1) When DVD players start becoming obsolete then, to potential thieves, the:
A.Marginal utility of stealing them increases
B.Marginal utility of stealing them decreases
C.Marginal cost of stealing them increases
D.Marginal cost of stealing them decreases
2) The monopolistically competitive seller’s demand curve will become more elastic
the:
A.Larger the number of competitors
B.Greater the degree of product differentiation
C.More significant the barriers to entry
D.Smaller the number of competitors
3) The problem with socially-optimal pricing regulation of a natural monopoly is that:
A.P < MC
B.P < AVC
C.P < ATC
D.P < MR
4) Public choice theory focuses on the economics of:
A.fiscal and monetary policy.
B.the behavior of business firms.
C.antitrust and regulatory policy.
D.government decision making, politics, and elections.
5) Answer the question on the basis of the following 2012 balance of payments data (+
and -) for the hypothetical nation of Zabella. All figures are in billions of dollars.
Refer to the given data. Zabella’s balance on goods and services shows a:
A.$5 billion deficit.
B.$5 billion surplus.
C.$10 billion surplus.
D.$15 billion deficit.
6) The following table illustrates alternative production techniques for producing 18
widgets that can be sold for $1 each for a total revenue of $18.
Refer to the above table. If the price per unit of labor were to increase from $2 to $3,
the most efficient production technique would then be:
A.A
B.B
C.C
D.D
7)
Refer to the above table. The average variable cost of producing 3 units of output is:
A.$9.33
B.$10
C.$12.67
D.$38
8) The graphs below illustrate the market for a product on which an excise tax has been
imposed by government.
Refer to the above graph. The excise tax on this product as shown in the graph is
ultimately paid:
A.100 percent by consumers
B.100 percent by producers
C.75 percent by consumers and 25 percent by producers
D.50 percent by consumers and 50 percent by producers
9)
Refer to the figure. Suppose the graphs represent the demand for use of a local golf
course for which there is no significant competition (it has a local monopoly); P denotes
the price of a round of golf; Q is the quantity of rounds ‘sold” each day. If the left graph
represents the demand during weekdays and the right graph the weekend demand, this
profit-maximizing golf course should:
A.charge $9 for each round, regardless of the day of the week.
B.charge $7 for each round, regardless of the day of the week.
C.charge $7 for each round on weekdays and $10 during the weekend.
10) Allocative efficiency is achieved when the production of a good occurs where:
A.P = minimum ATC.
B.P = MC.
C.P = minimum AVC.
D.total revenue is equal to TFC.
11) Answer the question on the basis of the data given in the following production
possibilities table:
Refer to the table. As compared to production alternative D, the choice of alternative C
would:
A.tend to generate a more rapid growth rate.
B.be unattainable.
C.entail unemployment.
D.tend to generate a slower growth rate.
12) Which organization primarily makes and guarantees loans to developing nations for
basic development projects such as the construction of dams, roads, and schools?
A.The World Bank
B.The New Economic Order
C.The Federal Reserve System
D.The Committee on Economic Development
13) Answer the question using the following data, which show all available techniques
for producing 20 units of a particular commodity:
Refer to the data. If a new production technique is developed that enables a firm to
produce 20 units of output with 3 units of land, 3 of labor, 1 of capital, and 2 of
entrepreneurial ability, this technique would:
A.not be adopted because, although it reduces production costs, it does not increase
profit.
B.be adopted because it would lower production costs and increase economic profit.
C.not be adopted because it entails higher production costs than other available
techniques.
D.be adopted, even though economic profits would be reduced slightly.
14) Answer the following questions based on graph.
(a)What is the domestic equilibrium level of quantity and price of jelly beans in the
United States?
(b)Fill in the U.S. Export Supply curve and U.S. Import Demand curve on the graph
provided.
(c)Suppose the world price of jelly beans is currently $1.00. Will the United States face
a shortage, surplus, or neither?
(d)Suppose the world price of jelly beans is currently $2.25. Will the United States face
a shortage, surplus, or neither?
15)
Refer to the above graph. It shows short-run cost curves for a competitive firm. At what
price would the firm break even?
A.P1
B.P2
C.P3
D.P4
16) Suppose that a large tree on Betty’s property is blocking Chuck’s view of the lake
below. Betty accepts Chuck’s offer to pay Betty $100 for the right to cut down the tree.
This situation describes:
A.the Coase theorem.
B.the optimal allocation of a public good.
C.nonrivalry and nonexcludability.
D.a market for externality rights.
17) If demand for a product is elastic, the value of the price elasticity coefficient is:
A.zero.
B.greater than one.
C.equal to one.
D.less than one.
18) Suppose that white workers are getting paid $21/hour, while similarly-productive
African-American workers are getting paid $18/hour. A prejudiced white employer with
a discrimination coefficient of $24/hour will:
A.Hire African-Americans only if their wage rate falls to $3/hour
B.Hire African-American workers
C.Not hire African-Americans at all, even if they offer to work for free
D.Not hire African-Americans, unless they work for free