1) Unlike most demand curves, the demand curve for loanable funds is upsloping.
2) Patents and copyrights were established by the government to reduce oligopoly and
monopoly power.
3) The Social Security program is financed with funds from general tax revenues of the
Federal government.
4) When people change their decision just because the context of the given information
is changed, we call that the framing effect.
5) Antiques tend to have highly inelastic supply curves.
6) The threat of rejection is part of what makes the invisible hand a valid metaphor for
how the market system works.
7) A monopsonist in the labor market tends to hire more workers than would be hired if
the labor market were purely competitive.
8) A monopsonistic employer may sell its product in a competitive market.
9) People who engage in mental accounting are more likely to purchase overpriced
warranties.
10) U.S. exports increase and U.S. imports decrease the supplies of foreign monies
owned by U.S. banks.
11) A market that is achieving allocative efficiency must also be achieving productive
efficiency.
12) In the median-voter model, the median voter refers to the voter who makes her
choice at the midpoint of the voting period.
13) A linear demand curve has a constant elasticity over the full range of the curve.
14)
Refer to the above graph showing the market for a product. Which of the following
could not explain the indicated increase in equilibrium price from P1 to P2?
A.An increase in consumer incomes
B.An increase in production costs
C.A decrease in the price of a complementary product
D.An increase in the price of a substitute product
15) Explain what happens to AFC, AVC, ATC, and MC curves in these two situations:
(a) fixed cost increase; (b) variable cost increase.
16) The demand for autos is likely to be:
A.less price elastic than the demand for Honda Accords.
B.more price elastic than the demand for Honda Accords.
C.of the same price elasticity as the demand for Honda Accords.
D.perfectly inelastic.
17) Which of the following does not necessarily violate antitrust laws?
A.Deceptive advertising
B.Price discrimination
C.Price fixing
D.Interlocking directorates
18) Suppose there are only three labor markets (A, B, and C) in the economy and each
of these markets is purely competitive. The table below contains the demand (or
marginal-revenue-product) schedule for labor in each of these three markets. Assume
there are 24 million homogeneous workers in the economy and that one-half of these
workers are male and one-half are female.
(a)What would the wage rates be if the 12 million female workers could only work in
labor market C because of labor market discrimination, while half the 12 million male
workers are employed in labor market A and the other half in labor market B?
(b)Now what would happen to wage rates in each market if discrimination was
eliminated and the amounts of labor were equal in each market?
(c)What would happen to domestic output in each market and for society?
19) Which of the following is assumed in constructing a typical production possibilities
curve?
A.The economy is using its resources inefficiently.
B.Resources are perfectly shiftable among alternative uses.
C.Production technology is fixed.
D.The economy is engaging in international trade.
20) The table shows the demand schedule facing Nina, a monopolist selling baskets.
Refer to the above table for Nina. What is the change in total revenue if she raises the
price from $10 to $12?
A.-$300
B.+$300
C.+$120
D.-$120
21) Pure monopoly refers to:
A.any market in which the demand curve to the firm is downsloping.
B.a standardized product being produced by many firms.
C.a single firm producing a product for which there are no close substitutes.
D.a large number of firms producing a differentiated product.
22) The term consumersovereignty means that:
A.Government is responsible for protecting consumers’ interests
B.What is produced is ultimately determined by what consumers buy
C.There are no limits on what consumers may buy in a market system
D.Producers have strong control over what consumers buy
23) The following question is based on the demand and cost data for a pure monopolist
given in the table below.
Refer to the above table. If the monopolist were forced to produce the socially optimal
output through the imposition of a ceiling price, the ceiling price would have to be set
at:
A.$100
B.$150
C.$200
D.$250
24) The relative price inelasticity of demand for agricultural products has resulted in:
A.Prices fluctuating more in agriculture than in other industries
B.Prices fluctuating less in agriculture than in other industries
C.Higher prices for agricultural products
D.Lower prices for agricultural products
25) Political corruption occurs in the following instances, except when:
A.Government officials use their powers for personal gain
B.People pay a government official to do what he should be doing
C.People pay a bureaucrat to do something that he should not be doing
D.Businesses pay property taxes and license fees
26) Which is an example of barter?
A.A person trades a desk for a box of tools
B.A person buys clothes at a used clothing store
C.A gift of tuition money from parents to their children
D.The purchase of stock on the New York Stock Exchange
27) Answer the question on the basis of the following data:
Refer to the given data. If your taxable income increases from $4,000 to $5,000, you
will encounter a marginal tax rate of:
A.40 percent.
B.25 percent.
C.15 percent.
D.10 percent.
28) Answer the question on the basis of the following data for the hypothetical nations
of Alpha and Beta. Qs is domestic quantity supplied and Qd is domestic quantity
demanded.
Refer to the given data. At a world price of $2:
A.Alpha will want to import 20 units of steel.
B.Beta will want to export 20 units of steel.
C.Alpha will want to export 20 units of steel.
D.neither country will want to import steel.
29) Economists consider governments to be “wasteful”:
A.whenever they over- or underallocate resources to a project.
B.only when they overallocate resources to a project.
C.only when they underallocate resources to a project.
D.whenever they attempt to correct a market failure.
30) If the four-firm concentration ratio in an oligopolistic industry is 100 percent and
each firm has an equal percentage of sales, the Herfindahl index is:
A.10,000
B.2,500
C.3,750
D.1,000
31) Below are the short-run average-total-cost schedules for three plants of different
size that a firm might build to produce its product. Assume that these are the only
possible sizes of plants that the firm might build. What is the long-run average-cost
schedule for the firm? Show it in the second table below.
For what output levels should the firm build plant X, plant Y, and plant Z?
32) What are the major components of the current account in the balance of payments?
How is the current account balance determined?
33) What are four types of labor market discrimination?
34) Explain the reasoning behind the inverted-U theory of R&D expenditures.
35) What is the difference between societys view and an individual firms view of
economic rent?
36) What are the four dimensions of the typical consumers situation?
37) Explain what critics see as the problems with social regulation.
38) What is the relationship between marginal cost and the short-run supply curve for
the purely competitive firm?