1) after all long-run adjustments have been completed, a firm in a competitive industry
will produce that level of output where average total cost is at a minimum.
2) The optimal (economically-efficient) level of air pollution is zero emissions.
3) The following economic data for a hypothetical economy:
The above data indicate that the economy has entered a period of demand-pull inflation.
4) A highly progressive tax takes relatively more from the rich than it does from the
poor.
5) the lower the consumer’s income, the higher his or her budget line.
6) during the past ten years the u.s. economy has experienced three recessions.
7) User cost is defined as the present value of the profit the company would earn if it
delayed extraction until next year.
8) if the coefficient of income elasticity of demand is positive, the product is an inferior
good.
9) increases in household and business spending are a demand factor in economic
growth.
10) Credit cards are treated as money because they facilitate transactions.
11) Currency and coins held by banks are part of the M1 definition of money supply.
12) a competitive firm will produce in the short run so long as its price exceeds its
average fixed cost.
13) with a downsloping demand curve and an upsloping supply curve for a product,
placing an excise tax on this product will:
a.increase equilibrium price and quantity.
b.decrease equilibrium price and quantity.
c.decrease equilibrium price and increase equilibrium quantity.
d.increase equilibrium price and decrease equilibrium quantity.
14)
refer to the above diagram. if price is reduced from p1 to p2, total revenue will:
a.increase by a minus c.
b.increase by c minus a.
c.decrease by a minus c.
d.decrease by c minus a.
15) when diseconomies of scale occur:
a.the long-run average total cost curve falls.
b.marginal cost intersects average total cost.
c.the long-run average total cost curve rises.
d.average fixed costs will rise.
16) If the dollar price of foreign currencies falls (that is, the dollar appreciates), we
would expect:
A.aggregate demand to decrease and aggregate supply to increase.
B.both aggregate demand and aggregate supply to decrease.
C.both aggregate demand and aggregate supply to increase.
D.aggregate demand to increase and aggregate supply to decrease.
17) which of the following has been a significant factor in ipods replacing portable cd
players?
a.ipods are now less than one-half the price of cd players.
b.a scarcity of production capacity has curtailed the manufacture of cd players.
c.most consumers perceive ipod portability and storage to be superior to cd players.
d.the price of ipods has increased dramatically.
18) Which one of the following would not shift the aggregate demand curve?
A.a change in the price level
B.depreciation of the international value of the dollar
C.a decline in the interest rate at each possible price level
D.an increase in personal income tax rates
19) Economists who adhere to the laissez-faire antitrust perspective:
A.view competition as a long-run dynamic process in which firms battle for dominance
of markets but rarely can sustain such dominance once it is achieved.
B.believe the antitrust laws are as important today as they were when they were passed
in the early 1900s.
C.say that an industry’s structure, which is based on economies of scale, usually
predicts the behavior of the industry firms.
D.contend that large, dominant firms should be broken into smaller competitive firms
and then government should stand back and let competition prevail.
20)
In which of the above market situations will the largest portion of an excise tax of a
specified amount per unit of output be borne by producers?
A.4
B.3
C.1
D.2
21) the sunshine corporation finds that its costs are $40 when it produces no output. its
total variable costs (tvc) change with output as shown in the accompanying table. use
this information to answer the following question(s).
refer to the above information. this firm:
a.is making an economic profit of $260.
b.is realizing a loss of $125.
c.may be either realizing a profit or a loss.
d.is selling its output in a competitive market.
22) The latest industry to begin the deregulation process is the:
A.trucking industry.
B.airlines industry.
C.electricity industry.
D.railroad industry.
23)
refer to the above diagrams, which pertain to a purely competitive firm producing
output q and the industry in which it operates. which of the following is correct?
a.the diagrams portray neither long-run nor short-run equilibrium.
b.the diagrams portray both long-run and short-run equilibrium.
c.the diagrams portray short-run equilibrium, but not long-run equilibrium.
d.the diagrams portray long-run equilibrium, but not short-run equilibrium.
24) the invisible hand refers to the:
a.fact that the u.s. tax system redistributes income from rich to poor.
b.notion that, under competition, decisions motivated by self-interest promote the social
interest.
c.tendency of monopolistic sellers to raise prices above competitive levels.
d.fact that government controls the functioning of the market system.
25) limited liability means that:
a.creditors have no legal claim on the personal assets of a proprietor.
b.corporations cannot be sued.
c.creditors have no legal claim on the personal assets of a corporate stockholder.
d.corporations have a legal life independent of their owners and managers.
26) Fiscal policy is carried out primarily by:
A.the Federal government.
B.state and local governments working together.
C.state governments alone.
D.local governments alone.
27) The following schedule contains data for a private closed economy. All figures are
in billions. Use these data in answering the next question(s).
Refer to the above data. If gross investment is $10 at all levels of GDP, the equilibrium
GDP will be:
A.$300.
B.$260.
C.$220.
D.$180.
28) The main purpose of the antitrust laws is:
A.to encourage firms to produce where P > MC.
B.the elimination of both negative and positive externalities.
C.to prevent the monopolization of industries.
D.to regulate natural monopolies.
29) the aggregate cost of unemployment can be measured by the:
a.amount by which actual gdp exceeds potential gdp.
b.amount by which potential gdp exceeds actual gdp.
c.excess of real gdp over nominal gdp.
d.excess of nominal gdp over real gdp.
30) the vertical distance between the horizontal axis and any point on a
nondiscriminating monopolist’s demand curve measures:
a.the quantity demanded.
b.product price and marginal revenue.
c.total revenue.
d.product price and average revenue.
31) government rather than the private sector must provide economically desirable
public goods because:
a.private production of those goods would entail unacceptably high external costs.
b.the availability of such goods yields no benefits to individuals.
c.the benefits yielded by such goods are available to everyone and cannot be withheld
from those who refuse to pay for them.
d.their provision is necessary to achieve full employment and price-level stability.
32) Some government bonds can be redeemed for currency or a check at banks. Why,
then, isnt it universally agreed that government bonds are part of the money supply?
33) Describe the changes in population and living standards since 1800. What
implications do these changes raise about standards of living today?
34) Dont put all your eggs in one basket. Interpret in terms of economic concepts.
35) How does the use of credible threats or empty threats by firms affect outcomes and
the Nash equilibrium in one-period games?
36) Explain how an increase or decrease in demand and supply will affect the value of a
nations currency.
37) What is hyperinflation and what are its effects?
38) Why is land rent a surplus payment from the perspective of economists?
39) The main purpose of required reserves is to promote bank liquidity and protect
depositors. Evaluate this statement.