QUESTION 11

1. On a graph of a demand curve, total consumer surplus equals:

		the demand curve.
		the area above the demand curve and beneath the market price.
		the area beneath the demand curve and above the market price.
		the market price.

10 points

QUESTION 12

1. If the elasticity of demand for a good is estimated to be _____, then firms producing the good will experience an increase in total revenue if prices fall.

		0.05
		0.75
		1
		2.5

10 points

QUESTION 13

1. Which one of the following products would tend to have inelastic demand?

		luxury sedans
		candy
		crude oil
		Black Angus T-bone steak

10 points

QUESTION 14

1. If the goal of education were solely to support economic growth, the ideal graduate would be a:

		jack-of-all-trades but master of none (where a "jack" is a serviceable tradesperson).
		jack-of-all-trades and master of one.
		jack-of-all-trades and master of none.
		jack-of-some-trades but master of none.

10 points

QUESTION 15

1. If quantity supplied equals 40 units and quantity demanded equals 50 units under a price control, then it is a:

		price ceiling.
		price floor.
		market equilibrium.
		minimum wage.

10 points

QUESTION 16

1. As trade becomes more widespread, specialization______, which in turn______productivitiy.

		decreases; decreases
		increases; increases
		decreases; increases
		increases; decreases

10 points

QUESTION 17

1. If there are only two goods in the economy, chocolate and peanut butter, and the price of chocolate falls, the new utility-maximizing bundle for a typical consumer would entail _____ peanut butter and _______ chocolate.

		less; more
		more; less
		more; more
		less; less

10 points

QUESTION 18

1. To economists, the term "consumer surplus" means:

		the excess money consumers have left over after purchasing goods.
		the difference between the price a consumer is willing to pay and the price that suppliers are willing to accept.
		the consumer's gain from trading.
		the difference between the price a consumer is able to pay and willing to pay.

10 points

QUESTION 19

1. Recall Chapter 1's opening story about the British sea captains and the convicted felons. In what way were incentives used to solve the problem of the high mortality rate on board the ships?

		Payment (to captains) was to be offered for each prisoner that was taken aboard the ships.
		Payment (to ship captains) was made independent of the regulations passed for prisoner welfare.
		Regulations were passed so that prisoners could get better food, water, and medical care.
		Payment (to ship captains) was made dependent on the survival rate of prisoners.

10 points

QUESTION 20

1. In the week before Hurricane Katrina, the price of flashlights rose in New Orleans because of:

		an increase in supply.
		an increase in demand.
		a decrease in supply.
		a decrease in demand.