1) The excess capacity problem associated with monopolistic competition implies that
fewer firms could produce the same industry output at a lower total cost.
2) The price elasticity of supply determines how much price as a result of a change in
demand.
3) Business income will decrease in the nation from which workers emigrate.
4) The Food, Conservation, and Energy Act of 2008 provides three types of agricultural
subsidies: direct payments, countercyclical payments, and marketing loans.
5) Answer the question on the basis of the following information. Assume that by
devoting all its resources to the production of X, nation Alpha can produce 40 units of
X. By devoting all its resources to Y, Alpha can produce 60Y. Comparable figures for
nation Beta are 60X and 40Y.
Refer to the given information. Beta would prefer terms of trade at, or close to, 1X =
1Y.
6) The marginal revenue product curve of a purely competitive seller declines solely
because of the law of diminishing returns.
7) In a two-nation two-good world, if one nation is more efficient in producing both
goods than the other nation, then the more-efficient nation cannot gain from trading
with the other nation.
8) An increase in quantity supplied might be caused by an increase in production costs.
9) Health maintenance organizations (HMOs) are like health clubs that operate facilities
where people can exercise and get physical training.
10) If start-up firms can quickly shift the short-run cost curves up and to the left, they
would improve their chances of becoming profitable.
11)
Refer to the above graph of a hypothetical market for health care. The efficiency loss
caused by the provision of health insurance covering four-fifths of the cost is:
A.$3,000
B.$6,000
C.$12,000
D.$24,000
12) In which one of the following market models is X-inefficiency least likely to be
present?
A.Pure competition.
B.Oligopoly.
C.Monopolistic competition.
D.Pure monopoly.
13)
Assumptions: (1) Employers in this market are willing and able to ignore minimum
wage laws; (2) Sd represents the supply of domestic-born (and legal immigrant)
workers; (3) St represents the total supply of workers in this labor market (Sd plus
illegal immigrants); and (4) unless otherwise stated, illegal immigration is not
effectively blocked by the government.
Refer to the given figure and assumptions. Assume initially that government does not
effectively block illegal immigration. If the government then finds a way to prevent all
illegal immigrants from working in this labor market:
A.10,000 domestic-born workers will gain employment at the expense of 20,000 illegal
immigrants.
B.20,000 domestic-born workers will gain employment at the expense of 20,000 illegal
immigrants.
C.10,000 domestic-born workers will gain employment at the expense of 70,000 illegal
immigrants.
D.10,000 domestic-born workers will gain employment at the expense of 50,000 illegal
immigrants.
14) Joe fishes for swordfish at a cost of $6 per ton. Ronny fishes at a cost of $4 per ton.
Both have one 1000 ITQ and the current market price is $10 per ton. If Joe sold his ITQ
to Ronny for $7000, he and Ronny would:
A.Make the sale because they’re both better off
B.Not make the sale because Joe is better off and Ronny is not
C.Not make the sale because Ronny is better of and Joe is not
D.Not make the sale because neither is better off
15) Answer the question on the basis of the following data confronting a firm:
Refer to the data. This firm is selling its output in a(n):
A.monopolistically competitive market.
B.monopolistic market.
C.purely competitive market.
D.oligopolistic market.
16)
Refer to the diagram that shows the market for U.S. health care. Other things equal,
which of the following would shift the demand curve for medical care from D1 to D2?
A.Higher copayments and deductibles in insurance policies.
B.An aging population.
C.Cutbacks in the government’s Medicaid program.
D.Restrictions by firms on the eligibility of part-time workers for medical benefits.
17) Social regulation:
A.Was developed as a substitute for industrial regulation
B.Has declined in importance in recent years
C.Applies more broadly and affects more people than industrial regulation
D.Is more concerned with the overall standard of living of society rather than with
details of production processes
18) The economizing problem is:
A.the need to make choices because economic wants exceed economic means.
B.how to distribute resources equally among all members of society.
C.that people’s means often exceed their wants.
D.that people do not know how to rationally allocate resources.
