1) An oil company is considering drilling in the Gulf at a current cost of $300,000 with
an expected profit of $500,000 in three years. The current market rate is 10 percent.
Should the company make the investment?
A.Yes, the future value of the profit is greater than the present value of the cost
B.No, the future value of the profit is less than the present value of the cost
C.Yes, the present value of the profit is greater than the present value of the cost
D.No, the present value of the profit is less than the present value of the cost
2)
Refer to the above graph. It shows the supply curve for a product before tax (S0) and
after an excise tax is imposed (S1). The excise tax on the product is ultimately paid:
A.By buyers only
B.By sellers only
C.75 percent by buyers and 25 percent by sellers
D.25 percent by buyers and 75 percent by sellers
3) If a firm is hiring variable resources D and F in perfectly competitive input markets,
it will minimize the cost of producing any level of output by employing D and F in such
amounts that:
A.the price of each input equals its MP.
B.MPD = MPF.
C.MPD/PD = MPF/PF.
D.MPD/PF = MPF/PD.
4) Answer the question on the basis of the following demand and cost data for a specific
firm.
Refer to the above data. If columns 1 and 3 are this firm’s demand schedule, maximum
economic profit will be:
A.$60
B.$70
C.$80
D.$90
5) A non-discriminating pure monopolist is generally viewed as:
A.Productively efficient, but allocatively inefficient
B.Productively inefficient, but allocatively efficient
C.Both productively and allocatively inefficient
D.Both productively and allocatively efficient
6) One suggested policy that industrially advanced nations could adopt to foster
economic growth in less developed nations would be to:
A.Leave the responsibility to the World Bank
B.Direct foreign aid to the poorest DVCs
C.Recruit more skilled workers from DVCs
D.Target the banking sector for the most help
7) A Lorenz curve is a graph that shows:
A.The equity versus efficiency trade-off
B.How many households are living in poverty
C.The tradeoff between inflation and unemployment
D.The distribution of household income
8) The consumer price index is 113 in Year 1 and 118 in Year 2. The nominal wage rate
is $8 in Year 1 and $9 in Year 2. What is the approximate percentage change in the real
wage rate from Year 1 to Year 2?
A.2 percent
B.4 percent
C.6 percent
D.8 percent
9) Where there is asymmetric information between buyers and sellers:
A.product shortages will occur at the equilibrium price.
B.product surpluses will occur at the equilibrium price.
C.markets can produce inefficient outcomes.
D.markets will fail due to the “free-rider problem.”
10)
Refer to the above table. The addition of which unit has the greatest marginal utility?
A.Fifth
B.Sixth
C.Seventh
D.Eighth
11) An IAC (industrially advanced country) had a per capita income of $28,200 while a
DVC (developing country) had a per capita income of $1,200. If both countries
experience a per-capita-income growth of 2 percent, then their respective per-capita
income levels will become:
A.$33,840 and $1,440
B.$28,764 and $1,224
C.$33,840 and $1,224
D.$28,764 and $1,440