1) In pure competition, price is determined where the industry:
A.Demand and supply curves intersect
B.Total cost is greater than total revenue
C.Demand intersects the individual firm’s marginal cost curve
D.Average total cost equals total variable cost
2) If country A can produce both goods X and Y more efficiently, that is, with smaller
absolute amounts of resources, than can country B:
A.mutually advantageous specialization and trade between A and B may still be
possible.
B.we can conclude that A is an industrially advanced economy and B is a developing
economy.
C.it will necessarily be advantageous for B to import both X and Y from A.
D.then there is no possible basis for mutually advantageous specialization and trade
between A and B.
3) Human capital is best defined as:
A.the productive skills and knowledge that workers acquire from education and
training.
B.the substitution of labor for machinery in the production process.
C.any piece of machinery that must be combined with labor to be productive.
D.the exchange of money for real assets.
4) Which of the following will not produce an outward shift of the production
possibilities curve?
A.An upgrading of the quality of a nation’s human resources.
B.The reduction of unemployment.
C.An increase in the quantity of a society’s labor force.
D.The improvement of a society’s technological knowledge.
5) Which of the following statements is correct?
A.If demand increases and supply decreases, equilibrium price will fall.
B.If supply increases and demand decreases, equilibrium price will fall.
C.If demand decreases and supply increases, equilibrium price will rise.
D.If supply declines and demand remains constant, equilibrium price will fall.
6)
Refer to the graph. Other things equal, a decrease in the price of a substitute resource
would cause a:
A.move from a to b on D1
B.shift from D2 to D3 assuming the output effect exceeds the substitution effect.
C.shift from D3 to D2 assuming the output effect exceeds the substitution effect.
D.move from b to a on D1
7) The following table shows the projected rate of return and number of investment
projects which might be undertaken by a small firm. Each project requires an
investment of $1,000.
Refer to the above table and information. If the interest rate increases from 5 percent to
15 percent, the amount of loanable funds demanded by this firm:
A.Increases by $1,000
B.Increases by $3,000
C.Decreases by $2,000
D.Decreases by $3,000
8) Which of the following statements is true about migration behavior?
A.Older workers are more likely to migrate than younger workers.
B.Migrants are more likely to migrate to countries farther rather than nearer to their
home country.
C.Single workers are more likely to migrate than workers with spouses and children.
D.Workers are less likely to migrate where “beaten paths” exist.
9)
Among those who became permanent legal residents of the U.S. in 2011, about how many
were family sponsored?
A.65%
B.40%
C.33%
D.25%
10) Suppose that a consumer purchases just two goods, X and Y. The Y-intercept of the
budget line in this case would indicate the:
A.Maximum dollar amount of budget that the consumers has for good Y
B.Price that the consumer has to pay for each unit of good Y
C.Maximum quantity of good Y that the consumer could buy with a given budget
D.Quantity of good Y that the consumer would want to buy
11) Children are charged less than adults for admission to professional baseball games
but are charged the same prices as adults at the concession stands. This pricing system
occurs because:
A.children have an elastic demand for game tickets but an inelastic demand for
concession items.
B.children have an inelastic demand for game tickets but an elastic demand for
concession items.
C.the seller can prevent children from buying game tickets for adults but cannot prevent
children from buying concession items for adults.
D.children can personally “consume” only a single game ticket but can personally
consume more than one concession item.
12) The supply curve for a productive resource wherein price provides an incentive
function is:
A.Vertical
B.Horizontal
C.Upsloping to the right
D.Downsloping to the right
13) Cognitive biases are the results of:
A.Heuristics used in the deliberative processes of the human brain
B.Heuristics used in the intuitive processes of the human brain
C.Deliberative processes of the human brain taking over the intuitive ones
D.The conflict between the older part and the newer part of the human brain
14) Suppose that a prejudiced African-American employer has a discrimination
coefficient of $5/hour. Suppose also that the market wage rate is $20/hour for
African-American workers, and $18/hour for Hispanic workers. In this case, the
employer will:
A.Hire Hispanic workers
B.Not hire Hispanic workers unless their wage rate falls to $5/hour
C.Hot hire Hispanic workers regardless of wage rate
D.Not hire Hispanic workers unless their wage rate falls to $15/hour
15) Fixed costs faced by farmers typically include the following, except:
A.Family labor
B.Fertilizer
C.Property taxes
D.Interest and rent payments
16) Other things the same, if a price change causes total revenue to change in the
opposite direction, demand is:
A.perfectly inelastic.
B.relatively elastic.
C.relatively inelastic.
D.of unit elasticity.
17) What effect will each of the following most likely have on the supply of corn in a
competitive market? State what happens to supply. Explain your reasoning in each case
and relate it to a supply determinant.
(a)the development of an improved corn seed that resists drought conditions
(b)an increase in the price of soybeans which can also be planted on land used for
growing corn
(c)an increase in government payments for growing corn
(d)an increase in the price of fertilizer
18) Harvey quit his job at State University where he earned $45,000 a year. He figures
his entrepreneurial talent or foregone entrepreneurial income to be $5,000 a year. To
start the business, he cashed in $100,000 in bonds that earned 10 percent interest
annually to buy a software company, Extreme Gaming. In the first year, the firm sold
11,000 units of software at $75 for each unit. Of the $75 per unit, $55 goes for the costs
of production, packaging, marketing, employee wages and benefits, and rent on a
building.
Refer to the above information. The explicit costs of Harvey’s firm in the first year
were:
A.$150,000
B.$605,000
C.$655,000
D.$825,000
19) Which of the following economic effects of unions tends to improve efficiency?
A.Featherbedding
B.Strike or lockout
C.Union wage advantage
D.Voice mechanism
20) Process innovation causes an upward shift in a firm’s total product curve and:
A.a decrease in its average product.
B.a downward shift in its average total cost curve.
C.an upward shift in its average total cost curve.
D.an upward shift in its marginal revenue curve.
21) Describe the legal protections and potential advantages of taking the lead in
innovation.
22) In the debate over passing a bill providing a minimum guaranteed price for corn, a
congressman argued, Minimum guaranteed prices always cause a disruption of the
natural equilibrium of a market, ultimately costing taxpayers money. Evaluate this
statement.
23) How does corruption contribute to government failure?
24) Do changes in relative expected returns on stocks, real estate and production
facilities affect the value of a nations currency?
25) Give a definition of technological advance. What role does time play in the
definition according to economists?
26) What are three policy options for dealing with pure monopolies that are entrenched
and inefficient?