1) A point or product-combination to the left of and inside a budget line:
A.Is attainable, but a combination or point to the right of the line is unattainable
B.Is unattainable, but a combination or point to the right of the line is attainable
C.Costs more than a combination or point on the budget line
D.Costs more than a combination or point outside the budget line
2) The table below shows the marginal utility schedules for a soft drink (MUs) and an
energy drink (MUe). The price of the soft drink is $2 and the price of the energy drink
is $4. The consumers income is $10.
(a)If the consumer can only buy the soft drink, how much will the consumer buy and
what will be the total utility?
(b)If the consumer buys both the soft drink and the energy drink, how much will the
consumer buy to maximize utility? How much will total utility change?
Suppose another company decides to enter the energy drink market and the marginal
utility schedule for that firm is listed below. Their energy drink is price at $3.
(c)With the introduction of the new energy drink, what bundle will the consumer
choose to maximize utility? What will be the total level of utility?
(d)How do the results in (d) demonstrate possible benefits of diffusion for consumers?
3) The law of diminishing returns results in:
A.an eventually rising marginal product curve.
B.a total product curve that eventually increases at a decreasing rate.
C.an eventually falling marginal cost curve.
D.a total product curve that rises indefinitely.
4) Featherbedding refers to:
A.a situation in which a union forces an employer to hire union workers in preference
to nonunion workers.
B.the requirement that unneeded workers be retained on a job.
C.the refusal by one union to handle or transport goods produced by workers in another
union.
D.disputes among two or more unions as to which will perform certain jobs.
5) Unions might support a higher minimum wage because:
A.their constitutions obligate them to do so.
B.they feel a higher minimum wage will lower labor’s tax payments for welfare
programs.
C.a higher minimum wage makes less-skilled workers less substitutable for union
workers.
D.the minimum wage is better targeted than are alternative income-maintenance
programs.
6) Which of the following helps explain growing income inequality in the United States
in recent years?
A.Reduced immigration.
B.Increased demand for highly skilled workers.
C.The falling labor force participation rate of women.
D.Increased power of unions.
7) In a typical month, a family buys six bags of candy bars as snacks when the price of
a bag costs $4.00. When the price of the candy bars falls to $3.00 a bag, the family buys
seven bags of candy bars a month. When the price of a bag of candy bars rises to $6.00,
the family buys three bags a month. Answer these questions: (a) How did the fall in the
price affect real income in terms of bags of candy bars? (b) How did the rise in the price
affect real income in terms of bags of candy bars? [Hint: How many bags of candy bars
could the family buy in situation (a) and in situation (b) without changing the amount
they spend on candy bars in a typical month?]
8) The demand curve faced by a purely competitive firm:
A.Has unitary elasticity
B.Yields constant total revenues even when price changes
C.Is identical to the market demand curve
D.Is the same as its marginal revenue curve
9) Which of the following statements is true for a long-run supply curve that slopes
upward?
A.If total market output is increased, unit costs of production increase
B.If total market output is unchanged, unit costs of production increase
C.The total cost of producing 15 units is no larger than the cost of producing 10 units
D.If total market output is decreased, total costs of production will remain unchanged
10) Answer the question on the basis of the following domestic supply and demand
schedules for a product. Suppose that the world price of the product is $1.
Refer to the given data. With a $1-per-unit tariff, the quantities sold by foreign and
domestic producers respectively will be:
A.1 unit and 15 units.
B.7 units and 4 units.
C.11 units and 4 units.
D.indeterminate.
11) The difference between the maximum price a consumer is willing to pay for a
product and the actual price the consumer pays is:
A.Allocative efficiency
B.Productive efficiency
C.The consumer surplus
D.The producer surplus
12)
Refer to the diagram. At the profit-maximizing output, total variable cost is equal to:
A.0AHE.
B.0CFE.
C.0BGE.
D.ABGH.
13) In the U.S., the Federal government runs a chronic budget deficit, whereas many
state and local governments do not, because:
A.Many state and local governments have balanced-budget laws that make deficits
illegal, while the Federal government does not
B.Voters in Federal elections tend to favor budget deficits, while voters in state and
local elections do not
C.Many state and local governments face stricter accounting standards than the Federal
government does
D.Elections at the state and local levels tend to occur more frequently than at the
Federal level
14) Answer the question on the basis of the following demand and supply data for a
competitive market:
Refer to the given data. If government levies a per-unit excise tax of $1 on suppliers of
this product, equilibrium price and quantity will be:
A.$9 and 3,000
B.$7.50 and 2,250
C.$8.50 and 2,250
D.$7 and 3,000