1)
Refer to the graphs above. Which one shows a perfectly elastic demand?
A.Graph A
B.Graph B
C.Graph C
D.Graph D
2) A firm considering whether to borrow money to purchase a capital good will
compare the rate of interest for the loan with the:
A.Opportunity cost of the capital good
B.Rate of return on the investment
C.Length of the investment
D.Treasury bill rate
3)
The diagram concerns supply adjustments to an increase in demand (D1 to D2) in the
immediate market period, the short run, and the long run. Supply curves S1, S2, and S3
apply to the:
A.immediate market period, long run, and short run respectively.
B.immediate market period, short run, and long run respectively.
C.long run, short run, and immediate market period respectively.
D.short run, long run, and immediate market period respectively.
4) Which of the following characteristics is least unique to a market system?
A.Private ownership of property resources.
B.Competition among buyers and sellers pursuing monetary returns.
C.The widespread use of money.
D.Freedom of enterprise and choice.
5) The role of government in fostering economic growth in DVCs has been criticized
because:
A.Most governments operate as dictatorships
B.There is often poor administration and corruption in government
C.Government is generally supportive of business at the expense of labor
D.Governments have adopted the unpopular method of forced savings to stimulate
investment
6) Suppose that a union successfully negotiated a 10 percent wage increase and the
quantity of labor demanded increased by 10 percent. We can conclude that:
A.the labor demand curve must have independently shifted to the right.
B.labor demand is highly elastic.
C.the coefficient of labor demand elasticity is less than 1.
D.labor demand is unit-elastic.
7) Using income as the tax base, which of the following best illustrates a regressive tax?
A.The federal inheritance tax.
B.A 7 percent general sales tax.
C.The corporate income tax.
D.The personal income tax.
8) To the average consumer, the marginal utility of a second copy of today’s newspaper
is:
A.Constant
B.Increasing
C.Close to zero
D.Close to one
9) The world’s largest debtor nation in terms of debt owed to foreign citizens and
governments is:
A.Russia.
B.Argentina.
C.Japan.
D.The United States.
10) Consider the supply and demand graph below to answer three questions: (a) Use a
letter to identify the area of maximum consumer surplus; (b) Use a letter to identify the
area of maximum producer surplus; (c) Why is the output level shown by the vertical
dashed line one that is allocatively efficient from a marginal cost and marginal benefit
perspective?
11) Suppose the domestic price (no-international-trade price) of copper is $1.20 a pound
in the United States while the world price is $1.00 a pound. Assuming no transportation
costs, the United States will:
A.have a domestic surplus of copper.
B.export copper.
C.import copper.
D.neither export nor import copper.
12) Import quotas on sugar may cost consumers $2 billion per year. But this quota goes
unchallenged because the $10 average annual cost per person is so small that probably
not one voter in 200 knows the quota exists. This statement describes:
A.the voting paradox.
B.the special-interest effect.
C.the median-voter model.
D.free-rider problem.
13)
Refer to the above supply and demand graph. In the graph, line S is the current supply
of this product, while line S1 is the optimal supply from the society’s perspective. If
government corrects this externality problem and shifts production to the socially
optimal level, then the product price will be equal to:
A.0G
B.0F
C.0E
D.0D
14) An improvement in production technology will:
A.increase equilibrium price.
B.shift the supply curve to the left.
C.shift the supply curve to the right.
D.shift the demand curve to the left.
15) Answer the question on the basis of the following supply information facing a
single firm in a particular labor market:
Refer to the given information. This labor supply curve demonstrates that:
A.the firm is selling its output under imperfectly competitive conditions.
B.the firm is selling its output under purely competitive conditions.
C.higher wage rates must be paid to successive workers to overcome their higher
opportunity costs.
D.the firm is hiring labor under purely competitive conditions.
16)
Refer to the diagram, which is a rectangular hyperbola, that is, a curve such that each
rectangle drawn from any point on the curve will be of identical area. In comparing the
price elasticity and the slope of this demand curve, we can conclude that the:
A.slope of a demand curve measures its elasticity.
B.elasticity of a demand curve measures its slope.
C.slope and elasticity of the curve are both constant throughout.
D.slope of the curve varies, but its elasticity is constant.
17) The best example of a craft union would be the:
A.United Auto Workers
B.United Steelworkers
C.Teamsters
D.International Brotherhood of Electrical Workers
18) The following table illustrates alternative production techniques for producing 18
widgets that can be sold for $1 each for a total revenue of $18.
Refer to the above table. At the $3 price for labor the most efficient technique will
result in an:
A.Economic loss of $2
B.Economic profit of $l
C.Economic profit of $2
D.Economic profit of $3