1) A firm will find it profitable to hire workers up to the point at which their:
A.marginal resource cost equals their wage rate.
B.wage rate equals product price.
C.MP is equal to their MRP.
D.marginal resource cost is equal to their MRP.
2) The simple circular flow model shows that workers and capital-owners offer their
services to firms through the:
A.Product markets
B.Resource markets
C.Employment agencies
D.Government agencies
3) Balin purchases fair trade cocoa out of concern for workers’ rights and environmental
sustainability. He could purchase cocoa of equal quality at a lower price. Behavioral
economists would consider Balin’s purchase:
A.unusual in that it demonstrates concern for others.
B.purely self-interested but motivated by something other than his financial well-being.
C.as evidence that Balin is not acting purely in his self-interest.
D.a bad decision because it ignores important information that could improve Balin’s
well-being.
4) Suppose capital and labor are used in fixed proportions so that each machine requires
only one worker. If a decline in the price of capital occurs, then the demand for labor
will:
A.decrease solely because of the substitution effect.
B.increase solely because of the substitution effect.
C.increase solely because of the output effect.
D.decrease solely because of the output effect.
5) Assume initially that the price of X (measured on the horizontal axis) is $9 and the
price of Y (measured on the vertical axis) is $4. If the price of X now declines to $6, the
budget line will:
A.be unaffected.
B.shift outward on the vertical axis.
C.shift inward on the horizontal axis.
D.shift outward on the horizontal axis.
6)
Refer to the above graph for a purely competitive firm in the short run. Profits would be
maximized if the firm produces which level of output?
A.A
B.B
C.C
D.Greater than C
7)
Refer to the above graphs. If union workers decide to take more leisure, while the prices
of the products produced by union workers decrease, this situation is depicted in graph:
A.A
B.B
C.C
D.D
8)
Refer to the total revenue graph above. Demand is price-elastic between points:
A.A and B
B.D and E
C.F and G
D.G and H
9)
Refer to the diagrams. The solid lines are production possibilities curves; the dashed
lines are trading possibilities curves. The opportunity cost of producing a:
A.pizza is 2 beers in both countries.
B.beer is pizza in both countries.
C.pizza in East Lothian is 1 beer.
D.beer in West Lothian is pizza.
10) In the kinked demand model of oligopoly, if one firm increases its price, the most
likely reaction of the other firms will be to:
A.Decrease their prices
B.Increase their prices
C.Not change their prices
D.Reduce their quantity
11) Employer-provided private health insurance began in the United States because:
A.the rising threat of socialism prompted U.S. companies to provide insurance to
dampen enthusiasm for socialist reform.
B.during World War II, wage and price controls forced employers to use nonwage
forms of compensation to attract workers.
C.poor health conditions at the beginning of the 20th century prompted the U.S.
government to require new companies to offer health insurance to employees.
D.the American Medical Association successfully lobbied the U.S. government to
provide subsidies to companies offering private health insurance to employees.
12)
Refer to the short-run production and cost data. In Figure A curve (1) is:
A.total product and curve (2) is average product.
B.total product and curve (2) is marginal product.
C.average product and curve (2) is marginal product.
D.marginal product and curve (2) is average product.
13)
Refer to the long-run cost diagram for a firm. If the firm produces output Q2 at an
average cost of ATC2, then the firm is:
A.producing the profit-maximizing output but is failing to minimize production costs.
B.incurring X-inefficiency but is producing that output at which all existing economies
of scale might be realized.
C.incurring X-inefficiency and is failing to produce the output at which all economies
of scale might be realized.
D.producing that output with the most efficient combination of inputs and is realizing
all existing economies of scale.
14) A pure monopolist should never produce in the:
A.elastic segment of its demand curve because it can increase total revenue and reduce
total cost by lowering price.
B.inelastic segment of its demand curve because it can increase total revenue and
reduce total cost by increasing price.
C.inelastic segment of its demand curve because it can always increase total revenue by
more than it increases total cost by reducing price.
D.segment of its demand curve where the price elasticity coefficient is greater than one.
15) In 2011, the poverty line for a family of four was about:
A.$15,508
B.$30,453
C.$22,891
D.$38,754
16) The ratio at which nations will exchange one product for another is known as the:
A.Exchange rate
B.Discount rate
C.Terms of trade
D.Balance of trade
17) Which one of the following acts declared “[e]very contract, combination . . . or
conspiracy, in restraint of trade or commerce among the several states . . . to be illegal”?
A.The Wheeler-Lea Act.
B.The Federal Trade Commission Act.
C.The Sherman Act.
D.The Interstate Commerce Act.
18) Melanie and Oli are competing Pacific halibut fishers. Both have been allocated
ITQs that limit their catch to 1,000 tons of Pacific halibut each. Melanie’s cost per ton is
$20; Oli’s cost per ton is $28.
Refer to the information given. If the market price of Pacific halibut is $40 per ton, and
Melanie and Oli both catch their quota, their combined profit will be:
A.$12,000.
B.$22,000.
C.$25,000.
D.$32,000.
19) In which market model are the conditions of entry into the market easiest?
A.Pure competition
B.Pure monopoly
C.Monopolistic competition
D.Oligopoly
20) Which of the following will not cause a shift in the demand for resource X?
A.A decline in the price of resource X
B.An increase in the price of the product resource X is producing.
C.A decrease in the price of substitute resource Y
D.An increase in the productivity of resource X