19)
Refer to the above graph. If the Lorenz curve shifted from (d) to (b), then the Gini ratio
and the degree of income inequality would:
A.Increase
B.Decrease
C.Remain constant
D.Become negative
20) In the short run, a purely competitive seller will shut down if product price:
A.equals average revenue.
B.is greater than MC.
C.is less than AVC.
D.is less than ATC.
21) Answer the question on the basis of the following five data sets wherein it is
assumed that the variable shown on the left is the independent variable and the one on
the right is the dependent variable. Assume in graphing these data that the independent
variable is shown on the horizontal axis and the dependent variable on the vertical axis.
Refer to the data sets. The variables are directly related in:
A.all five data sets.
B.in none of the data sets.
C.in data sets 1, 2, and 3 only.
D.in data sets 1, 2, and 5 only.
22) Which statement concerning monopolistic competition is false?
A.Long-run equilibrium under monopolistic competition and pure competition both
entail zero economic profits for firms
B.Monopolistic competition is likely to result in a greater variety of product brands than
pure competition
C.The monopolistically competitive demand curve is more elastic than the demand
curve facing a monopoly
D.Long-run equilibrium in monopolistic competition does not entail any economic
inefficiency because of easy entry and exit
23) Which of the following laws prohibited mergers by stock acquisition if the effect
was to lessen competition?
A.Celler-Kefauver Act of 1950.
B.Wheeler-Lea Act of 1938.
C.Clayton Act of 1914.
D.Sherman Act of 1890.
24) The larger the number of firms and the smaller the degree of product differentiation
the:
A.greater the divergence between the demand and the marginal revenue curves of the
monopolistically competitive firm.
B.larger will be the monopolistically competitive firm’s fixed costs.
C.less elastic is the monopolistically competitive firm’s demand curve.
D.more elastic is the monopolistically competitive firm’s demand curve.
25)
Refer to the diagram, where Sd and Dd are the domestic supply and demand for a
product and Pc is the world price of that product. Sd + Q is the product supply curve
after an import quota is imposed. The size of the import quota:
A.is vz.
B.is vy.
C.is wy.
D.cannot be determined.
26) At the output where the combined amounts of consumer and producer surplus are
largest:
A.the areas of consumer and producer surplus necessarily are equal.
B.the maximum willingness to pay for the last unit of output equals the minimum
acceptable price of that unit of output.
C.consumer surplus exceeds producer surplus by the greatest amount.
D.marginal benefit exceeds marginal cost by the greatest amount.
27) A cap-and-trade program:
A.assigns a property right to the atmosphere.
B.mandates that every firm individually cut its emissions to below a certain level.
C.assigns a property right to polluting the atmosphere.
D.is easy to establish and enforce.
28) The table below shows a consumer’s utility schedule.
Refer to the above table. Based on the data, you can conclude that the consumer:
A.Receives increasing marginal utility from consuming the first three units
B.Experiences diminishing marginal utility after consuming the first unit
C.Experiences diminishing marginal utility only after consuming the fourth unit
D.Will never consume just one unit of the product
29) A purely competitive seller is:
A.both a “price maker” and a “price taker.”
B.neither a “price maker” nor a “price taker.”
C.a “price taker.”
D.a “price maker.”
30) What were the charges, findings, and proposed district court remedy in the
Microsoft antitrust case?
31) Describe the three major disadvantages of flexible exchange rates.
32) Explain the role interest rates play in understanding the time value of money.
33) What are three examples of occupations that are expected to experience a rapid
decline in employment from 2010-2020? Why are these occupations likely to
experience this decline?
34) What positive role can government play in fostering economic growth in
developing countries?
35) Explain how an increase or decrease in demand and supply will affect the value of a
nations currency.
36) How is a preset price similar to a government-imposed price ceiling or a price
floor? How is a preset price different from a government-imposed price ceiling or price
floor?
37) How do framing effects affect perceptions of gains or losses? Give an example
based on a wage increase of 7 percent for a worker and a wage increase of 11 percent
for co-workers.