1) A normative statement is one that:
A.is based on the law of averages.
B.applies only to microeconomics.
C.applies only to macroeconomics.
D.is based on value judgments.
2) In a graph showing the market supply and demand for British pounds in terms of
U.S. dollars, the demand-for-pounds curve is downsloping because:
A.Fewer British pounds can be purchased if pounds become less expensive
B.Fewer U.S. dollars can be purchased if British pounds become less expensive
C.More U.S. dollars can be purchased if British pounds become more expensive
D.More British pounds can be purchased if pounds become less expensive
3)
Consider the supply and demand curves depicted in the diagram above. If the
government imposed a price ceiling of $15, then buyers will be intending to buy ___,
but they will be able to legally buy ____.
A.30 units; 24 units
B.36 units; 24 units
C.36 units; 30 units
D.24 units; more than 24 units
4) Other things equal, if the wage rates paid to a firm’s labor inputs were to rise, we
would expect the:
A.AFC, AVC, ATC, and MC curves all to rise.
B.AVC, ATC, and MC curves all to rise.
C.AFC and ATC curves to fall.
D.MP curve to fall.
5) Which of the following is not a source of loanable funds?
A.The saving of households.
B.Business saving.
C.Commercial bank lending.
D.Government budget deficits.
6) Based on the concept of price elasticity of demand, which of the following cases is
most likely to occur?
A.Golf courses charging higher prices for golf during the week than on weekends.
B.Movie theaters charging higher prices for senior citizens.
C.Colleges charging lower tuition for low-income students.
D.Airlines charging lower fares for business travelers.
7) If the existence of health insurance increases one’s incentive to use the health care
system more intensively, this is an illustration of:
A.the adverse selection problem.
B.the moral hazard problem.
C.the benefits-received principle.
D.the Coase theorem.
8) The World Trade Organization was established as a successor to:
A.GATT.
B.NAFTA.
C.the EU.
D.the Doha Development Agenda.
9) Assume that a firm can produce product A, product B, or product C with the
resources it currently employs. These resources cost the firm a total of $100 per week.
Assume, for the purposes of this problem, that the firms costs cannot be changed. The
market prices and the quantities of A, B, and C these resources can produce are given as
follows.
(a)Compute the firms profit when it produces A, B, or C and enter these data in the
table.
(b)Which product will the firm produce?
(c)If the price of A rose to $16, which product will the firm produce?
(d)If the firm produces A at a price of $16, what would tend to happen to the number of
firms producing product A?
10) If long-run average total cost decreases as output increases, this is due to:
A.Declining average fixed costs
B.The law of diminishing returns
C.Economies of scale
D.Externalities
11) Which of the following statements is correct?
A.Under the gold standard, exchange rates fluctuate without restraint and thereby
correct any international balance of payment disequilibrium
B.If nations X and Y are on the international gold standard, and X’s exports to Y exceed
X’s imports from Y, then gold will flow from X to Y
C.If the dollar price of pounds rises, then the pound price of dollars will also rise
D.American exports tend to increase, while American imports tend to decrease, the
supplies of foreign monies owned by American banks