Exam #1

Multiple Choice
Identify the choice that best completes the statement or answers the question.

____ 1. Which of the following controversies delayed the admission of Texas into the Union?
a. A border dispute with California.
b. The creation of a large slave state.
c. The violation of a treaty with Spain.
d. The displacement of Native Americans.
____ 2. Before the Civil War, plantations were perfectly price discriminating monopsonies. After the Civil War, they
became one-wage monopsonies. Producer surplus in the market for labor
a. changed uncertainly.
b. increased.
c. did not change.
d. decreased.
____ 3. Which of the following lowered the short-run demand for slaves in the South?
a. The adoption of the cotton gin by southern plantations
b. The annexation of Texas in 1845
c. Division of labor and specialization on large plantations
d. None of the above.
____ 4. Whose family-based colonization was a breakthrough success, leading to most colonies becoming
self-sustainable in the late 1600s?
a. Christopher Columbus
b. Benjamin Franklin
c. John Smith
d. James Cook
____ 5. During the American Revolutionary War, the Continental Congress printed more continentals. By itself, this
action caused the equilibrium value of each continental to
a. not change.
b. change uncertainly.
c. decrease.
d. increase.
____ 6. The Stamp Tax of 1765 increased the tax on paper in the colonies. In the market for paper-producing labor,
the equilibrium wage
a. decreased, and employment did not change.
b. increased, and employment increased.
c. decreased, and employment decreased.
d. None of the above.
____ 7. Higher taxation by England on colonial goods caused consumer and producer surplus in these markets to
decrease by
a. more than the increase in tax revenue to England.
b. the same amount as the increase in tax revenue to England.
c. less than the increase in tax revenue to England.
d. Any of the above could be true.
 Table 3.12—Schedule of Labor Supply

Labor Wage Marginal Cost Marginal Product of Labor

____ 8. Refer to Table 3.12 above. Suppose the firm may sell its good for $0.50 per unit. A profit-maximizing
plantation after the Civil War pays its workers a wage equal to
a. $4
b. $2
c. $3
d. $1
____ 9. In the market for textiles, the technological advance of the power loom caused
a. total surplus to decrease and producer surplus to increase.
b. total surplus to increase and producer surplus to change uncertainly.
c. total surplus to increase and producer surplus to increase.
d. None of the above.
____ 10. All else equal, the Anaconda Plan caused the domestic production of munitions in the South to
a. increase.
b. not change.
c. decrease.
d. Any of the above could be true.

Figure 4.1

____ 11. Refer to Figure 4.1 above. The world price equals PA, and this country trades with the rest of the world.
Domestic consumer surplus equals
a. area “a”, and this country exports the good.
b. area “a + b + c + d + e + f”, and this country exports the good.
c. area “a”, and this country imports the good.
d. None of the above.
____ 12. The Stamp Tax of 1765 harmed colonists who bought paper-related products because it
a. decreased the amount of these products that colonists consumed.
b. increased the price that colonists paid for these products.
c. All of the above.
d. None of the above.
____ 13. In the market for a good, if the price is higher than the equilibrium price, then
a. production is greater than consumption, and the price must rise.
b. production is greater than consumption, and the price must fall.
c. consumption is greater than production, and the price must rise.
d. None of the above.

