1) In the extraction of a nonrenewable resource, increased current extraction will reduce
the extraction firm’s user costs.
2) The price elasticity of demand for most agricultural products is relatively low.
3) In the demand-enhancing union model, a union tries to increase the wage rate
through such actions that promoting the industry’s product, or raising labor productivity.
4) U.S. exports of farm products have generally declined as a percentage of U.S. farm
output over the past half-century.
5) Generally speaking, oligopolistic industries producing raw materials and
semifinished goods usually offer differentiated products, while oligopolists producing
consumer goods usually offer standardized products.
6) 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.
7) Per capita water use in the United States has steadily increased since 1973.
8) Illegal immigration can result in higher wages for domestic-born workers who are
complementary inputs.
9)
10) The marginal cost to society of reducing pollution rises with increases in pollution
abatement because of the law of:
A.diminishing marginal utility.
B.conservation of matter and energy.
C.demand.
D.diminishing returns.
11)
Refer to the graph above representing the purely competitive market for a product.
When the market is at equilibrium, the deadweight loss would be:
A.Area a
B.Area b
C.Area d
D.Zero
12)
Refer to the above graph. All data are for the short run. If the product price is P2, the
firm will:
A.Close down to avoid a loss
B.Produce Q2 units and make an economic profit
C.Produce Q5 units and break even
D.Produce Q2 units and suffer a loss
13) Answer the question on the basis of the following information: Harry owns a barber
shop and charges $6 per haircut. By hiring one barber at $10 per hour, the shop can
provide 24 haircuts per eight-hour day. By hiring a second barber at the same wage rate,
the shop can now provide a total of 42 haircuts per day.
Refer to the given information. The MRP of the second barber is:
A.18 haircuts.
B.$108.
C.42 haircuts.
D.$126.
14) Monopolistically competitive firms are similar to monopolies in that they have:
A.High barriers to entry in their industry
B.Close substitutes for their products
C.Inelastic demand for their products
D.Marginal revenues that are less than price
15) Which of the following is a law passed in the last 15 years relating to health care?
A.Establishment of health maintenance organizations to reduce health care costs.
B.Establishment of deductibles and copayments in health insurance policies.
C.Establishment of health savings accounts (HSAs) to promote saving for routine
medical expenses.
D.Establishment of fixed Medicare payment to hospitals based on one of several
hundred diagnostic categories.
16)
With labor migration, the country of origin experiences:
A.An increase in output and a rising wage rate
B.An increase in output and a falling wage rate
C.A decrease in output and a falling wage rate
D.A decrease in output and a rising wage rate
17) The government may not implement policies intended to redistribute income in
which of the following economic systems?
A.Laissez-faire capitalism
B.Command system
C.Mixed economy
D.Market system
18) From 1995 to 2007 in the U.S., the median and average family wealth adjusted for
inflation both:
A.Increased rapidly but fell sharply from 2007 to 2010
B.Stayed roughly the same, then rose from 2007 to 2010
C.Stayed at about the same level, then fell sharply from 2007 to 2010
D.Increased slowly, then accelerated from 2007 to 2010
19) Because of “mental accounting:”
A.people are better able to process price changes than changes in product sizes.
B.people tend to be less risk averse.
C.people pay too little on their monthly credit card bills.
D.people isolate purchases and sometimes make irrational decisions.
20) The price of gold is often volatile because:
A.Demand is relatively inelastic so changes in supply have a large effect on price
B.Supply is relatively elastic so changes in demand have a large effect on price
C.Demand is relatively elastic so changes in supply have a large effect on price
D.Supply is relatively inelastic so changes in demand have a large effect on price
21) A manufacturer of frozen pizzas found that total revenue decreased when price was
lowered from $5 to $4. It was also found that total revenue decreased when price was
raised from $5 to $6. Thus,
A.the demand for pizza is elastic above $5 and inelastic below $5.
B.the demand for pizza is elastic both above and below $5.
C.the demand for pizza is inelastic above $5 and elastic below $5.
D.$5 is not the equilibrium price of pizza.
22) In the circular flow model, households earn their incomes in the:
A.Resource markets
B.Product markets
C.Capitalist markets
D.Money markets
23) The kinked-demand schedule that an oligopolist believes confronts the firm is given
in the table below. Compute the oligopolists total revenue at each of the nine prices, and
enter these figures in the table. Also compute marginal revenue for each unit between
the nine prices and enter these figures in the table.
(a)Where is the kink in the demand curve? What is the current selling price at that kink
and how much output will be demanded?
(b)What is the range of marginal cost that will keep the price set at the kink?
24)
Refer to the table representing Darcy’s bank account. Assuming that $1,000 was
deposited into her account at the beginning of year 1, and no further deposits or
withdrawals were made, what interest rate is being paid on Darcy’s account?
A.6 percent.
B.6.4 percent.
C.19.1 percent.
D.60 percent.
25) What is the gaze heuristic? The steering heuristic?
26) Why does an entrepreneur deserve to be compensated with profit?
27) Government polices sometimes have unintended consequences. Give an example of
one.
28) Discuss how the DuPont cellophane case of 1956 differed from the Alcoa case of
1945.
29) (Consider This) How is strategic behavior illustrated by the competition among
three sellers of native arts and crafts near a national park?
30) Briefly describe the role of government in the economy. How are these government
activities financed?