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1) Available research suggests that the union wage advantage diminishes the national
output by:
A.15 percent.
B.8 percent.
C.3 percent.
D.less than 1 percent.
2) Microfinance can help directly support:
A.Labor or workers
B.Local governments
C.Entrepreneurs
D.Consumers
3) Which one of the following is most likely to increase the Herfindahl index of a
particular industry?
A.A conglomerate merger.
B.A vertical merger.
C.A price-fixing arrangement among all the industry firms.
D.A horizontal merger.
4) Answer the question using the following table with investment-demand in an
economy.
Refer to the above table. If the interest rate is 15 percent:
A.$400 billion of investment will be undertaken
B.$460 billion of investment will be undertaken
C.$530 billion of investment will be undertaken
D.$600 billion of investment will be undertaken
5) Depositors do not check their banks carefully for stability anymore, because of the
Federal deposit insurance program. This illustrates the problem of:
A.Adverse selection
B.Externalities
C.Moral hazard
D.Public goods
6)
Refer to the labor market diagram where D is the labor demand curve, S is the labor
supply curve, and MRC is the marginal resource (labor) cost curve. If an inclusive
union was able to get the monopsonist to pay a $6 wage rate, then:
A.the supply curve would be perfectly elastic for the first four workers, but the MRC
curve would be unaffected.
B.the supply curve would be perfectly elastic for all workers and the MRC curve would
coincide with it.
C.the supply curve would be perfectly elastic for the first four workers and the MRC
would be $6 for the first four workers.
D.eight workers would be hired.
7) Other things equal, we would expect the labor demand curve of a monopolistic seller
to:
A.decline more rapidly than that of a purely competitive seller.
B.decline less rapidly than that of a purely competitive seller.
C.decline at the same rate as that of a purely competitive seller.
D.be more elastic than that of a purely competitive seller.
8) Alex and Ben are both loggers wanting to harvest timber from the same forest. Alex
prefers to harvest and replant at a sustainable rate; Ben wants to harvest as many trees
as possible to maximize short-run profit, and then move on. They face the same
production costs.
Refer to the information given. If property rights are well-defined and enforced:
A.Alex could buy Ben's part of the land and harvest and replant in a sustainable
manner.
B.Ben could buy Alex's part of the land and harvest all the timber as quickly as
possible.
C.incentives to harvest and replant in a sustainable manner are greater than with no
property rights.
D.all of these could occur.
9)
Refer to the graph above. Higher inflation in the United States relative to that in
Canada, ceterisparibus, will cause a(n):
A.Decrease in the supply of U.S. dollars
B.Increase in the demand for U.S. dollars
C.Decrease in the value of the U.S. dollar in terms of the Canadian dollar
D.Increase in the value of the U.S. dollar in terms of the Canadian dollar
10) When tariffs on imported products are removed by a nation, it will result in:
A.Higher prices and lower quantities consumed in that nation
B.Higher prices and higher quantities consumed in that nation
C.Lower prices and lower quantities consumed in that nation
D.Lower prices and higher quantities consumed in that nation
11) A criticism of social regulation is that it:
A.Contributes to the growth of natural monopoly
B.Increases the rate of innovation in the economy
C.Decreases the influence of the Federal government on business
D.Results in many unintended and costly side effects
12) Economic profits are not payments received for:
A.Taking uninsurable risks in a firm
B.Making products or production innovations
C.Starting up a business
D.Working for someone else
13)
Consider the demand curve above. If area 0ABC is smaller than area 0DEF, it suggests
that if the price increases from D to A, then total revenues of sellers will:
A.Increase
B.Decrease
C.Remain constant
D.Equal zero
14)
Refer to the diagram. At P3, this firm will:
A.produce 14 units and realize an economic profit.
B.produce 62 units and earn only a normal profit.
C.produce 40 units and incur a loss.
D.shut down in the short run.
15)
Refer to the diagram. Which one of the following might shift the marginal benefit curve
from MB1 to MB2?
A.Major new studies strongly linking cancer to pollution.
B.Improved technology for reducing pollution.
C.A change in consumer tastes from manufacturing goods to services.
D.A decrease in the price of recycled goods.
16) If property rights are weak or uncertain, resource extraction will tend to:
A.occur faster than the rate that would maximize the long-run stream of profits.
B.occur slower than the rate that would maximize the long-run stream of profits.
C.occur at the rate that would maximize the long-run stream of profits.
D.stop.
17) Assume the price of capital doubles and, as a result, firms make no change in the
relative quantities of capital and labor they employ. This implies that:
A.labor is not readily substitutable for capital.
B.the law of diminishing returns is not applicable.
C.the firms are producing an inferior good.
D.the demand for capital is highly price elastic.
18) Suppose that a pure monopolist can sell 5 units of output at $4 per unit and 6 units
at $3.90 per unit. The monopolist will produce and sell the sixth unit if its marginal cost
is:
A.$4 or less.
B.$3.90 or less.
C.$3.50 or less.
D.$3.40 or less.
19) The equation for the demand curve in the below diagram:
A.is P = 70 - Q.
B.is P = 35 - 2Q.
C.is P = 35 - .5Q.
D.cannot be determined from the information given.
20) Which of the following arguments contends that certain industries need to be
protected in the interest of national security?
A.The increased domestic employment argument.
B.The cheap foreign labor argument.
C.The diversification-for-stability argument.
D.The military self-sufficiency argument.
