Refer to the information provided in Figure 7.8 below to answer the question(s) that follow. 
Figure 7.8Refer to Figure 7.8. If the price of capital is $30, then along isocost line AB total cost is
A. $1,200.
B. $1,800.
C. $2,400.
D. indeterminate from this information, as the price of labor is not given.
Answer: B
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Gasoline is a normal good. If the price of gasoline falls, a consumer buys more gasoline because of
A) only an income effect. B) only a substitution effect. C) an increase in the marginal rate of substitution. D) both an income effect and a substitution effect.
A tariff on a product
a. is a direct quantitative restriction on the amount of a good that can be imported. b. increases the domestic quantity supplied. c. increases domestic consumer surplus. d. All of the above are correct.
Suppose that a large rogue wave destroys the (thankfully unoccupied) fleet of swordfish fishing boats docked in the Gloucester, Massachusetts harbor. What happens to the earnings of fishermen and women in Gloucester?
a. The reduction in the supply of fishing boats increases the marginal productivities of Gloucester fishermen and women, which causes the equilibrium wage to fall. b. The reduction in the supply of fishing boats reduces the marginal productivities of Gloucester fishermen and women, which causes the equilibrium wage to fall. c. The reduction in the supply of fishing boats increases the marginal productivities of Gloucester fishermen and women, which causes the equilibrium wage to rise. d. The reduction in the supply of fishing boats reduces the marginal productivities of Gloucester fishermen and women, which causes the equilibrium wage to rise.
Suppose an economy is operating at its maximum sustainable output rate. Neither recession nor economic boom are present. Which of the following would be true?
a. The economy would be considered at full employment. b. Actual GDP would exceed potential GDP. c. Actual unemployment will be less than the natural rate of unemployment. d. One hundred percent of the labor