Figure 3

____ 14. Refer to Figure 3 above. Suppose that after the Civil War, a perfectly price discriminating plantation still has
monopsony power but must pay its workers equal wages. What area do freedmen/women gain?
a. Area “a”
b. Area “a + b + c + d”
c. Area “e + f + g”
d. Area “h + i”
____ 15. Refer to Figure 3 above. Before the Civil War, plantation owners earned what area in economic welfare?
a. Area “a + b + c + e + f”
b. Area “a + b + c + d”
c. Area “a + b + c + d + e + f + g + h + i”
d. None of the above.
____ 16. Mercantilists believed that international trade between two countries was
a. an example of a zero sum game, where one country’s gain matched the loss to the other
country from trade.
b. not an example of a zero sum game, where both countries could gain from trade.
c. not an example of a zero sum game, where one country’s gain matched the loss to the
other country from trade.
d. an example of a zero sum game, where both countries could gain from trade.
____ 17. Robert Fulton’s first steamboat was called the
a. USS Philadelphia
b. Margaret
c. Victoria
d. Clermont
____ 18. During the late 1600s, immigration into the colonies increased. In the market for labor alone, this
immigration caused the equilibrium wage to
a. fall, and consumer surplus to decrease.
b. rise, and consumer surplus to decrease.
c. fall, and consumer surplus to increase.
d. rise, and consumer surplus to change uncertainly.
____ 19. In the short run, the annexation of Texas ___________ the demand for slavery and caused producer surplus in
the market for slaves to __________.
a. increased / decrease
b. increased / increase
c. increased / not change
d. uncertainly changed / not change
____ 20. All else equal, textile mills’ discovery of lower-cost methods of processing raw cotton into textiles caused the
demand for cotton to
a. increase, and the demand for slaves to increase.
b. change uncertainly, and the demand for slaves to increase..
c. not change, and the demand for slaves to change uncertainly.
d. None of the above.
____ 21. During recessionary periods, European incomes decreased. All else equal, this decrease in income would
have caused the equilibrium years of service that indentured servants offered to
a. decrease.
b. change uncertainly.
c. not change.
d. increase.
 Figure 1.1

____ 22. Refer to Figure 1.1 above. Compared with no tax, the per unit tax of P1 minus P3 causes the price that
buyers pay to
a. increase from P2 to P1.
b. increase from P3 to P2.
c. increase from P3 to P1.
d. None of the above.
____ 23. During the early 1800s, European incomes increased and slaves became less-expensive substitutes for
indentured servants. Combined, these events caused newly-indentured servants’ years of service to
a. change uncertainly.
b. increase.
c. decrease.
d. not change.
____ 24. Which of the following advantages did the South have during the Civil War?
a. England’s and France’s military support
b. More experienced generals
c. A larger population
d. All of the above.
____ 25. The destruction of goods and services during the American Revolutionary War immediately caused a
a. surplus of Continentals, and the price level rose.
b. shortage of Continentals, and the price level rose.
c. shortage of Continentals, and the price level fell.
d. None of the above.
____ 26. Slavery __________ in the world today, and it is economically __________ according to economic historians.
a. does not exist / efficient
b. exists / inefficient
c. does not exist / inefficient
d. exists / efficient
____ 27. Suppose the Townshend Acts increased the tax on paint by $2. All else equal, the price that sellers received
for paint would have
a. decreased by more than $2.
b. increased by exactly $2.
c. not changed.
d. decreased by less than $2.
____ 28. During the early 1800s, state government-sponsored canals lowered per-unit shipping costs, which benefited
a. buyers of transported goods.
b. sellers of transported goods.
c. All of the above.
d. None of the above.
____ 29. All else equal, which of the following plantations had slaves with the highest marginal product of labor?
a. Medium plantations.
b. Large plantations
c. Small plantations.
d. Plantation size did not affect worker productivity.
____ 30. Freebie (bubble one for credit). Which of the following shapes is the coolest?
a. Circle
b. Square
c. Triangle
d. I’m indifferent
Exam #1
Answer Section

MULTIPLE CHOICE

1. ANS: B PTS: 1
2. ANS: B PTS: 1
3. ANS: D PTS: 1
4. ANS: C PTS: 1
5. ANS: C PTS: 1
6. ANS: C PTS: 1
7. ANS: A PTS: 1
8. ANS: D PTS: 1
9. ANS: B PTS: 1
10. ANS: A PTS: 1
11. ANS: A PTS: 1
12. ANS: C PTS: 1
13. ANS: B PTS: 1
14. ANS: D PTS: 1
15. ANS: C PTS: 1
16. ANS: A PTS: 1
17. ANS: D PTS: 1
18. ANS: C PTS: 1
19. ANS: C PTS: 1
20. ANS: A PTS: 1
21. ANS: D PTS: 1
22. ANS: A PTS: 1
23. ANS: A PTS: 1
24. ANS: B PTS: 1
25. ANS: A PTS: 1
26. ANS: D PTS: 1
27. ANS: D PTS: 1
28. ANS: C PTS: 1
29. ANS: B PTS: 1
30. ANS: Any PTS: 1