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1) The Sherman Act was designed to:
A.exempt commercial banks from the antitrust laws.
B.make interlocking directorates legal.
C.prohibit misleading and antisocial advertising.
D.make monopoly and acts that restrain trade illegal.
2) Reasons for the rapid rise in demand for health care despite steeply rising prices
include the following, except:
A.People regard health care as an entitlement or a right
B.Imperfect information among consumers of health care
C.Third-party insurance payments shield consumers from the true cost of health care
D.High income-elasticity of the demand for health-care services
3) In the DVCs, underemployment frequently takes the form of:
A.factory workers who are working longer hours than they would prefer.
B.workers who are employed inefficiently in small industry when they could be highly
productive in agriculture.
C.farmers whose productivity is very low.
D.craft workers and artisans who are replaced by simple machinery and equipment.
4) Price leadership represents a situation where oligopolistic firms:
A.Reduce their reliance on nonprice competition
B.Form a cartel
C.Face a kinked demand curve
D.Tacitly collude
5) Which of the following statements is correct?
A.The parity ratio has not exceeded 100 in the 20th or 21st century.
B.An increase in prices paid by farmers relative to prices received by farmers will
increase the parity ratio.
C.The parity ratio has generally been greater than 100 in the past four decades.
D.The parity ratio has generally declined over the past five decades.
6) The question is based on the following table that provides information on the
production of a product that requires one variable input.
Refer to the above table. With the addition of the second unit of input, the marginal
product is:
A.15 and the average product is 20
B.25 and the average product is 10
C.15 and the average product is 10
D.10 and the average product is 15
7)
In the diagram, total product will be at a maximum at:
A.Q3 units of labor.
B.Q2 units of labor.
C.Q1 units of labor.
D.some point that cannot be determined with the above information.
8) In answering the question, assume a graph in which dollars are measured on the
vertical axis and output on the horizontal axis.
Refer to the information. For a purely competitive firm, marginal revenue graphs as a:
A.straight, upsloping line.
B.straight line, parallel to the vertical axis.
C.straight line, parallel to the horizontal axis.
D.straight, downsloping line.
9)
Refer to the above diagram of the market for corn. There will be a surplus of 8 thousand
bushels at the price of:
A.$4/bushel
B.$3/bushel
C.$2/bushel
D.$5/bushel
10)
Refer to the short-run production and cost data. In Figure B curve (3) is:
A.AVC and curve (4) is MC.
B.MC and curve (4) is AVC.
C.MC and curve (4) is AFC.
D.AFC and curve (4) is MC.
11) Assume a firm faces these costs: total cost of capital = $4,000; price paid for labor =
$20 per labor unit; and price paid for raw materials = $8 per raw-material unit.
Refer to the above information. Originally the firm produced 2,000 units of output by
combining its fixed capital with 200 units of labor and 500 units of raw materials. Now
the firm changes its production process so that it can produce 3,000 units of output by
combining its fixed capital with 100 units of labor and 500 units of raw materials. What
happened to average total cost?
A.ATC decreased by $2.67
B.ATC increased by $2.67
C.ATC increased by $3.33
D.ATC decreased by $3.33
12) If a firm is a price taker, then the demand curve for the firm's product is:
A.Equal to the total revenue curve
B.Perfectly inelastic
C.Perfectly elastic
D.Unit elastic
13) Which would best explain a decrease in both the price and the quantity of a product
over a period of time?
A.A decrease in people's incomes, and the product is an inferior good
B.A long strike by workers who make the product
C.A decrease in the price of a substitute good
D.A technological improvement in production methods
14) Assume that a purely competitive firm has the schedule of average and marginal
costs given in the table below.
(a) In the table below, complete the supply schedule for the competitive firm and state
what the economic profit will be at each price.
(b) If there are 100 firms in the industry and all have the same cost schedule, complete
the market supply schedule in the table below.
Answer the following questions: (1) What will the equilibrium price and quantity of the
product be? (2) What will the profits of each firm be? (3) Will firms tend to enter or
leave the industry in the long run? Explain.
15)
Refer to the diagram, in which solid arrows reflect real flows; broken arrows are
monetary flows. Flow (6) might represent:
A.the payment of payroll taxes by households.
B.corporate income tax payments.
C.the purchase of basketballs by the Ogallala school district.
D.the purchase of armored personnel vehicles by government.
16)
Refer to the graphs. Terryville has a comparative advantage in producing:
A.product A.
B.product B.
C.both products A and B.
D.neither product A nor B.
17) If a firm has at least some control over the price of its product, then the firm cannot
be in which market model:
A.Oligopoly
B.Pure monopoly
C.Pure competition
D.Monopolistic competition
18) Why is there an asymmetric information problem in the market for health care?
A.The patient, not the physician, knows most about the amount and type of health care
to be provided
B.The government, not the physician, knows most about the amount and type of health
care to be provided
C.Insurance companies, not the physician, knows most about the type of health care to
be provided
D.The physician, not the patient, knows most about the amount and type of health care
to be provided
19) Which of the following statements is true about price ceilings?
A.Price ceilings cause goods to be rationed.
B.Price ceilings cause goods to be rationed by some other means than legally
determined market prices.
C.Ration coupons are the only way to ration goods when price ceilings are in place.
D.All of the other statements are correct.
20) The MR = MC rule applies:
A.in the short run but not in the long run.
B.in the long run but not in the short run.
C.in both the short run and the long run.
D.only to a purely competitive firm.
