1) There is a surplus of tomatoes in the market. This implies that:
A.The current price is set above the equilibrium level
B.The price will be rising, as a result
C.Supply of tomatoes is more than the demand
D.Quantity demanded is more than quantity supplied
2) A protective tariff will:
A.increase the sales of foreign exporters.
B.increase the price and sales of domestic producers.
C.increase the welfare of domestic consumers.
D.create an efficiency gain in the domestic economy.
3) U.S. farm household income in 2011 was:
A.Less than the average income for all households
B.About equal to the average income for all households
C.Above the national average income by about $18,000
D.Above the national average income by about $30,000
4) In the following question you are asked to determine, other things equal, the effects
of a given change in a determinant of demand or supply for product X upon (1) the
demand (D) for, or supply (S) of, X; (2) the equilibrium price (P) of X; and (3) the
equilibrium quantity (Q) of X.
Refer to the given information. A reduction in the number of firms producing X will:
A.increase D, increase P, and increase Q.
B.increase S, decrease P, and increase Q.
C.decrease S, increase P, and decrease Q.
D.decrease S, decrease P, and increase Q.
5) Children who dislike Brussels sprouts exemplify the notion that the marginal utility
of Brussels sprouts is:
A.Zero
B.Negative
C.Positive, but decreasing
D.Less than the total utility
6) Examples of low-income developing countries are:
A.Switzerland, New Zealand, and Australia.
B.Germany, Austria, and Italy.
C.Sudan, Bangladesh, and Ethiopia.
D.Mexico, South Korea, and Brazil.
7) The idea that one pays a relatively small known cost for protection against an
uncertain and much larger cost is the basic principle behind:
A.Insurance
B.Copayment
C.Moral hazard
D.Asymmetric information
8) Which of the following is not a basic market model?
A.Pure competition
B.Free enterprise
C.Oligopoly
D.Monopoly
9) In the circular flow diagram, households get their ability to pay for their consumption
expenditures from the:
A.Revenues they receive for their products
B.Costs they incur for resources
C.Incomes they earn for their resources
D.Goods and services they get in the product markets
10) If a variable input is added to some fixed input, beyond some point the resulting
extra output will decline. This statement describes:
A.economies and diseconomies of scale.
B.X-inefficiency.
C.the law of diminishing returns.
D.the law of diminishing marginal utility.
11)
Refer to the diagram. Points A, B, C, D, and E show:
A.that the opportunity cost of bicycles increases, while that of computers is constant.
B.combinations of bicycles and computers that society can produce by using its
resources efficiently.
C.that the opportunity cost of computers increases, while that of bicycles is constant.
D.that society’s demand for computers is greater than its demand for bicycles.
12) Which of the following statements best describes the Internet market structure?
A.It is highly competitive, with many providers and no firms in a dominant position.
B.There are a few large firms, such as Google, Facebook, and Amazon, but they each
occupy their own niche and don’t infringe on the others’ territories.
C.There are a few large firms, such as Google, Facebook, and Amazon, each
dominating a particular sector but always trying to gain market share in another sector.
D.It is comprised of firms that have been granted monopolies by the government and
are highly regulated.
13) Answer the question on the basis of the following data confronting a firm:
Refer to the data. If the firm’s minimum average variable cost is $10, the firm’s
profit-maximizing level of output would be:
A.2
B.3
C.4
D.5
14) The economic principle that “unemployment rate will tend to increase as the
economy moves into a recession” is an example of:
A.A normative statement
B.An assumption
C.A loaded terminology
D.A generalization
15) The price of a certain farm product was $1.25 in the base period when the parity
ratio was 100. If the index of prices paid by farmers is now at 140, then the parity price
of this farm today should be:
A.$0.90
B.$1.50
C.$1.75
D.$2.00
16)
The diagram suggests that:
A.X and Y are both inferior goods.
B.X and Y are both normal goods.
C.X and Y are substitute goods.
D.X and Y are independent goods.
17) Consider the currency market for British pounds and U.S. dollars. A decrease in the
supply of British pounds results in:
A.An appreciation of the pound and a depreciation of the dollar
B.A depreciation of the pound and a depreciation of the dollar
C.An appreciation of the pound and an appreciation of the dollar
D.A depreciation of the pound and an appreciation of the dollar
18) The degree of inequality in income distribution based on single-year data is:
A.Understated even though it takes into account income mobility
B.Overstated because it does not take into account income mobility
C.Understated because it does not take into account income mobility
D.Overstated even though it takes into account income mobility
19) One main difference in the rulings on the 1945 Alcoa case and the 1956 Dupont
cellophane case is that the Alcoa case:
A.Focused on structure whereas the Dupont case focused on behavior
B.Focused on behavior whereas the Dupont case focused on structure
C.Defined the market broadly whereas the Dupont case defined the market narrowly
D.Defined the market narrowly whereas the Dupont case defined the market broadly
20) If firms are losing money in a purely competitive industry, then the long run
adjustments in this situation will cause the market price to:
A.Increase, and the representative firm’s profits will increase
B.Decrease, and the representative firm’s profits will increase
C.Increase, and the representative firm’s profits will decrease
D.Decrease, and the representative firm’s profits will decrease