1) Which of the following is a public assistance or welfare program as opposed to a
social insurance program?
A.Supplemental Security Income (SSI).
B.Unemployment compensation.
C.Medicare.
D.Social Security.
2) Assume the Environmental Protection Agency imposes an excise tax on polluting
firms. In which of the following situations would we expect the additional costs to be
borne most heavily by consumers?
A.Demand is highly elastic and supply is highly inelastic.
B.Demand and supply are both highly elastic.
C.Demand and supply are both highly inelastic.
D.Demand is highly inelastic and supply is highly elastic.
3) Which is not characteristic of a product with relatively inelastic demand?
A.The good is regarded by consumers as a necessity
B.There are a large number of good substitutes for the good
C.Buyers spend a small percentage of their total income on the product
D.Consumers have had only a short time period to adjust to changes in price
4) Price supports:
A.decrease pollution because participants must practice organic farming.
B.neither increase nor decrease environmental pollution.
C.increase pollution because supports encourage the cultivation of marginal land and
the use of more pesticides and fertilizers.
D.discourage rent-seeking activity.
5)
Refer to the above graph. If the output level is Q1, then the sum of the consumer and
producer surplus is:
A.bce
B.ac0
C.0abe
D.0eQ1
6) In a market system, resources will move away from an industry when:
A.Profits of firms in the industry are rising
B.Demand for the industry’s product is decreasing
C.The production of output in the industry is rising
D.Profits of firms in other industries are falling
7) A parity ratio of 0.6 in year A means that prices:
A.Received in year A could buy 60 percent as much as prices received in the base
period
B.Received in the base period could buy 60 percent as much as prices received in year
A
C.Received in year A had risen by 60 percent over the prices received in the base period
D.Paid by farmers in year A had risen by 60 percent over the prices paid in the base
period
8)
Refer to the diagram, in which solid arrows reflect real flows; broken arrows are
monetary flows. Flow (1) might represent:
A.corporate income tax payments.
B.government provision of highways for truck transportation.
C.business property tax payments.
D.transfer payments to low-income families.
9) Which of the following financed the largest share of health-care spending in 2011?
A.Medicare
B.Medicaid
C.Copayments and deductions paid by patients
D.Military and other public insurance (excl. Medicare and Medicaid)
10)
In the above graph, the expected-rate-of-return curve would be the line connecting
points:
A.a, c, and e
B.b, c, and e
C.b, c, and d
D.a,c, and d
11) State industries are notoriously poor “incubators” for the development of
profit-focused, entrepreneurial persons who may leave the firm to set up their own
businesses. This statement is an argument in favor of:
A.free immigration and emigration.
B.privatizing state industries.
C.central planning.
D.free trade.
12) Which is not true of price discrimination?
A.Successful price discrimination requires that different segments of the market have
different demand elasticities
B.Successful price discrimination will provide the firm with more profit than if it does
not discriminate
C.Successful price discrimination implies that the producer can separate customers into
easily identifiable groups
D.Successful price discrimination will generally result in a lower level of output than
would be the case under a single-price monopoly
13)
Refer to the tables. Suppose that the amount and quality of resources are the same in
both countries. We can conclude that:
A.Duckistan is technologically better than Herbania at producing military goods.
B.Herbania is technologically better than Herbania at producing both military goods
and civilian goods.
C.the total opportunity cost of producing 4 units of military goods is the same in both
countries.
D.Herbania is technologically superior to Duckistan in producing civilian goods.
14) In the balance of payments of the United States, inflows of foreign currencies to the
United States are recorded as:
A.a positive entry.
B.a current account entry.
C.a negative entry.
D.net investment income.
15)
In the labor market shown above, if a minimum wage level is set at Wm, it will cause:
A.Employment to increase from A to B
B.Employment to decrease from C to B
C.Employment to decrease from B to A
D.AC workers to be hired
16) Which of the following statements is correct?
A.Monopoly firms tend to be more internally efficient than competitive firms because
they have a single goal of profit maximization
B.Monopoly firms are sheltered from competitive forces and such an environment
makes them subject to X-inefficiency
C.Monopoly firms are in industries with low barriers to entry that tend to lower the cost
of producing products
D.Competitive firms tend to be more efficient than monopolist firms because they
maximize per unit profits, not total profits
17)
Refer to the tables. Opportunity costs are:
A.constant in both Duckistan and Herbania.
B.larger in Duckistan than in Herbania.
C.increasing in both Duckistan and Herbania.
D.increasing in Duckistan and constant in Herbania.