1) Regulatory capture in government often happens because the people who are most
qualified to supervise and regulate an industry oftentimes are or have been the leaders
of the industry.
2) The demand curve for loanable funds illustrates the behavior of lenders or savers.
3)
Remittances by Mexican workers in the United States to their families in Mexico tend to
reduce the gains from immigration to the United States and increase it for Mexico.
4) Because of framing effects, a worker will be happy with a 5 percent raise regardless
of how much of a raise her fellow employees receive.
5) Economic profits are the salaries received by the hired managers of business
corporations.
6) When the government bails out failing banks, it creates a moral hazard problem; but
when the government bails out homeowners who are defaulting, there is no moral
hazard problem.
7) The Consumer Product Safety Commission engages in social regulation, rather than
industrial regulation.
8) For the past couple of decades, approximately how much trash per person per day
has been generated in the United States?
A.2 pounds.
B.3.4 pounds.
C.4.6 pounds.
D.12.8 pounds.
9) Population growth remains high in most DVCs:
A.because religious and sociocultural considerations favor large families.
B.because children may provide economic security for aging parents.
C.because children provide agricultural labor in rural areas.
D.for all of these reasons.
10) Economic cost can best be defined as:
A.any contractual obligation that results in a flow of money expenditures from an
enterprise to resource suppliers.
B.any contractual obligation to labor or material suppliers.
C.a payment that must be made to obtain and retain the services of a resource.
D.all costs exclusive of payments to fixed factors of production.
11) The Latin term “ceteris paribus” means:
A.that if event A precedes event B, A has caused B.
B.that economics deals with facts, not values.
C.other things equal.
D.prosperity inevitably follows recession.
12) Which of the following statements about the financing of international trade is
correct?
A.International trade means the trading of financial assets for foreign exchange
B.Most international transactions are made with gold
C.Imports are more important than exports to the economy of a nation
D.Exports provide the foreign currencies needed to pay for imports
13) Most remittances flow toward:
A.European nations.
B.advanced industrial nations.
C.developing nations.
D.North America.
14) An obstacle to economic growth in developing countries is:
A.The limited demand for natural resources
B.The limited supply of capital goods
C.A decline in population growth
D.The low productivity of capital
15) Broadly defined, competition involves:
A.private property and freedom of expression.
B.independently acting buyers and sellers and freedom to enter or leave markets.
C.increasing opportunity costs and diminishing marginal utility.
D.capital goods and division of labor.
16) Which question is an example of a microeconomic question?
A.What should the Federal government do to reduce the trade deficit with Japan?
B.Will the merger of two airlines likely lead to higher cost of air travel in the economy?
C.What factors are contributing to the steep rise in the federal government’s total debt?
D.Will the inflation rate remain relatively stable this year?
17) Nonprice competition refers to:
A.competition between products of different industries, for example, competition
between aluminum and steel in the manufacture of automobile parts.
B.price increases by a firm that are ignored by its rivals.
C.advertising, product promotion, and changes in the real or perceived characteristics of
a product.
D.reductions in production costs that are not reflected in price reductions.
18) A firm wants to borrow funds to purchase a new piece of equipment that costs
$20,000 and has a useful life of one year. The investment is expected to produce an
additional $1,500 in total revenue. The firm will most likely make the investment if the
interest rate is:
A.6 percent
B.8 percent
C.10 percent
D.12 percent
19) 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 capital and financial account shows a:
A.deficit of $5 billion.
B.surplus of $10 billion.
C.deficit of $10 billion.
D.surplus of $5 billion.
20) Answer the question on the basis of the following information:
Refer to the data. The marginal product of the fourth worker:
A.is 5.
B.is 7.
C.is 71/2.
D.cannot be calculated from the information given.
21) Which of the following is correct?
A.Vertical mergers are more likely to be acceptable under antitrust laws than are
horizontal mergers.
B.A vertical merger entails the merging of two or more competing firms.
C.Horizontal mergers are more likely to be acceptable under antitrust laws than are
vertical mergers.
D.Conglomerate mergers occur when two or more firms at various stages in a good’s
production are combined.
22) Supporters of social regulation contend that:
A.The existence of natural monopoly requires a regulatory response from government
B.There is a pressing need to eliminate price fixing in U.S. business
C.Higher costs are the price that must be paid for a better society
D.Benefits of public ownership of businesses are greater than the costs
23) If the supply of a product decreases and the demand for that product simultaneously
increases, then equilibrium:
A.price must rise, but equilibrium quantity may rise, fall, or remain unchanged.
B.price must rise and equilibrium quantity must fall.
C.price and equilibrium quantity must both increase.
D.price and equilibrium quantity must both decline.
24) Information problems create inefficient outcomes in:
A.the private sector but not the public sector.
B.the public sector but not the private sector.
C.neither the private nor the public sector.
D.both the private and the public sectors.
25) Which of the following provisions of the PPACA do proponents expect to reduce
the growth of health care spending?
A.Prohibiting insurers from dropping or denying individuals with preexisting
conditions.
B.Allowing individuals to purchase coverage through insurance exchanges.
C.Subsidizing purchases of insurance for those complying with the personal mandate.
D.Expanding access to Medicaid coverage.
26) Which of the following amended the Clayton Act’s prohibition against mergers that
substantially lessen competition?
A.Celler-Kefauver Act of 1950
B.Wheeler-Lea Act of 1938
C.Clayton Act of 1914
D.Sherman Act of 1890
27) What are the similarities and differences in the economic effects of tariffs and
quotas?
28) What is the tradeoff in the extraction of nonrenewable resources?
29) How do firms incorporate opportunity costs to calculate economic costs? Discuss
and give example using an explicit economic cost and an implicit economic cost.
30) What are the basic characteristics of oligopoly? How does oligopoly compare with
the other market structures?
31) How are producer and consumer surpluses maximized in a competitive market?
32) What is the technology problem in DVCs?
33) Describe how near-monopoly behavior in internet industries has fostered aggressive
competition.