1) A state government wants to increase the taxes on cigarettes to increase tax revenue.
Because cigarettes are addictive, we would expect its demand to be:
A.Elastic, thus the government’s cigarette-tax revenues would rise with a tax increase
B.Elastic, thus the government’s cigarette-tax revenues would fall with a tax increase
C.Inelastic, thus the government’s cigarette-tax revenues would fall with a tax increase
D.Inelastic, thus the government’s cigarette-tax revenues would rise with a tax increase
2) Which antitrust act provided that injured parties could file suit and, if successful,
collect triple damages from monopolistic violators?
A.Wheeler-Lea Act
B.Clayton Act
C.Sherman Act
D.Celler-Kefauver Act
3) The characteristic most closely associated with oligopoly is:
A.Easy entry into the industry
B.A few large producers
C.Product standardization
D.No control over price
4) The availability of health insurance tends to:
A.decrease the quantity of health care demanded and cause an underallocation of
resources to the health care industry.
B.increase the quantity of health care demanded and cause an underallocation of
resources to the health care industry.
C.increase the quantity of health care demanded and cause an overallocation of
resources to the health care industry.
D.decrease the quantity of health care demanded and cause an overallocation of
resources to the health care industry.
5) In industrially advanced countries, the price elasticity of demand for health care is
about:
A.2.0
B.0.2
C.4.5
D.1.0
6) Which of the following supports the contention that pure competitors have a weak
incentive to engage in R&D?
A.Entry to purely competitive industries is easy and thus profit from innovation is
quickly competed away.
B.In pure competition, products are already highly differentiated.
C.Most purely competitive industries are increasing-cost industries.
D.Pure competitors are happy to earn only a normal profit.
7) Assume product A is an input in the production of product B. In turn, product B is a
complement to product C. We can expect a decrease in the price of A to:
A.increase the supply of B and increase the demand for C.
B.decrease the supply of B and increase the demand for C.
C.decrease the supply of B and decrease the demand for C.
D.increase the supply of B and decrease the demand for C.
8) Economic profits are:
A.Always larger than accounting profits
B.The sum of accounting profits and implicit costs
C.Equal to the difference between total revenues and implicit costs
D.Equal to the difference between accounting profits and implicit costs
9) Internationally, participation differences in organ donation programs are mostly
attributed to:
A.cultural views.
B.financial compensation for organ donors.
C.what default option is set for participation or nonparticipation.
D.living standards as measured by per capita GDP.
10) Government officials tend to make:
A.better economic decisions than private individuals because of the wealth of
information at their disposal.
B.better economic decisions than private individuals because of the efficient processes
and flexibility built into the government bureaucracy.
C.inefficient choices because they lack the information necessary to accurately weigh
marginal benefits and marginal costs.
D.inefficient choices because the invisible hand directs them away from the resource
allocation where marginal benefits equal marginal costs.
11) Which of the following Gini ratios would indicate the least amount of income
inequality?
A.0.20
B.0.40
C.0.60
D.0.80
12)
Refer to the above graph. Which point is the shutdown point for the firm?
A.A
B.B
C.C
D.D
13) Linda committed a traffic violation that resulted in an accident. She learns first that
the violation will result in a $500 fine; she then learns that she will have to pay another
$500 for damage caused in the accident. According to prospect theory,
A.she will suffer as much disutility from paying for the accident damage as she does
from paying the fine.
B.she will suffer less disutility from paying for the accident damage than from paying
the fine.
C.she will suffer more disutility from paying for the accident damage than from paying
the fine.
D.she will feel less disutility from paying $1,000 than she would receive positive utility
from receiving $1,000.
14) Answer the question on the basis of the following marginal utility data for products
X and Y. Assume that the prices of X and Y are $4 and $2 respectively and that the
consumer’s income is $18.
Refer to the data. Which of the following represents the demand schedule for X?
A.
B.
C.
D.
15)
Refer to the diagram for a purely competitive producer. The firm will produce at a loss
at all prices:
A.above P1.
B.above P3.
C.above P4.
D.between P2 and P3.
16) Neoclassical economics and behavioral economics:
A.are generally viewed as complementary, together providing better understanding of
economic behavior than each could on its own.
B.are diametrically opposed to each other.
C.generally address different issues in economics, and therefore rarely intersect on the
same topic.
D.both start from the premise that people are fundamentally rational in their decision
making.