1) Which of the following is not an example of a socio-cultural impediment to
economic growth?
A.Tribal allegiances that take precedence over national unity
B.Religious beliefs and practices that severely limit economic activity
C.Migration of labor resources from agricultural to urban areas
D.The existence of a system for allocating jobs based on caste or tradition
2) If there is allocative efficiency in a purely competitive market for a product, the
maximum price consumers are willing to pay is:
A.Less than marginal benefit
B.Greater than marginal cost
C.Equal to the amount of efficiency or deadweight losses
D.Equal to the minimum price producers are willing to accept
3) Which of the following best explains why hospital charges of $25 per aspirin are not
unusual?
A.Government payments for Medicare and Medicaid patients do not cover hospitals’
fixed costs, so these costs must be distributed to other patients and their private
insurance providers.
B.Government exercises no cost control for Medicare and Medicaid, so hospitals get
away with charging those patients $25 for an aspirin.
C.Pharmaceutical companies have monopoly power over hospitals, allowing them to
charge high prices for medications.
D.Hospitals distribute a medically advanced form of aspirin that costs more to produce.
4) Draw three supply and demand graphs that illustrate the effect of time on the
elasticity of supply using the below graphs. The three graphs should show: (a) the
immediate market period; (b) the short run; and (c) the long run.
5) Total revenue falls as the price of a good is raised, if the demand for the good is:
A.Elastic
B.Inelastic
C.Unitary elastic
D.Perfectly elastic
6)
A shift in union labor demand from D1 to D2 in the diagram might be the result of:
A.a refusal by union members to buy the product they are producing.
B.an increase in tariffs on products competing with those produced by relevant union
workers.
C.increases in the prices of complementary inputs.
D.a strike (work stoppage) by the union.
7) The following graph is the production possibilities curve of a nation:
Refer to the above graph. The marginal opportunity cost of the fourth unit of bread is:
A.0 unit of drill presses
B.1 unit of drill presses
C.3 units of drill presses
D.4 units of drill presses
8) Answer the question on the basis of the following information: Harry owns a barber
shop and charges $6 per haircut. By hiring one barber at $10 per hour, the shop can
provide 24 haircuts per eight-hour day. By hiring a second barber at the same wage rate,
the shop can now provide a total of 42 haircuts per day.
Refer to the given information. Harry should:
A.hire the second barber because he will add $28 to profits.
B.hire the second barber because he will add $108 to profits.
C.not hire the second barber because he is less productive than the first barber.
D.not hire the second barber because he will diminish profits.
9) In international financial transactions, what are the only two things that individuals
and firms can exchange?
A.Currency and real assets.
B.Services and manufactured goods.
C.Preexisting assets and currently produced goods and services.
D.Currency and currently produced goods and services.
10) Farm price support programs have other costs besides the amount paid to farmers,
and these costs include the following, except:
A.Rent-seeking activities by consumers
B.Rent-seeking activities by farmers
C.Administrative costs
D.Environmental costs
11) With a downsloping demand curve and an upsloping supply curve for a product, a
decrease in resource prices will:
A.increase equilibrium price and quantity.
B.decrease equilibrium price and quantity.
C.decrease equilibrium price and increase equilibrium quantity.
D.increase equilibrium price and decrease equilibrium quantity.