1. In economics, efficiency means . . .

(a) maximizing a firm's profits

(b) paying workers as little as the market will bear.

(c) using markets rather than the government to produce goods.

(d) using the minimum amount of resources to achieve a desired result.

(e) the pursuit of self-interest.

2. Which one of the following is a normative question?

(a) Are men paid more than women?

(b) What is per capita income in Zambia?

(c) When did the United States abandon the gold standard?

(d) How much more money should managers earn than workers?

(e) What is the current value of the stock market?

3. Which of the following will not cause a good's entire demand curve to

shift?

(a) A change in consumers' tastes or desires for the good.

(b) A change in the current price of the good.

(c) A change in consumers' income.

(d) A change in consumers' expectations.

(e) A change in the availability and price of substitute goods.

4.What is the effect on equilibrium price and quantity of an increase in

both supply and demand?

(a) There is an increase in equilibrium price and an increase in equilibrium quantity.

(b) There is an ambiguous effect on equilibrium price and an increase in equilibrium quantity.

(c) There is a decrease in equilibrium price and an increase in equilibrium quantity.

(d) There is no change in equilibrium price or quantity.

(e) None of the above.

5. A demand curve with an extremely high price elasticity of demand would be close to (. . . )

(a) vertical.

(b) horizontal

(c) a 45 degree line.

(d) unstable.

(e) a rectangular hyperbola that never touches either axis.

6. Suppose that an ice cream parlor raises the price of an ice cream cone

from $3 to $4, and that the parlor sells five fewer cones each day. Which

of the following statements is false?

(a) The demand for ice cream cones is downward sloping.

(b) Consumer surplus from ice cream cones has decreased.

(c) Part of the area of consumer surplus becomes part of the area of

producer surplus.

(d) Some people's willingness-to-pay for a cone is greater than $3 but

less than $4.

(e) Ice cream cones provide declining marginal benefits.