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1) The short-run supply curve for a competitive firm is the:
A.Entire MC curve
B.Segment of the MC curve lying below the AVC curve
C.Segment of the MC curve lying above the AVC curve
D.Segment of the AVC curve lying to the right of the MC curve
2) Which attitude or custom is the most conducive to long-term economic growth?
A.Focus on group contentment rather than individual achievement.
B.The belief there is little or no correlation between an individual's economic actions
and her or his economic fortunes.
C.Direct connections between individual efforts (including educational efforts) and
economic rewards.
D.Use of the majority of resources for religious structures and ceremonies.
3) Behavioral economists suggest that brand-loyalty, which can be a source of
monopoly power for the producer, may be explained by consumers' tendency to have
the:
A.Anchoring effect
B.Mental accounting effect
C.Status quo bias
D.Confirmation bias
4) The slope of a budget line reflects the:
A.elasticity of demand for the two products.
B.price ratio of the two products.
C.amount of the consumer's income.
D.utility ratio of the two products.
5) Since 1975 the distribution of income has:
A.remained virtually constant from year to year.
B.become more equal.
C.varied considerably from year to year but in general has been stable.
D.become less equal.
6)
Assumptions: (1) Employers in this market are willing and able to ignore minimum
wage laws; (2) Sd represents the supply of domestic-born (and legal immigrant)
workers; (3) St represents the total supply of workers in this labor market (Sd plus
illegal immigrants); and (4) unless otherwise stated, illegal immigration is not
effectively blocked by the government.
Refer to the given figure and assumptions. How many domestic-born (and legal
immigrant) workers will be hired at equilibrium?
A.20,000.
B.50,000.
C.60,000.
D.70,000.
7) Over the next 15 years, ___ out of every 10 people added to the world's population
will be born in developing countries.
A.6
B.7
C.8
D.9
8) Gomez argues that we need to increase the nation's output. Chang contends that our
top priority should be a more equal distribution of income and output. It can be
correctly stated that these two goals are:
A.essentially unrelated.
B.complementary because the realization of one will promote fulfillment of the other.
C.at least partially competing because the redistribution of income might impair
incentives to work and produce.
D.complementary because a more equal distribution of income always promotes
economic growth.
9) When the United States is described as having a dual system of health care, this
means that:
A.government provides basic health insurance for all Americans and private insurance
covers services beyond the basic level.
B.high-quality care is provided in urban areas, but care in rural areas is of poor quality.
C.those Americans with good insurance or substantial wealth receive world-class health
care, while those without insurance receive no or low-quality health care.
D.the high-risk segment of the population is required to have health insurance, while
the low-risk sector is not.
10)
With labor migration, the destination country experiences:
A.An increase in output and a rising wage rate
B.An increase in output and a falling wage rate
C.A decrease in output and a falling wage rate
D.A decrease in output and a rising wage rate
11) Which of the following is most likely to be an implicit cost for Company X?
A.Forgone rent from the building owned and used by Company X.
B.Rental payments on IBM equipment.
C.Payments for raw materials purchased from Company Y.
D.Transportation costs paid to a nearby trucking firm.
12) Price is taken to be a "given" by an individual firm selling in a purely competitive
market because:
A.The firm's demand curve is downward-sloping
B.There are no good substitutes for the firm's product
C.Each seller supplies a negligible fraction of total market
D.Product differentiation is reinforced by extensive advertising
13) The individual who brings together economic resources and assumes the risk of
business ventures in a capitalist economy is called the:
A.Manager
B.Entrepreneur
C.Stockbroker
D.Banker
14) Assume the price of product Y (the quantity of which is plotted on the vertical axis)
is initially $15 and the price of X (the quantity of which is plotted on the horizontal
axis) is initially $3. Assume money income is initially $60. If the prices of Y and X now
increase to $30 and $6 respectively and money income increases to $120, then the
budget line will:
A.shift rightward and become steeper.
B.shift rightward and become flatter.
C.shift rightward, but its slope will not change.
D.be unchanged.
15)
Symbols: Q = number of workers demanded; W = wage rate; and VTP = value of the
cumulative total product (output) of the particular number of workers.
Assumptions: (1) The current wage in Zinnia is $20 and the current wage in Marigold is
$12; (2) full employment exists in both countries.
Refer to the given data, symbols, and assumptions. Migration of workers will:
A.increase the combined value of total product but reduce the wage in Zinnia.
B.increase the combined value of total product but reduce the wage in Marigold.
C.reduce the combined value of total product but increase the wage in Marigold.
D.reduce the combined value of total product but increase the wage in Zinnia.
16) Frederic Bastiat's Petition of the Candlemakers most directly refutes which of the
following arguments for protectionism?
A.Increased domestic employment argument.
B.Infant industry argument.
C.Cheap foreign labor argument.
D.Diversification-for-stability argument.
17) The opportunity cost to a consumer who smokes cigarettes consists of the:
A.Costs imposed on others who inhale second-hand smoke
B.Products that the consumer could have bought instead of cigarettes
C.Amount of cigarette-taxes paid by this consumer
D.Cost of complementary products such as lighters, ashtrays, and cigarette holders
18) Which of the following does not foster innovation and technological advance?
A.Competition in markets
B.Freedom of choice and enterprise
C.Self-interest and personal rewards
D.Fear and avoidance of risk
