John Rawls’s views on income distribution and fairness can best be described by the
statement:
A. The lesser individuals’ duty should be to work for the well-being of the brightest
individuals.
B. A high level of income inequality is necessary to sustain the arts, beauty, education,
and civilization.
C. Society’s goal should be to maximize the welfare of the least well-off, but some
inequality is necessary to meet this goal.
D. Property rights should be equally distributed, and the market should determine the
distribution of income.
Answer:
Free marketers such as Stephen Landsburg would conclude that:
A. all models support laissez-faire policies.
B. models sometimes support the need for government intervention.
C. models always support the need for government interventions.
D. models have no implications for government interventions.
Within a model, if people do not fully consider the effects of their decisions on others
(i.e., there are externalities), it is possible that government intervention is necessary to
provide the outcome that most people in society want.
Answer:
Given that diesel cars get much better gas mileage than the typical car, an increase in
the price of gasoline would be expected to:
A. decrease the equilibrium price and increase the equilibrium quantity of diesel cars.
B. increase the equilibrium price and decrease the equilibrium quantity of diesel cars.
C. decrease the equilibrium price and quantity of diesel cars.
D. increase the equilibrium price and quantity of diesel cars.
Answer:
If the RECAP policy was imposed on firms by the government, it would be considered:
A. a shadow price.
B. an advantageous default option nudge.
C. a push.
D. a purposeful behavior.
Answer:
Backward induction will not lead to a determinate sequence of actions for:
A. games with dominant strategies.
B. sequential games.
C. simultaneous move games.
D. mixed strategy games.
Answer:
If a monopolistically competitive market became perfectly competitive, output probably
would:
A. rise.
B. fall.
C. not change.
D. rise and then fall.
Answer:
Public assistance programs:
A. are not means-tested and are targeted to the public.
B. are means-tested social programs targeted to the poor and providing financial,
nutritional, and housing assistance.
C. provide the same amount of support to families in poverty in every state of the
United States.
D. are available only to single-parent families with at least three children.
Answer:
The price of computers has fallen each year for the last 10 years. This is probably an
example of the working of:
A. economic forces.
B. political forces.
C. social forces.
D. nonmarket forces.
Answer:
The income effect refers to the decision to work:
A. more hours when the wage rate goes up.
B. the same number of hours when the wage rate goes up.
C. more hours as income increases.
D. fewer hours as income increases.
Answer:
Refer to the graph shown. When the market is in equilibrium, producer surplus is equal
to:
A. 250.
B. 500.
C. 750.
D. 1,000.
Answer:
Refer to the graphs shown. The curve that best demonstrates the law of demand is:
A. I.
B. II.
C. III.
D. IV.
Answer:
The following graph shows average fixed costs, average variable costs, average total
costs, and marginal costs of production.
Refer to the graph shown. The average fixed cost curve is represented by which curve?
A. I
B. II
C. III
D. IV
Answer:
Joe is maximizing utility by consuming three colas at $2 a piece and four hot dogs. The
last cola gave him 200 units of utility, and the last hot dog gave him 300 units of utility.
The price of each hot dog is:
A. $3.00.
B. $1.50.
C. $1.00.
D. $0.50.
Answer:
Refer to the graph shown. If buyers must pay $5, quantity demanded will equal:
A. 2.5.
B. 50.
C. 75.
D. 100.
Answer:
If the long-run market supply curve is perfectly elastic, an increase in demand will
cause the final equilibrium to be at:
A. the original price but at a smaller output.
B. a higher price with a higher output.
C. the original price but with a higher output.
D. a higher price but with the same output.
Answer:
The problem that arises when people don’t have to bear the negative consequence of
their actions is known as:
A. adverse selection.
B. externality.
C. moral hazard.
D. signaling.
Answer:
Which of the following is most likely to reduce the supply of labor?
A. An increase in population
B. An increase in the value placed on leisure by workers
C. A decrease in the value placed on leisure by workers
D. A decrease in labor productivity
Answer:
What distinguishes a deductive approach from an inductive approach to modeling?
A. An inductive approach begins by looking at the data, whereas a deductive approach
develops the implications of a model first.
B. Inductive modeling uses data, whereas deductive modeling does not.
C. The deductive approach begins by looking at the data, whereas the inductive
approach begins with the model.
D. The inductive approach does not have conclusions for viable policies, whereas the
deductive approach does.
Answer:
A production table can be used to determine:
A. a firm’s profits.
B. a firm’s costs.
C. how much output is produced from a given quantity of inputs.
D. how much of a product will be demanded by consumers.
Answer:
When people talk about U.S. intellectual property rights, what are they talking about?
