1) For all practical purposes, the supply of land is:
A.almost perfectly inelastic.
B.negatively sloped.
C.relatively elastic.
D.perfectly elastic.
2) Suppose that under its collective bargaining agreement the ABC Corporation can hire
nonunion workers, but such workers must join the union within 30 days. This
agreement embodies:
A.an open shop.
B.a closed shop.
C.a union shop.
D.an agency shop.
3) According to most experts, which of the following factors is most important in
causing health care costs to rise?
A.The aging of the population.
B.Rising incomes.
C.Malpractice suits.
D.Fee-for-service health insurance and cost-increasing technology.
4)
Which of the diagrams correctly portrays a nondiscriminating pure monopolist’s
demand (D) and marginal revenue (MR) curves?
A.A.
B.B.
C.C.
D.D.
5)
Refer to the above graph showing the market for a product. Which of the following
would best explain why the shift in demand from D1 to D2 would cause price to rise
from P1 to P2?
A.Because after the shift in the demand, there would be a surplus at price P2
B.Because after the shift in the demand, there would be a shortage at price P2
C.Because after the shift in the demand, there would be a shortage at price P1
D.Because after the shift in the demand, there would be a surplus at price P1
6) According to the Consider This box on catfish and art, which of the following
airlines in 2007 agreed to pay $300 million in fines for fixing fuel surcharges on
passenger tickets and cargo?
A.Korean Air and British Airlines.
B.Qantas and Lufthansa.
C.United Airlines and American Airlines.
D.Virgin Atlantic and Aeroflot.
7) Which of the following conditions is not required for price discrimination?
A.Buyers with different elasticities must be physically separate from each other.
B.The good or service cannot be profitably resold by original buyers.
C.The seller must be able to segment the market, that is, to distinguish buyers with
different elasticities of demand.
D.The seller must possess some degree of monopoly power.
8) The next three questions refer to the information in the following table.
(a)What would price and quantity be if the market were closed to international trade?
What would the domestic and foreign quantity supplied be if it were open to
international trade and the world price was $6?
(b)If the world price was $4 and a tariff of $2 were placed on the product, what would
be the total revenues going to domestic producers, foreign producers (after-tax), and the
government? Explain.
(c)Given a world price of $4, what would be the difference in the total revenue received
by foreign producers with a $2 per unit tariff compared with a quota of 20,000 units?
9) If users can benefit from conservation, resources will be:
A.Not be profitable
B.Extracted at a fast rate
C.Preserved for future use
D.Overused in the present and the future
10) In a sporting goods store, you can buy the equipment you want and forgo the rest.
But in an election you “buy” the entire range of the candidate’s positions, including
some you may not agree with. This difference:
A.reflects limited and bundled choices in the public sector.
B.describes the paradox of voting.
C.describes the principal-agent problem in the public sector.
D.creates bureaucratic inefficiency in the public sector.
11)
Native-born workers may not be harmed by immigration if it:
A.Reduces wages and labor demand is inelastic
B.Reduces the rate of return on capital
C.Increases the rate of return on capital
D.Causes production costs to rise
12) The concept of parity in farm policy implies that:
A.Farm incomes should remain stable over the business cycle
B.A given output should always provide the farmer with the same real income
C.The purchasing power of the farmer’s dollar should fall
D.The prices of farm commodities should remain stable
13) In the balance of payments of the United States, U.S. goods imports are recorded as
a:
A.positive entry.
B.capital account entry.
C.current account entry.
D.financial account entry.
14) Answer the following question based on the data provided in the tables below for
two hypothetical nations, Wat and Xat. The nations have the production possibilities for
rice and corn given in the following table:
Refer to the data above. Assume that Wat originally produced rice and corn at
combination C and that Xat originally produced combination B. If the nations now fully
specialized based on comparative advantage, the total gains from specialization and
trade are:
A.25 units of rice and 25 units of corn
B.50 units of rice and 50 units of corn
C.100 units of rice and 100 units of corn
D.100 units of rice and 150 units of corn
15) The Temporary Assistance for Needy Families (TANF) program:
A.Put a limit on receiving welfare payments and required able-bodied adults to work
after receiving assistance for two years
B.Increased the number of people receiving welfare benefits and the amount of the
assistance
C.Required businesses to monitor low-income workers and used Federal funds to
supplement their pay
D.Required the use of food stamps for food purchases by families, but permitted cash
assistance to be given to the elderly
16) If the price of a product increases:
A.Consumer surplus will decrease
B.Consumer surplus will increase
C.Total revenue will definitely increase
D.Total revenue will definitely decrease
17) What are the likely economic effects of social regulation on prices, innovation, and
competition?
18) What is the profit-maximizing condition for the use of a resource?
19) Complete the following short-run cost table using the information provided.
20) Explain how the prices of related goods also affect demand.
21) What do critics of social regulation need to remember about government?
22) Consider the two graphs below. Graph A represents a typical firm in a purely
competitive industry. Graph B represents the supply and demand conditions in that
industry. The dashed horizontal line represents the current market price for firms and
for the industry. In the long run, what will happen to price, profit, the supply curve, and
the number of firms in the industry?
23) Compare and explain the significance of the substitution and output effects as they
apply to resource pricing. What relationship, if any, do they bear to the income and
substitution effects discussed in connection with product demand?
24) What is the probable incidence of the personal income tax?
25) Use diminishing marginal utility to explain why millionaires often do not have
many homes, even if they can afford it.