1) OPEC functions as a classic example of a kinked demand curve oligopoly.
2) Rivalry means that when one person buys and consumes a product, it is not available
for purchase and consumption by another person.
3) The demand for health care is highly elastic with respect to both price and income.
4) Extensive network effects may drive a market toward natural monopoly because
consumers tend to choose a common, standard product that everyone else is using.
5) To achieve profit maximization, a firm must produce the profit-maximizing output
with the least amount of economic resources.
6) It will be profitable for a firm to hire additional units of any resource up to the point
at which its MRP is equal to its MRC.
7) Most nations of the world are now IACs, not middle- and low-income DVCs.
8) The process by which capital goods are accumulated is known as investment.
9) Negative-sum games do not exist because neither player has an incentive to play the
game.
10) If an oligopolist’s competitors follow its price cuts but ignore its price increases, the
oligopolist would end up holding its price constant even if its marginal cost changes.
11) The most important growth obstacle common to all DVCs is the lack of desire to
increase their standards of living.
12) One clear effect of labor unions is an increase in the wage rates of their members.
13) Indifference analysis assumes that utility is numerically measurable.
14) A monopolist will try to charge the highest price that it can charge.
15) The ratio of the prices of two products that a consumer would buy with a given
fixed income is equivalent to the:
A.Marginal rate of substitution
B.Slope of the budget line
C.Income elasticity of demand for the two products
D.Price elasticity of demand for the two products
16) An inflow of investment funds into the United States from overseas is likely to
result from a(n):
A.Decline in expectations for economic growth in the United States
B.Growing belief among investors that the U.S. dollar ($) is overvalued
C.Rise in U.S. interest rates relative to world interest rates
D.Increase in the U.S. inflation rate
17)
Refer to the above data. If government adopts a price support program that sets the
price at $9, then the total amount that private buyers would pay for this agricultural
product is:
A.$300
B.$900
C.$1,800
D.$2,000
18)
Refer to the diagrams. Firm A is a:
A.pure competitor and Firm B is a pure monopoly.
B.pure competitor, as is Firm B.
C.pure monopoly and Firm B is a pure competitor.
D.pure monopoly, as is Firm B.
19) Answer the question on the basis of the following cost data for a firm that is selling
in a purely competitive market:
Refer to the data. If the market price for the firm’s product is $12, the competitive firm
should produce:
A.4 units at a loss of $109.
B.4 units at an economic profit of $31.75.
C.8 units at a loss of $48.80.
D.zero units at a loss of $100.
20) Globalization of resource markets has resulted in the business practice of
offshoring, which involves:
A.Only an outflow of jobs away from the U.S.
B.No possible expansion of jobs in the U.S.
C.Huge losses to consumers in the U.S.
D.Both an outflow as well as an inflow of jobs in the U.S.
21)
Refer to the diagram. If this is a competitive market, price and quantity will move
toward:
A.$60 and 100, respectively.
B.$60 and 200, respectively.
C.$40 and 150, respectively.
D.$20 and 150, respectively.
22) Which of the following is not an assumption that we make in analyzing pure
competition in the long run?
A.Firms are free to enter into, or exit from, a purely competitive market
B.We may talk about a “representative” firm, by assuming that competitive firms all
have identical cost curves
C.Firms may increase output by expanding their plant sizes
D.Profits are not relevant to firm behavior anymore, because competitive firms earn
zero profits in the long run
23) : Amazon’s rise to become the world’s largest online retailer was largely driven by:
A.an exclusive license granted by the U.S. government.
B.patents on online selling that keeps other firms out of the market.
C.far superior products than other online sellers could offer.
D.massive economies of scale in distribution logistics and data storage.
24) In which one of the following market models is X-inefficiency most likely to be the
greatest?
A.Pure competition.
B.Oligopoly.
C.Monopolistic competition.
D.Pure monopoly.
25) Which of the following would most likely increase the demand for gasoline?
A.The expectation by consumers that gasoline prices will be higher in the future.
B.The expectation by consumers that gasoline prices will be lower in the future.
C.A widespread shift in car ownership from SUVs to hybrid sedans.
D.A decrease in the price of public transportation.
26)
Which of the diagrams illustrate(s) the effect of a decline in the price of personal
computers on the market for software?
A.A only.
B.A and D.
C.B only.
D.D only.
27) A nation’s production possibilities curve is bowed out from the origin because:
A.resources are not generally equally efficient in producing every good.
B.the originator of the idea drew it this way and modern economists follow this
convention.
C.resources are scarce.
D.wants are virtually unlimited.
28) NAFTA:
A.has increased the standard of living in the North African member nations.
B.benefits workers in the participating nations but hurts consumers by raising prices.
C.allows completely unrestricted movement of goods, services, and resources between
the member nations.
D.has reduced most trade barriers between Canada, Mexico, and the United States.
29) A nation can produce two products: steel and wheat. The table below is the nation’s
production possibilities schedule:
Refer to the above table. Which of the following output-combinations is unattainable:
A.1 steel and 80 wheat
B.4 steel and 55 wheat
C.30 wheat and 3 steel
D.95 wheat and 0 steel
30)
Refer to the diagram where D and S are the United States’ demand for and supply of
Swiss francs. At the equilibrium exchange rate, E, the United States’ balance of
payments is in equilibrium. Under a system of flexible exchange rates, the shift in
demand from D to D’ will:
A.ultimately reduce U.S. exports and raise U.S. imports.
B.cause the dollar to appreciate.
C.cause the Swiss franc to depreciate.
D.cause the dollar to depreciate.
31)
Refer to the market for loanable funds, as shown in the above graph. Suppose investors
who borrow money in the loanable funds market become quite nervous and pessimistic
about the economy in general, and expected returns on investments in particular. We
would expect to see a(n):
A.Lower equilibrium interest rate
B.Rightward shift of the supply curve
C.Rightward shift of the demand curve
D.Increase in the equilibrium quantity of loanable funds
32)
Refer to the four graphs above. Select the graph above that best shows the changes in
demand and supply in the market specified in the following situation: In the market for
music CDs sold in stores, if more consumers switch to music-downloads from the
Internet, and the cost of making music CDs decreases because of technological
improvement in production.
A.Graph A
B.Graph B
C.Graph C
D.Graph D
33) The economizing problem is one of deciding how to make the best use of:
A.virtually unlimited resources to satisfy virtually unlimited wants.
B.limited resources to satisfy virtually unlimited wants.
C.unlimited resources to satisfy limited wants.
D.limited resources to satisfy limited wants.
34) Over the range of positive, but diminishing, marginal returns for an input, the total
product curve:
A.Falls
B.Rises at a constant rate
C.Rises at a decreasing rate
D.Rises at an increasing rate
35) Explain how Singapore delivers good quality health care with significantly less
spending than the United States.
36) Explain the three characteristics of utility.
37) Examine the effect Medicare and Medicaid have on the bills patients with private
health insurance pay.
38) If tariffs contribute to inefficiency in the international allocation of resources and
lower output and income, why have nations enacted tariffs?
39) Why would private business be considered more efficient than public agencies?