TEST BANK
Principles of Microeconomics
Betsey Stevenson and Justin Wolfers
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ST
3rd Edition
UV
IA
_A
PP
RO
VE
D?
, TABLE OF CONTENTS
Principles of Microeconomics (3rd Edition) - Test Bank
Betsey Stevenson and Justin Wolfers
ST
PART I FOUNDATIONS OF ECONOMICS
UV
Chapter 1 The Four Core Principles of Economics
Chapter 2 Demand and Consumer Choice
Chapter 3 Supply and Producer Choice
Chapter 4 Equilibrium: Where Supply Meets Demand
IA
PART II ANALYZING MARKETS
Chapter 5 Elasticity: Measuring Responsiveness
_A
Chapter 6 Taxes, Price Controls, and Quantity Regulations
Chapter 7 Welfare Economics: Evaluating Market Efficiency
and Market Failure
Chapter 8 Comparative Advantage and Gains from Trade
PP
PART III APPLICATIONS AND POLICY ISSUES
Chapter 9 International Trade
Chapter 10 Externalities and Public Goods
RO
Chapter 11 The Labor Market
Chapter 12 Why Wages Vary: Workers, Jobs, Institutions, and
Discrimination
Chapter 13 Inequality, Poverty, and Social Insurance
VE
PART IV INDUSTRIAL ORGANIZATION AND BUSINESS STRATEGY
Chapter 14 Market Structure and Degrees of Market Power
D?
Chapter 15 Entry, Exit, and Long-Run Profitability
Chapter 16 Price Discrimination and Sophisticated Pricing
Strategies
Chapter 17 Economics of Strategic Management
, PART V ADVANCED DECISIONS
Chapter 18 Game Theory and Strategic Choices
Chapter 19 Decisions Involving Uncertainty
ST
Chapter 20 Decisions Involving Private Information
UV
IA
_A
PP
RO
VE
D?
, Name: Class: Date:
Chapter 1
1. International House of Pancakes (IHOP) is a U.S.-based multinational restaurant chain that specializes in
breakfast food. Due to declining sales, an IHOP franchisee must consider closing up to three of her least
profitable locations. She meets with two consultants to discuss potential plans. The first consultant offers two
plans. Plan A keeps one location open with certainty. Plan B has a one-in-three chance of saving all three
ST
locations but a two-in-three chance of saving no locations. The second consultant also offers two plans. Plan C
will result in losing two locations with certainty. Plan D has a two-in-three chance of losing all locations but a one-
in-three chance of losing no locations. If the franchisee chooses Plan A, she should also choose Plan:
a. No plan results in the same outcome as Plan A.
UV
b. B.
c. C.
d. D.
ANSWER: c
IA
2. International House of Pancakes (IHOP) is a U.S.-based multinational restaurant chain that specializes in
breakfast food. Due to declining sales, an IHOP franchisee must consider closing up to four of his least profitable
locations. He meets with two consultants to discuss potential plans. The first consultant offers two plans. Plan A
_A
will result in losing two locations with certainty. Plan B has a three-in-four chance of losing all locations but a one-
in-four chance of losing no locations. The second consultant also offers two plans. Plan C keeps two locations
open with certainty. Plan D has a one-in-four chance of saving all four locations but a three-in-four chance of
saving no locations. If the franchisee chooses Plan B, he should also choose Plan:
PP
a. No plan results in the same outcome as Plan B.
b. B.
c. C.
d. D.
RO
ANSWER: d
3. International House of Pancakes (IHOP) is a U.S.-based multinational restaurant chain that specializes in
breakfast food. Due to declining sales, an IHOP franchisee must consider closing up to three of her least
profitable locations. She meets with two consultants to discuss potential plans. The first consultant offers two
VE
plans. Plan A will result in losing two locations with certainty. Plan B has a two-in-three chance of losing all
locations but a one-in-three chance of losing no locations. The second consultant also offers two plans. Plan C
keeps one location open with certainty. Plan D has a one-in-three chance of saving all three locations but a two-
in-three chance of saving no locations. If the franchisee applies the cost-benefit principle, which combination of
plans reflects a consistent decision?
