1) Generally speaking, the smaller the percentage of one’s total budget devoted to a
particular product, the more price elastic will be the demand for that product.
2) The presence of an agency shop requires all workers to join the union within the first
30 days of employment.
3) Fixed exchange rates usually provide more certainty to those engaged in
international trade.
4) When some firms leave a purely competitive industry, the market supply curve will
shift in such a way that the remaining firms’ profits will increase.
5) A firm sells 99 units of output when price equals $10, and 100 units of output when
price equals $9. Its marginal revenue for the 100th unit of output is negative.
6) Saving is low in many DVCs primarily because income is very equally distributed.
7) Sales taxes are proportional in relation to income because the same tax rate applies
regardless of the size of a purchase.
8) College graduates who dislike business risk will mostly seek to be hired by firms as
labor, rather than starting their own firms.
9)
Much of the recent concerns about immigration in the U.S. have focused on green-card
holders.
10) In an oligopolistic market:
A.one firm is always dominant.
B.products may be standardized or differentiated.
C.the four largest firms account for 20 percent or less of total sales.
D.the industry is monopolistically competitive.
11) Currently (2009) farm employment is about:
A.15.8 percent of total employment.
B.9.4 percent of total employment.
C.1.1 percent of total employment.
D.1.8 percent of total employment.
12) Unlike newspaper dispensing devices, soft drink dispensing machines do not permit
people to take more than one can or bottle with each payment. The reason is that the:
A.opportunity cost of additional cans or bottles of a soft drink increase very rapidly.
B.marginal utility of extra soft drink cans or bottles declines slowly, particularly
because they are storable and can be consumed later.
C.marginal utility of extra soft drink cans or bottles declines quite rapidly.
D.opportunity cost of additional cans or bottles of soft drink increases very slowly.
13)
The Council of Economic Advisers have found that skilled immigrants in the U.S. do all of
the following, except:
A.Boost the technical capabilities of U.S. firms
B.Pay less in taxes than they absorb in government services
C.Make major innovative contributions in science, medicine, and engineering
D.Augment the supply of health-care providers in the U.S.
14) Which of the following statements is true about the effects of illegal immigration in
the United States?
A.Illegal immigrant workers displace domestic-born workers on a one-for-one basis.
B.Illegal immigration has a negative fiscal impact that falls most heavily on state and
local governments.
C.Illegal immigration negatively impacts wages and the standard of living for all
domestic-born workers.
D.All of these are true.
15) If the price of product X rises, then the resulting decline in the amount purchased
will:
A.necessarily increase the consumer’s total utility from his total purchases.
B.increase the marginal utility of the last unit consumed of this good.
C.increase the total utility from purchases of this good.
D.reduce the marginal utility of the last unit consumed of this good.
16) Laissez-faire capitalism is characterized by:
A.Very limited government role in the economy
B.Active government intervention in the economy
C.Individuals and firms abiding by a government economic plan
D.A very fair distribution of income and wealth
17) The following data represent a personal income tax schedule. Answer the question
on the basis of this information.
Refer to the table. If your taxable income is $8,000, your average tax rate is:
A.25 percent and the marginal rate on additional income is also 25 percent.
B.25 percent and the marginal rate on additional income is 40 percent.
C.25 percent and the marginal rate on additional income cannot be determined from the
information given.
D.20 percent and the marginal rate on additional income is 30 percent.
18) Which of the following cases best illustrates economic immigration?
A.Sophia migrated to Germany to rejoin her family.
B.Julio migrated to Australia to take a job paying three times what he earned at home.
C.Nguyen migrated to the United States to escape religious persecution.
D.Vladimir migrated to Great Britain to avoid political imprisonment.
19) Answer the question on the basis of the accompanying table that shows average
total costs (ATC) for a manufacturing firm whose total fixed costs are $10:
Refer to the data. The average variable cost of 4 units of output is:
A.$33.50.
B.$28.50.
C.$19.00.
D.$21.00.
20)
Answer on the basis of the relationships shown in the four figures. The amount of y is
directly related to the amount of x in:
A.both 1 and 3.
B.both 1 and 2.
C.2 only.
D.l only.
21) If competitive industry Z is making substantial economic profit, output will:
A.fall in industry Z and firms will likely leave the market.
B.fall in all industries except industry Z.
C.expand in industry Z as more resources will move to that industry.
D.expand in industry Z, but no new firms will enter the market.
22) In which set of market models are there the most significant barriers to entry?
A.Monopolistic competition and pure competition
B.Monopolistic competition and pure monopoly
C.Oligopoly and monopolistic competition
D.Oligopoly and pure monopoly
23) What is the main problem with government guarantees that socialize losses and
privatize gains?
A.They encourage overly risky investments by insulating private investors from any
losses.
B.The investments that do occur never generate production of goods underproduced by
the private sector.
C.They discourage private investment in worthwhile projects.
D.They tend to benefit foreign companies at the expense of domestic firms.
24) The process by which people isolate purchases and fail to consider all consumption
options simultaneously is known as:
A.framing.
B.mental accounting.
C.anchoring.
D.the endowment effect.
25) The major ‘success indicator” for business managers in command economies like
the Soviet Union and China in the past was:
A.The quantity of output
B.Product quality
C.The amount of profits
D.Worker morale
26) The following table gives data for the market for a product.
Refer to the table above. What is the equilibrium price and quantity in this market?
A.$6 and 60, respectively
B.$5 and 30, respectively
C.$3 and 30, respectively
D.$30 and 3, respectively
27) As it relates to international trade, dumping:
A.is a form of price discrimination illegal under U.S. antitrust laws.
B.is the practice of selling goods in a foreign market at less than cost.
C.constitutes a general case for permanent tariffs.
D.is defined as selling more goods than allowed by an import quota.
28) Suppose that a firm successfully introduces a highly profitable new product. If this
new product is priced higher than existing substitute products, then the:
A.new product has greater marginal utility than the existing products.
B.laws of economics have been violated.
C.new product must have increasing, not diminishing, marginal utility.
D.existing products were unprofitable to produce.
29)
Senator Approxmire opposes a proposal requiring that the monopsonist pay a minimum
wage of at least Wmin, stating: “Even if the labor market is monopsonistic, economic
theory unambiguously demonstrates that imposing a minimum wage causes
employment to fall.” Senator Approxmire is:
A.Correct because the law of demand states that as the wage rises, the firm demands
less labor
B.Incorrect because the monopsonist would offer a wage of WA, which is higher than
Wmin, and maintain its employment at L1
C.Incorrect because the monopsonist’s effective MRC curve becomes ABCD, which
means that it will choose to hire more workers, from L1 to L2, following the imposition
of the minimum wage
D.Correct because the graph indicates that at the wage of Wmin, the monopsonist
would not make a profit from hiring labor and so would not hire any at all
30) How does technological advance enhance economic efficiency? Distinguish
between its effects on productive efficiency and allocative efficiency.
31) How does speculation in currencies affect the value of a nations currency?
32) Use a supply and demand diagram to evaluate the following statement: Deportation
of illegal workers would boost the employment of American workers on a one-for-one
basis.
33)
34) List five basic determinants of market demand that could cause demand to decrease.
35) What is myopia? How does it relate to behavioral and neoclassical economics?
36) What potential economic problem can arise with a guaranteed payment contract for
professional athletes that is not related to performance?
37) Why is the right of private property an essential characteristic of a market system?
38) Why are costs important in economics?