Question

15)The theory of international trade presented in Chapter 9 of the Mankiw text, shows that a tariff can reduce efficiency by reducing domestic consumption, but increase efficiency by increasing domestic production.

True

False

16)

Table 5-1

Income	Quantity of Good X Purchased	Quantity of Good Y Purchased
$30,000	2	20
$40,000	5	10

Refer to Table 5-1. Good Y is

an inferior good.

not related to income.

a normal good.

price inelastic.

22) all points on the production possibility frontier:

will lead to overproduction and eventually a recession.

have both full and efficient employment of all resources, including labor

are fair and equitable

have all workers with jobs, but they may be employed in the wrong job

27) In Chapter 2 of his text, N.G. Mankiw states that nearly all economists agree that a ceiling on rents reduces the quality and quantity of housing available.

True

False

39)

Table 7-1

BUYER	WILLINGNESS TO PAY
MIKE	$50.00
SANDY	$30.00
JONATHAN	$20.00
HALEY	$10.00

Refer to Table 7-1. If the table represents the willingness to pay of four buyers and the price of the product is $18, then their total consumer surplus is

$72.

$46.

$42.

$38.

Answer 1

15)

It shall be noted that tariff makes domestic industries less efficient and innovative by reducing competition.

Hence, the statement in the question is False

16)

With increase in income from $30000 to $40000, the quantity purchased of Good Y falls from 20 to 10, indicating that Good Y is an inferior Good.

It shall be noted that an inferior good purchase decreases with the increase in income, everything else remaining constant.

22)

It shall be noted that all points on the production possibility frontier are points of efficiency, indicating that there is full and efficient employment of all resources, including labor.

The production possibility frontier is the smooth curve that indicate the optimal combination of two goods that could be produced by efficient & full employment of all available resources including labor.

27)

It is true that ceiling on rents reduces the quantity and quality of housing available.

There is 93% economists agreeing to it as per American Economic Review

Hence, the correct answer is TRUE

39)

BUYER	WILLINGNESS TO PAY	PRICE	CONSUMER SURPLUS
MIKE	$50.00	$18.00	$32.00
SANDY	$30.00	$18.00	$12.00
JONATHAN	$20.00	$18.00	$2.00
HALEY	$10.00	$18.00

The first three buyer will buy the commodity.

The consumer surplus enjoyed by each buyer who actually buys the product is the excess of willingness price over the actual price they pay.

Thus, total consumer surplus = $32 + $12 + $12 = $46

Hence, the correct answer is $46