1) What is the reason why large, short-run declines in farm prices do not significantly
reduce farm production in the short run?
A.Farmers’ variable costs are high compared with their fixed costs
B.Farmers’ fixed costs are high compared with their variable costs
C.Farmers’ prices received are greater than prices paid for agricultural products
D.Farmers’ prices paid are greater than prices received for agricultural products
2) Which of the following is correct?
A.Budget lines are linear and upsloping; indifference curves are downsloping and
concave to the origin.
B.Budget lines are linear and downsloping; indifference curves are downsloping and
concave to the origin.
C.Budget lines are linear and downsloping; indifference curves are downsloping and
convex to the origin.
D.Budget lines are downsloping and convex to the origin; indifference curves are linear
and downsloping.
3) Total U.S. health care spending in 2011 was approximately:
A.$847 billion.
B.$1.1 trillion.
C.$2.7 trillion.
D.$4.1 trillion.
4) The U.S. supply of Japanese yen is:
A.downsloping because a lower dollar price of yen means U.S. goods are cheaper to the
Japanese.
B.upsloping because a higher dollar price of yen means U.S. goods are cheaper to the
Japanese.
C.upsloping because a lower dollar price of yen means U.S. goods are cheaper to the
Japanese.
D.downsloping because a higher dollar price of yen means U.S. goods are cheaper to
the Japanese.
5) The United States in 2010 had about:
A.1.8 percent of the world’s population and generated about 10 percent of the world’s
output
B.2.4 percent of the world’s population and generated about 20 percent of the world’s
output
C.4.5 percent of the world’s population and generated about 23 percent of the world’s
output
D.10 percent of the world’s population and generated about 30 percent of the world’s
output
6) The marginal productivity theory of income distribution suggests that:
A.government should subsidize the most productive workers through a system of
transfer payments.
B.each individual should receive income based on his or her contribution to total
output.
C.resource owners should receive income based on the idea of “from each according to
his ability, to each according to his wants.”
D.resource owners should receive income based upon their needs.
7) Which of the following is not correct? A typical production possibilities curve:
A.indicates how much of two products a society can produce.
B.reveals how much each additional unit of one product will cost in terms of the other
product.
C.specifies how much of each product society should produce.
D.indicates that to produce more of one product society must forgo larger and larger
amounts of the other product.
8) A firm will earn economic profits whenever:
A.Marginal revenue exceeds marginal costs
B.Marginal revenue exceeds variable costs
C.Average revenue exceeds average total costs
D.Average revenue exceeds average variable costs
9) The idea of the Law of Demand, as applied to electric cars, assumes which of the
following to be constant?
A.Price of electric cars
B.Price of gasoline cars
C.Quantity of electric cars demanded by buyers
D.How much sellers are charging customers for electric cars
10) The demographic transition concept suggests that:
A.effective birth control is the primary prerequisite of DVC income growth.
B.income growth must first occur before DVC birth rates will decline.
C.children are economic assets in the IACs but economic liabilities in the DVCs.
D.the IACs will have higher birth rates than the DVCs.
11) Barter:
A.is the major means of exchange in centrally planned economies.
B.accounts for over 30 percent of the dollar volume of all exchange in the U.S.
economy.
C.entails the exchange of goods for goods.
D.is used to circumvent the problem of a lack of coincidence of wants among potential
buyers and sellers.
12) The following are examples of innovative products in their respective industries,
except:
A.Nokia’s smart phones
B.Johnson & Johnson’s disposable contact lenses
C.Hewlett-Packard’s Scientific calculator
D.Apple’s iPhone
13) Those economists who justify high pay packages for CEOs say that they:
A.Are primarily an efficiency wage package for CEOs
B.Reflect the compensating differences for CEOs
C.Reflect the marginal revenue product of CEOs
D.Are like buying a ticket to a lottery
14) Credit bureaus provide credit histories to banks and insurance companies, in order
to help deal with the problem of:
A.Public goods
B.Externalities
C.Moral hazard
D.Adverse selection
15) In the financial crisis that precipitated the 2007-2009 recession, people
systematically overestimated their prospects for financial gain. Which branch of
economics would most likely have expected to predict this?
A.Neoclassical economics.
B.Keynesian economics.
C.Behavioral economics.
D.Classical economics.
16) Individual transferable quotas (ITQs):
A.promote efficiency and limit catches.
B.promote efficiency in production but still lead to overfishing.
C.limit catches but encourage production cost increases that are inefficient.
D.have failed to limit catches or promote efficiency.
17)
Refer to the diagram. Starting at point A, the opportunity cost of producing each
successive unit of tractors is:
A.a constant 2 units of bread.
B.2, 4, 6, and 8 units of bread.
C.8, 6, 4, and 2 units of bread.
D.the reciprocal of the output of tractors.
18) In long-run equilibrium, a monopolistically competitive producer achieves:
A.neither productive efficiency nor allocative efficiency.
B.both productive efficiency and allocative efficiency.
C.productive efficiency but not allocative efficiency.
D.allocative efficiency but not productive efficiency.
19) The demand for farmland will increase if:
A.the demand for food decreases.
B.technological advances make land more productive.
C.the price of farm labor increases and the output effect exceeds the substitution effect.
D.the supply of farmland increases.
20) Assume the atmosphere of an urban area is able to reabsorb 8000 tons of pollutants
per year. The schedule below shows the price polluters would be willing to pay for the
right to dispose of 1 ton of pollutants per year and the total quantity of pollutants they
would wish to dispose of at each price.
(a)If there were no emission fee, how many tons of pollutants would there be and how
much greater would this amount be than the capacity for reabsorption?
(b)What pollution fee should the urban authorities charge to solve the problem?
(c)What would happen in this market for pollution rights if quantity demanded
increased by 1000 tons at each price?