1) Suppose a firm anticipates that an R&D expenditure of $100 million will result in a
new production process that will reduce costs and thus create a one-time added profit of
$112 million a year later. The firm’s expected rate of return is:
A.0.12 percent.
B.112 percent.
C.12 percent.
D.2 percent.
2) The U.S. demand for British pounds is:
A.downsloping because a higher dollar price of pounds means British goods are
cheaper to Americans.
B.downsloping because a lower dollar price of pounds means British goods are more
expensive to Americans.
C.upsloping because a lower dollar price of pounds means British goods are cheaper to
Americans.
D.downsloping because a lower dollar price of pounds means British goods are cheaper
to Americans.
3) A profit-maximizing company should extract a nonrenewable resource in the present
up to the quantity where the:
A.selling price of the resource equals the extraction cost plus the user cost of the
resource.
B.selling price of the resource equals the total cost plus the user cost of the resource.
C.selling price of the resource equals the extraction cost of the resource.
D.extraction cost of the resource equals the user cost of the resource.
4) An increase in the demand for MP3 music indicates that more are:
A.Purchased even if prices of MP3 music stayed the same
B.Demanded because MP3 music prices decreased
C.Demanded because sellers are selling more MP3 music
D.Purchased because sellers are putting MP3 music on sale
5) Most borrowers value money for:
A.Its own sake
B.What it can buy
C.What it can produce
D.What they have to pay for it
6) The hedonic treadmill refers to a phenomenon where:
A.people can’t improve their economic well-being because prices increase as fast as
wages.
B.people can’t get out of debt because credit card companies use anchoring to get
consumers to carry large balances on their accounts.
C.increasing our level of consumption doesn’t make us any happier in the long term.
D.feelings of loss offset our feelings of gain, leaving us no happier in the long term.
7) Answer the question on the basis of the following cost data for a purely competitive
seller:
Refer to the data. Given the $75 product price, at its optimal output the firm will:
A.realize a $25 economic profit.
B.realize a $30 economic profit.
C.incur a $25 loss.
D.realize a $30 loss.
8)
Refer to the above graphs. (Assume that the pre-migration labor force in Country A is 100
and that it is 150 in country B.) What part of domestic output in country A is the total wage
bill before and after the immigration?
A.$500M before and $800M after
B.$500M before and $100M after
C.$400M before and $100M after
D.$400M before and $500M after
9)
Refer to the above table, which shows the ranked preferences of voters for three
alternative projects, with “1” being the top preference. In a paired-choice vote between
a jail and a stadium:
A.A majority of the voters would favor the jail, 2-to-1
B.A majority of the voters would favor the stadium, 2-to-1
C.A majority of the voters would favor the jail, 3-to-0
D.A majority of the voters would favor the stadium, 3-to-0
10) In the table below are the demand and supply schedules for beer in thousands of
cases in a state.
(a)What is the equilibrium price and quantity before a tax is imposed?
(b)If state government now imposes an excise tax of $0.60 per case of beer, what is the
after-tax supply schedule?
(c)What is the equilibrium price of beer after the tax is imposed? How much of the
$0.60 is borne by the buyer and how much by the seller?
11)
Refer to the above graphs of D and MR for a monopolist. Which of the following
statements is true?
A.A price cut from P1 to P2 would lead to a decrease in consumer spending on the
product
B.A price cut from P1 to P2 would lead to an increase in consumer spending on the
product
C.A price cut from P2 to P3 would lead to no change in consumer spending on the
product
D.A price cut from P2 to P3 would lead to an increase in consumer spending on the
product
12) “The nation needs to prevent foreign nations from selling their excess goods in our
nation at a price below cost so we can save American firms.” This quotation would be
most closely associated with which protectionist argument?
A.Increase domestic employment
B.Protection against dumping
C.Strategic trade policy
D.Cheap foreign labor
13)
The diagram shows two product demand curves. On the basis of this diagram, we can
say that:
A.over range P1P2 price elasticity of demand is greater for D1 than for D2.
B.over range P1P2 price elasticity of demand is greater for D2 than for D1.
C.over range P1P2 price elasticity is the same for the two demand curves.
D.not enough information is given to compare price elasticities.
14)
The diagram concerns supply adjustments to an increase in demand (D1 to D2) in the
immediate market period, the short run, and the long run. On the basis of this
illustration, we can conclude that:
A.short-run adjustments are more economically efficient than are long-run adjustments.
B.the amount of time producers have to adjust to a change in demand is not a
determinant of supply elasticity.
C.supply is more elastic the greater the amount of time producers have to adjust to a
change in demand.
D.supply is less elastic the greater the amount of time producers have to adjust to a
change in demand.
15) Economics is a social science that studies how individuals, institutions, and society
may:
A.Expand the amount of resources available to them
B.Attain a minimum level of production
C.Best use resources to maximize satisfaction of economic wants
D.Reduce the amount of goods and services they need
16) The Sunshine Corporation finds that its costs are $40 when it produces no output.
Its total variable costs (TVC) change with output as shown in the accompanying table.
Use this information to answer the following question.
Refer to the information. The total cost of producing 3 units of output is:
A.$65.
B.$105.
C.$145.
D.$185.
17) The soft-drink and automobile industries would be examples of which market
model?
A.Monopolistic competition
B.Pure competition
C.Pure monopoly
D.Oligopoly