A. The existence of high-quality educational institutions such as the Ivy League schools
B. Ideas and knowledge protected by patents and copyrights
C. The human capital of the U.S. labor force
D. The abstract nature of ownership in corporate organizations
Answer:
With a sole proprietorship:
A. all of one’s assets are at risk of loss.
B. shares are valued by the marketplace.
C. responsibility is shared.
D. income is taxed twice
Answer:
The production possibility table below on the left is for growing broccoli and asparagus
in a 320-square-foot garden in one season.
Which curve on the graph on the right corresponds to this table?
A. I
B. II
C. III
D. IV
Answer:
Refer to the graph shown. The firm in this monopolistically competitive industry will:
A. earn economic profits of $70,000 per year.
B. earn economic profits of $140,000 per year.
C. incur economic losses of $140,000 per year.
D. incur economic losses of $70,000 per year.
Answer:
The Robinson-Patman Act was passed during the Depression of the 1930s to:
A. eliminate labor unions.
B. make it illegal for many firms to raise prices.
C. make it illegal for many firms to lower prices.
D. strengthen the forces of competition.
Answer:
The total demand for wheat in the U.S. is given by Qd = 1750 – 130 P. Domestic supply
is given by, Qs = 1000 + 170 P. Price is measured in dollars/ton and quantity is
measured in thousands of tons. The equilibrium price and quantity of wheat are:
A. $4.78 a ton and 1,129 thousands of tons respectively.
B. $4.78 a ton and 1,813 thousands of tons respectively.
C. $2.50 a ton and 2,075 thousands of tons respectively.
D. $2.50 a ton and 1,425 thousands of tons respectively.
Answer:
Suppose a firm is contractually obligated to pay workers $25 per hour despite the fact
that the market-clearing wage is $19 per hour. If there are 500 qualified applicants but
only 350 job openings, it is likely that:
A. the firm will hire 350 workers at $25 per hour and 150 workers at $19 per hour.
B. the firm will go bankrupt.
C. jobs will have to be rationed in some way, and the firm may use non-job-related
qualities to do so.
D. the market eventually will clear at a wage rate between $19 and $25.
Answer:
Economies of scale account for what part of a long-run average total cost curve?
A. downward-sloping
B. horizontal
C. upward-sloping
D. vertical
Answer:
If a fast-food restaurant chain is deciding whether to offer a low-carb menu or to add
more tables to its restaurant floor:
A. it is still relevant to calculate marginal cost; it is just a less straightforward process.
B. the restaurant will incur marginal costs only if the addition of new menu items
causes a net increase in sales.
C. the restaurant will not incur marginal costs because new menu items will cause
customers to change their orders but not to order more food.
D. such a decision cannot be analyzed using an economic model because the model can
only address the question “Should we produce more or less?”
Answer:
Refer to the graph shown. If the marginal cost of each weekend trip this year is $299 no
matter how many trips Rodney takes, assuming he is rational, Rodney will take:
A. four trips this year.
B. three trips this year.
C. two trips this year.
D. one trip this year.
Answer:
One reason economists distinguish between micro and macro is:
A. the fallacy of composition does not always hold.
B. supply and demand are more interdependent in the aggregate (macro).
C. supply and demand are more interdependent in individual markets (micro).
D. supply and demand are never interdependent.
Answer:
The group of economists that has stressed the idea of government failure is:
A. mainstream economists.
B. Marxian economists.
C. public choice economists.
D. neo-Keynesian economists.
Answer:
Institutional discrimination exists when:
A. discrimination is based on individual characteristics related to job performance.
B. discrimination is based on individual characteristics not related to job performance.
C. the structure of a job makes it difficult for certain groups of individuals to succeed.
D. discrimination is based on correctly perceived statistical characteristics of a group.
Answer:
The production possibility frontiers of Northland and Southland are given. Without
trade, Northland produces and consumes 20 apples and 5 bananas and Southland
produces and consumes 10 apples and 40 bananas. Could they increase their
consumption bundle by changing production and trading?
A. No; Southland does at least as well at producing both, so it would have no incentive
to trade.
B. Yes; they could gain 75 bananas and 60 apples.
C. Yes; they could gain up to 60 apples without losing bananas.
D. Yes; they could gain up to 15 bananas without losing apples.
Answer:
When considering outsourcing, most laypeople:
A. recognize its benefits to raising foreign wages.
B. oppose it because of the visible loss of jobs.
C. support it because they enjoy lower consumer prices.
D. recognize it frees resources for other jobs for which the U.S. has a comparative
advantage.
Answer:
To manufacture 1,000 pairs of shoes in a week, a firm can use 1,500 workers and 50
machines or 100 machines and 2,000 workers. Which method is more technically
efficient?
A. 1,500 workers and 50 machines
B. 2,000 workers and 100 machines
C. Both are equally efficient.
D. Neither could be considered efficient.
Answer: