12. Refer to Figure 5. If China were to abandon a no-trade policy in favor of a free-trade policy, (c) total surplus in the Chinese economy would increase. ((C)
13. Refer to Figure 6. The imposition of a tariff on carnations (c) decreases the number of carnations imported by 200. (C)
14. Refer to Figure 6. The amount of revenue collected by the government from the tariff is (b) $400.(B)
15. Refer to Figure 6. Assuming the country currently allows free trade, who is most likely to resist the imposition of the illustrated tariff?: (a) consumer advocacy groups. (A)
16. Which of the following statements about a well-maintained yard best conveys the general nature of the externality? (c) A well-maintained yard conveys a positive externality because it increases the value of adjacent properties in the neighborhood.
17. Refer to Figure 7. This graph represents the tobacco industry. The industry creates (b) negative externalities. (B)
18. This graph represents the tobacco industry. The socially optimal price and quantity are (b) $1.80 and 35 units, respectively. (B)
19. University researchers create a positive externality because what they discover in their research labs can easily be learned by others who haven’t contributed to the research costs. What could the federal government do to equate the equilibrium quantity of university research and the socially optimal quantity of university research produced? (b) offer grants to university researchers (B)
20. An example of a common resource would be (d) the environment. (D)
21. Who among the following is a free rider?(d) Fred watches many public television programs, but he has never sent in a contribution to the station. (D)
22. To achieve the optimal provision of public goods, the (d) government must either provide the goods or subsidize their production.(D)
23. The Tragedy of the Commons for sheep grazing on common land can be eliminated by the government doing each of the following except (d) subsidizing sheep flocks. (D)
24. Refer to Table 1. Alyson’s pet sitting service experiences diminishing marginal productivity with the addition of the . c. third worker. (C)
25. The marginal product of labor is equal to the d. increase in output obtained from a one unit increase in labor.(D)
26. At Bert’s Bootery, the total cost of producing twenty pairs of boots is $400. The marginal cost of producing the twenty-first pair of boots is $83. We can conclude that the . b. average total cost of 21 pairs of boots is $23. (B)
27. Refer to Table 2. Each worker at Gallo’s cork factory costs $12 per hour. The cost of each machine is $20 per day regardless of the number of corks produced. If Gallo’s produces at a rate of 70 corks per hour and operates 8 hours per day, what is Gallo’s total labor cost per day? c. $576 (C)
28. Refer to Table 2. Assume Gallo’s currently employs 2 workers. What is the marginal product of labor when Gallo’s adds a 3rd worker? b. 10 corks per hour (B)
29. Suppose that for a particular firm the only variable input into the production process is labor and that output equals zero when no workers are hired. In addition, suppose that when four units of output are produced, the total cost is $175, and the average variable cost is $33.75. What would the average fixed cost be if ten units were produced? a. $4 (A)
30. Refer to Table 3. What is the variable cost of producing 5 gigaplots at Jimmy’s Gigaplot factory? b. $85 (B)
31. Refer to Table 3. What is the average variable cost of producing 6 gigaplots at Jimmy’s Gigaplot factory? c. $18 (C)
32. Refer to Table 4. What is the value of A? b. $50 (B)
33. Refer to Table 4. What is the value of G? d. $270 (D)
34. Refer to Figure 11. Which of the following can be inferred from the figure? (i) Marginal cost is increasing at all levels of output. (ii) Marginal product is increasing at low levels of output. (iii ) Marginal product is decreasing at high levels of output b. (ii) and (iii) only (B)
35. Refer to Figure 11. Why doesn’t the total cost curve begin at the origin (the point 0,0)? b. because fixed costs are positive when output is zero (B)