revenue curve is Answer: C 5) A monopolist maximizes profit by producing the quantity where Answer: A 6) A monopolist earns Answer: B 7) The deadweight loss of a monopoly is due to Answer: C 8) A natural monopoly occurs when Answer: A 9) Government-granted monopolies are created by Answer: D 10) A patent is Answer: B 11) A price discrimination occurs when Answer: D 12) A perfect price discrimination occurs when Answer: A 13) An antitrust policy is Answer: C 14) The Sherman Antitrust Act Answer: A 15) The Clayton Antitrust Act Answer: B 16) The Federal Trade Commission Act Answer: A 17) The Robinson-Patman Act Answer: C 18) The Clayton Antitrust Act prohibits Answer: D 19) The Federal Trade Commission Act prohibits Answer: B 20) The Robinson-Patman Act prohibits Answer: A Chapter 11 Monopolistic Competition 1) Monopolistic competition is a market with Answer: B 2) Monopolistic competition is similar to perfect competition in that Answer: C 3) Monopolistic competition is similar to monopoly in that Answer: A 4) A monopolistically competitive firm's demand curve is Answer: D 5) A monopolistically competitive firm's marginal revenue curve is Answer: B 6) A monopolistically competitive firm maximizes profit by producing the quantity where Answer: C 7) A monopolistically competitive firm earns Answer: A 8) A monopolistically competitive market is inefficient because Answer: D 9) Product differentiation refers to Answer: C 10) Product differentiation arises from Answer: A 11) Brand names are an example of Answer: B 12) Advertising is an example of Answer: C 13) The excess capacity theorem states that Answer: A 14) The markup over marginal cost is due to Answer: D 15) The more elastic the demand for a monopolistically competitive firm's product, the Answer: B 16) The less elastic the demand for a monopolistically competitive firm's product, the Answer: D 17) The long-run equilibrium for a monopolistically competitive firm occurs where Answer: A 18) The long-run equilibrium for a monopolistically competitive firm earns Answer: C 19) Monopolistic competition is not efficient because Answer: B 20) Monopolistic competition is similar to monopoly because Answer: D Chapter 12 Oligopoly 1) An oligopoly is a market with Answer: B 2) An oligopolist is a firm that Answer: C 3) The concentration ratio measures Answer: A 4) The Herfindahl-Hirschman Index measures Answer: D 5) A cartel is Answer: B 6) A Nash equilibrium occurs when Answer: C 7) A dominant strategy is Answer: A 8) A game theory is Answer: C 9) The prisoners' dilemma is a game theory example that illustrates Answer: B 10) The payoff matrix shows Answer: A 11) A price leader is Answer: B 12) Price leadership occurs when Answer: C 13) A kinked demand curve occurs when Answer: D 14) A kinked demand curve explains Answer: A 15) The theory of contestable markets suggests that Answer: B 16) The more contestable a market, the Answer: C 17) Barriers to entry are Answer: A 18) Predatory pricing occurs when Answer: C 19) Tying occurs when Answer: D 20) Price discrimination occurs when Answer: A Chapter 13 Income and Expenditure 1) The circular-flow diagram is Answer: A 2) Gross domestic product measures Answer: C 3) Gross domestic product is the market value of Answer: B 4) Gross domestic product counts Answer: D 5) Gross domestic product does NOT count Answer: B 6) The expenditure approach to measuring gross domestic product adds up Answer: A 7) The income approach to measuring gross domestic product adds up Answer: D 8) National income equals Answer: A 9) Personal income equals Answer: C 10) Disposable income equals Answer: B 11) Gross domestic product is equal to Answer: D 12) Net domestic product is equal to Answer: A 13) Gross national product is equal to Answer: C 14) Net national product is equal to Answer: B 15) National income is equal to Answer: D 16) Personal income is equal to Answer: A 17) Disposable income is equal to Answer: C 18) The consumer price index measures Answer: B 19) The producer price index measures Answer: D 20) The GDP deflator measures Answer: