5. Both Danny and Mark should specialize in producing
(A) pizza only.
(B) pizza and lemonade, respectively.
(C) lemonade and pizza, respectively.
(D) lemonade only.

6. If one pizza can exchange 3 pitchers of lemonade in the market, which of the following is correct. (A) Danny is willing to trade, but Mark does not. (B) Mark is willing to trade, but Danny does not. (C) Both Danny and Mark are not willing to trade. (D) Both Danny and Mark are willing to trade. 

7. Suppose Harry, Darby, and Jake are the only demanders of sandwiches. Also suppose x = 2. Then (A) the slope of Jake's demand curve is -2, and the slope of the market demand curve is -5/2. (B) the slope of Jake's demand curve is -2, and the slope of the market demand curve is -2/5. (C) the slope of Jake's demand curve is -1/2, and the slope of the market demand curve is -5/2. (D) the slope of Jake's demand curve is -1/2, and the slope of the market demand curve is -2/5.

8. Suppose Harry, Darby, and Jake are the only demanders of sandwiches. Also suppose the following: (1) \( x = 2 \); (2) the current price of a sandwich is $3.00; (3) the market quantity supplied of sandwiches is 4; (4) the slope of the inverse supply curve is 2. Then there is currently a (A) shortage of 6 sandwiches, and the equilibrium price of a sandwich is less than $3.00. (B) shortage of 6 sandwiches, and the equilibrium price of a sandwich is $5.00. (C) surplus of 6 sandwiches, and the equilibrium price of a sandwich is less than $3.00. (D) surplus of 6 sandwiches, and the equilibrium price of a sandwich is $5.00.

9. Suppose Harry, Darby, and Jake are the only demanders of sandwiches. Also suppose the following: (1) \( x = 2 \); (2) the current price of a sandwich is $3.00; (3) the market quantity supplied of sandwiches is 5; (4) the slope of the inverse supply curve is 1. Then there is currently a (A) shortage of 5 sandwiches, and the equilibrium price of a sandwich is between $3.00 and $5.00. (B) shortage of 5 sandwiches, and the equilibrium price of a sandwich is $5.00. (C) surplus of 5 sandwiches, and the equilibrium price of a sandwich is between $3.00 and $5.00. (D) surplus of 5 sandwiches, and the equilibrium price of a sandwich is $5.00.

10. Suppose the government has imposed a price ceiling on sliced sandwich bread. Which of the following events could transform the price ceiling from one that is binding to one that is not binding? (A) An increase in the price of flour, which is used to make bread. (B) A decrease in the price of lunch meat. (C) A decrease in the price of unsliced bread, which people consider a substitute for sliced bread. (D) An decrease in the price of peanut butter and jelly.

11. Suppose the government has imposed a price floor on cellular phones. Which of the following events could transform the price floor from one that is binding to one that is not binding? (A) Cellular phones become less popular. (B) Traditional land line phones become more expensive. (C) The components used to produce cellular phones become less expensive. (D) Firms expect the price of cellular phones to fall in the future.

12. In which of the following instances would the deadweight loss of the tax on cartons of cigarettes increase by a factor of 9? (A) The tax on cartons of cigarettes increases from $10 to $11. (B) The tax on cartons of cigarettes increases from $10 to $20. (C) The tax on cartons of cigarettes increases from $10 to $30. (D) The tax on cartons of cigarettes increases from $10 to $90.

13. When marginal cost is rising, average variable cost (A) must be rising. (B) must be falling. (C) must be constant. (D) could be rising or falling.

14. Which of the following is not a property of a firm's cost curves? (A) Marginal cost must eventually rise as a result of diminishing marginal product. (B) Average total cost is U-shaped. (C) Economies of scale will exist when average total cost falls as output rises. (D) Average total cost will cross marginal cost at the minimum of marginal cost.

15. The long-run supply curve for a competitive industry may be upward sloping if (A) there are barriers to entry. (B) firms that enter the industry are able to do so at lower average total costs than the existing firms in the industry. (C) some resources are available only in limited quantities. (D) accounting profits are positive.

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