D?
a. Plan C and Plan A
b. Plan B and Plan A
c. Plan D and Plan A
d. Plan C and Plan B
ANSWER: a
Principles of Microeconomics
Betsey Stevenson and Justin Wolfers
──────────────────────────────────────────────────
ST
3rd Edition
UV
IA
_A
PP
RO
VE
D?
, TABLE OF CONTENTS
Principles of Microeconomics (3rd Edition) - Test Bank
Betsey Stevenson and Justin Wolfers
ST
PART I FOUNDATIONS OF ECONOMICS
UV
Chapter 1 The Four Core Principles of Economics
Chapter 2 Demand and Consumer Choice
Chapter 3 Supply and Producer Choice
Chapter 4 Equilibrium: Where Supply Meets Demand
IA
PART II ANALYZING MARKETS
Chapter 5 Elasticity: Measuring Responsiveness
_A
Chapter 6 Taxes, Price Controls, and Quantity Regulations
Chapter 7 Welfare Economics: Evaluating Market Efficiency
and Market Failure
Chapter 8 Comparative Advantage and Gains from Trade
PP
PART III APPLICATIONS AND POLICY ISSUES
Chapter 9 International Trade
Chapter 10 Externalities and Public Goods
RO
Chapter 11 The Labor Market
Chapter 12 Why Wages Vary: Workers, Jobs, Institutions, and
Discrimination
Chapter 13 Inequality, Poverty, and Social Insurance
VE
PART IV INDUSTRIAL ORGANIZATION AND BUSINESS STRATEGY
Chapter 14 Market Structure and Degrees of Market Power
D?
Chapter 15 Entry, Exit, and Long-Run Profitability
Chapter 16 Price Discrimination and Sophisticated Pricing
Strategies
Chapter 17 Economics of Strategic Management
, PART V ADVANCED DECISIONS
Chapter 18 Game Theory and Strategic Choices
Chapter 19 Decisions Involving Uncertainty
ST
Chapter 20 Decisions Involving Private Information
UV
IA
_A
PP
RO
VE
D?
, Name: Class: Date:
Chapter 1
1. International House of Pancakes (IHOP) is a U.S.-based multinational restaurant chain that specializes in
breakfast food. Due to declining sales, an IHOP franchisee must consider closing up to three of her least
profitable locations. She meets with two consultants to discuss potential plans. The first consultant offers two
plans. Plan A keeps one location open with certainty. Plan B has a one-in-three chance of saving all three
ST
locations but a two-in-three chance of saving no locations. The second consultant also offers two plans. Plan C
will result in losing two locations with certainty. Plan D has a two-in-three chance of losing all locations but a one-
in-three chance of losing no locations. If the franchisee chooses Plan A, she should also choose Plan:
a. No plan results in the same outcome as Plan A.
UV
b. B.
c. C.
d. D.
ANSWER: c
IA
2. International House of Pancakes (IHOP) is a U.S.-based multinational restaurant chain that specializes in
breakfast food. Due to declining sales, an IHOP franchisee must consider closing up to four of his least profitable
locations. He meets with two consultants to discuss potential plans. The first consultant offers two plans. Plan A
_A
will result in losing two locations with certainty. Plan B has a three-in-four chance of losing all locations but a one-
in-four chance of losing no locations. The second consultant also offers two plans. Plan C keeps two locations
open with certainty. Plan D has a one-in-four chance of saving all four locations but a three-in-four chance of
saving no locations. If the franchisee chooses Plan B, he should also choose Plan:
PP
a. No plan results in the same outcome as Plan B.
b. B.
c. C.
d. D.
RO
ANSWER: d
3. International House of Pancakes (IHOP) is a U.S.-based multinational restaurant chain that specializes in
breakfast food. Due to declining sales, an IHOP franchisee must consider closing up to three of her least
profitable locations. She meets with two consultants to discuss potential plans. The first consultant offers two
VE
plans. Plan A will result in losing two locations with certainty. Plan B has a two-in-three chance of losing all
locations but a one-in-three chance of losing no locations. The second consultant also offers two plans. Plan C
keeps one location open with certainty. Plan D has a one-in-three chance of saving all three locations but a two-
in-three chance of saving no locations. If the franchisee applies the cost-benefit principle, which combination of
plans reflects a consistent decision?
D?
a. Plan C and Plan A
b. Plan B and Plan A
c. Plan D and Plan A
d. Plan C and Plan B
ANSWER: a
