1) Overall, economists believe that deregulation of industries formerly subjected to
industrial regulation:
A.has been a clear failure.
B.is neutral in its impact to society’s well-being, creating minimal net benefits at best.
C.has produced large net benefits for consumers and society.
D.has produced sizable efficiency gains in the communications industry, but not in the
transportation industry (railways, trucking, airlines).
2)
Native-born workers may not be harmed by immigration if:
A.They are complementary resources to immigrant workers
B.They are substitute resources to immigrant workers
C.Demand for their labor is elastic
D.Immigrants remit their earnings to their home countries
3)
Refer to the above graph. It shows the cost curves for a competitive firm. What is the
lowest price at which the firm will start producing output in the short run?
A.$1.25
B.$1.05
C.$0.90
D.$0.60
4) The currently relevant Food, Conservation, and Energy Act of 2008:
A.Ended the subsidies that had been provided under the Farm Act of 2002
B.Extends farm subsidy programs through 2014
C.Does not provide direct transfer payments to farmers
D.Prohibits the importation of some foreign agricultural products
5) According to The Economist magazine, growing income inequality is less of a
concern because:
A.it is increasing at a decreasing rate.
B.the poor have increasingly better access to goods and services once only available to
the rich.
C.poverty rates have fallen below 10 percent.
D.government transfers eliminate virtually all consumption inequality.
6)
Refer to the table. Over the $10-$8 price range, the elasticity coefficient of supply is:
A.1
B.zero
C.less than 1
D.greater than 1
7) Which of the following is correct?
A.Both purely competitive and monopolistic firms are “price takers.”
B.Both purely competitive and monopolistic firms are “price makers.”
C.A purely competitive firm is a “price taker,” while a monopolist is a “price maker.”
D.A purely competitive firm is a “price maker,” while a monopolist is a “price taker.”
8) A monopsonistic employer’s marginal resource (labor) cost curve:
A.is always more elastic than the labor supply curve.
B.coincides with the labor supply curve.
C.lies below the labor supply curve because the higher wage paid to an additional
worker must also be paid to all other employed workers.
D.lies above the labor supply curve because the higher wage paid to an additional
worker must also be paid to all other employed workers.
9)
Refer to the graph above. Suppose consumers do not know the safety risks associated
with a particular good, and that the free-market equilibrium is at E as shown in the
diagram above. If an independent agency now provides accurate information about the
harmful characteristics of the product, then:
A.The supply curve will shift to the left
B.The supply curve will shift to the right
C.Both the new equilibrium price and quantity will be lower
D.The new equilibrium price will be higher but the equilibrium quantity will be either
higher or lower
10) The narrower the definition of a product:
A.the larger the number of substitutes and the greater the price elasticity of demand.
B.the smaller the number of substitutes and the greater the price elasticity of demand.
C.the larger the number of substitutes and the smaller the price elasticity of demand.
D.The smaller the number of substitutes and the smaller the price elasticity of demand.
11) Which of the following represents an uninsurable risk to a business firm?
A.The possibility that its warehouse will burn down.
B.The possibility that several of its workers will be injured at work.
C.The possibility that an adverse change in consumer tastes will decrease the demand
for the firm’s product.
D.The possibility that a tornado will damage the plant and stop production for a month.
12) Which of the following generalizations is false? Other things equal:
A.interest rates are higher if lenders are imperfectly, rather than purely, competitive.
B.the interest rate is less on small loans than on larger loans.
C.long-term loans normally command higher interest rates than short-term loans.
D.the greater the risk on a loan, the greater the interest rate.
13) Stock options as a form of payment are designed to:
A.evade the equal-pay-for-equal-work provisions of the federal antidiscrimination law.
B.boost the overall earnings of minimum-wage workers.
C.offset monopsony.
D.address the principal-agent problem.
14) Which is necessarily true if the government were to replace a progressive income
tax system with a proportional one?
A.Lower income groups would pay less tax
B.Higher income groups would pay less tax
C.Lower income groups would pay more tax
D.The distribution of after-tax income would become less equal
15) A unique characteristic of taxes on economic rents is that such taxes:
A.stimulate aggregate production.
B.do not lead to a reallocation of the resource.
C.are paid by consumers.
D.are always regressive.
16) If a product has a diminishing, but positive, marginal utility, then:
A.Total utility decreases at an increasing rate
B.Total utility will become negative
C.Total utility increases at a diminishing rate
D.Total utility decreases at a diminishing rate
17) An inferior good is:
A.one whose demand curve will shift rightward as incomes rise.
B.one whose price and quantity demanded vary directly.
C.one that has not been approved by the Federal Food and Drug Administration.
D.not accurately defined by any of these statements.
18)
Assumptions: (1) Employers in this market are willing and able to ignore minimum
wage laws; (2) Sd represents the supply of domestic-born (and legal immigrant)
workers; (3) St represents the total supply of workers in this labor market (Sd plus
illegal immigrants); and (4) unless otherwise stated, illegal immigration is not
effectively blocked by the government.
Refer to the given figure and assumptions. The equilibrium wage and level of
employment are, respectively:
A.$4.00 and 50,000.
B.$4.00 and 60,000.
C.$4.00 and 70,000.
D.$6.50 and 60,000.
19) Specialization is beneficial:
A.At the individual firm level, but not at the national and international levels
B.At the individual, regional, and even international levels
C.Only if there are differences in the abilities of resources
D.Only as long as money and capital goods are employed
20) In developing prospect theory, which of the following did behavioral economists
not discover about people’s reaction to goods and bads?
A.People feel equivalent losses and gains in equal measure, supporting the assumption
that consumers behave rationally.
B.People are generally loss averse, feeling losses more intensely than gains.
C.People judge good and bad outcomes relative to the status quo.
D.People experience both diminishing marginal utility from gains and diminishing
marginal disutility from losses.