1) What is one of the major shortcomings of using tariffs or quotas to ‘save American
jobs”?
A.Trade barriers protect the development of new technology, but the new technology
eliminates jobs
B.Import restrictions alter the composition of domestic employment, but they have
minimal effect on the overall level of domestic employment
C.The volume of trade with other nations is limited to a few industries, so trade
restrictions would not increase national employment
D.Major American firms have produced many products in other countries, and would
not hire more domestic labor when trade barriers are imposed
2) If you owned a small farm, which of the following would most likely be a fixed cost?
A.Harvest labor.
B.Hail insurance.
C.Fertilizer.
D.Seed.
3) Farmers often find that large bumper crops are associated with declines in their gross
incomes. This suggests that:
A.farm products are normal goods.
B.farm products are inferior goods.
C.the price elasticity of demand for farm products is less than 1
D.the price elasticity of demand for farm products is greater than 1
4) Health care expenditures as a percentage of GDP are lower in the United States than
in Germany, France, or Canada.
5) Bilateral monopoly occurs where:
A.a monopsonistic employer bargains with an inclusive union.
B.a monopsonistic employer bargains with an exclusive union.
C.a craft union bargains with a purely competitive employer.
D.an industrial union bargains with a purely competitive employer.
6) A pure monopoly firm will never charge a price in the inelastic range of its demand
curve because lowering price to get into this region will:
A.Increase total revenue, increase total cost, and decrease profit
B.Decrease total revenue, increase total cost, and decrease profit
C.Increase total revenue, decrease total cost, and decrease profit
D.Decrease total revenue, total cost, and profit
7) During a period when output and employment is falling, the government will try to:
A.Increase tax rates
B.Increase interest rates
C.Reduce government spending
D.Stimulate borrowing and spending
8) A downsloping demand curve can be derived for a normal product by increasing its
price in the consumer-behavior model and noting:
A.The increase in the utility-maximizing quantity of that product demanded
B.The decrease in the utility-maximizing quantity of that product demanded
C.A substitution effect that encourages more consumption of that product
D.An income effect that encourages more consumption of that product
9)
Refer to the budget line shown in the diagram. If the consumer’s money income is $20,
which of the following combinations of goods is unattainable?
A.4 units of C and 6 units of D.
B.5 units of C and no units of D.
C.1 unit of C and 8 units of D.
10) The dictator game:
A.reveals nothing important about economic behavior because the money used is
hypothetical.
B.demonstrates that people care about fairness and will sacrifice financially for others.
C.demonstrates nothing definitive about fairness, as concerns about the other player’s
perceptions will influence the dictator’s choices.
D.regularly results in the dictator taking all of the money for him/herself, as economic
theory would predict.
11) What are the relative values of price, ATC, and AVC when a monopolist
experiences:
(a) a profit
(b) a loss but continues to produce
(c) a loss but ceases production
12) The long-run fall of commodity prices implies that commodity supplies have
grown:
A.Faster than the rate of productivity in the economy
B.Slower than total resource consumption
C.Faster than total resource consumption
D.Slower than the inflation rate
13) The opportunity cost of constructing a new public highway is the:
A.Money cost of hiring contractors and construction workers for the new highway
B.Value of other goods and services that are sacrificed in order to construct the new
highway
C.Expected cost of constructing the new highway in a future year
D.Value of shorter driving times and distances when the new highway is completed