1) Firms that pay efficiency wages tend to have higher worker turnover.
2) The principal-agent problem in labor markets arises because of the possibility of
shirking by workers.
3) Usury laws are a special case of “price floors” applied to the loanable funds market.
4) In monopsony situations, a minimum wage might increase wage and employment
levels.
5) In the balance of payments statement, a current account deficit is always matched by
a capital and financial accounts surplus.
6) Relatively high rates of U.S. inflation compared to other countries will increase the
supply of, and decrease the demand for, dollars in foreign exchange markets.
7) Society’s optimal amount of pollution abatement is where society’s marginal benefit
of abatement is zero.
8) Quantitative measures of managerial success, such as production targets or quotas,
are highly foolproof and are thus ideal to use in raising economic efficiency.
9) The size and scope of government inhibit the flow of information to decision makers,
leading to inefficient outcomes.
10) The Supplemental Nutrition Assistance Program (formerly the food-stamp program)
mostly pays out cash-vouchers to eligible households.
11) If a firm must pay a daily wage of $35 to hire 11 workers, and a daily wage of $40
to hire 12 workers, its marginal resource cost of hiring the twelfth worker is $40.
12) Firms in a monopolistically competitive industry have no reason to engage in
nonprice competition because their products are uniquely different from other sellers in
the market.
13) With diminishing marginal utility, if a consumer reduces her consumption of a
good, then her marginal utility from that good would increase.
14) In a market system, a consumer’s willingness to paybut not his ability to payis based
on his income.
15) The largest category of Federal government expenditures is national defense.
16) Suppose that a prejudiced white employer is willing to hire white workers at a rate
of $16/hour, and this employer has a discrimination coefficient of $4. This implies that
the employer would:
A.Not hire a non-white worker regardless of wage rate
B.Hire a non-white worker only at a rate of $12/hour or less
C.Actually pay a white worker $20/hour
D.Pay a non-white worker only $4/hour
17) AFL-CIO stands for:
A.American Federation of Labor-Congress of Industrial Organizations.
B.American Federation of Labor-Committee for Industrial Opportunity.
C.Assembly of Factory Laborers-Congress of Industrial Organizations.
D.Assembly of Factory Laborers-Committee for Industrial Opportunity.
18) Under the total allowable catch (TAC) system of fishing:
A.There are limits to the number of days a species can be caught
B.Biologists determine the size of the catch based on sustainable levels
C.The number of fishing boats allowed to fish in a specific area is restricted
D.Priority is given to catching fisheries with the greatest market value
19)
Refer to the above data. In a competitive market for this agricultural product, the
equilibrium price and output level will be:
A.$6 and 180 bushels
B.$7 and 220 bushels
C.$8 and 260 bushels
D.$8 and 160 bushels
20) A central focus of prospect theory is:
A.how people deal with “bads,” as well as how they deal with “goods.”
B.optimizing precious metal discovery and extraction.
C.maximizing returns from investment portfolios.
D.how people make rational decisions despite having incomplete information.
21)
Refer to the above graph. The selection of which point on the production possibilities
curve is most like to result in the largest increase in economic growth over time?
A.A
B.B
C.C
D.D
22) Which of the following Gini ratios indicates the lowest degree of income
inequality?
A.0.71
B.0.55
C.0.31
D.0.45
23) As a result of the acreage allotment programs, we would expect:
A.The best farmland to be taken out of production by farmers
B.The worst farmland to be taken out of production by farmers
C.Lower farm incomes
D.Lower farm prices
24) According to the marginal productivity theory of resource demand, the
labor-demand schedule for a producer selling in a purely competitive market is:
A.The same as the marginal resource cost schedule
B.The same as the marginal productivity schedule
C.The same as the marginal revenue product schedule
D.Independent of the value of the product being produced
25) Markets, viewed from the perspective of the supply and demand model:
A.assume many buyers and many sellers of a standardized product.
B.assume market power so that buyers and sellers bargain with one another.
C.do not exist in the real-world economy.
D.are approximated by markets in which a single seller determines price.
26) In a competitive market economy, firms select the least-cost production technique
because:
A.such choices will result in full employment of available resources.
B.to do so will maximize the firms’ profits.
C.this will prevent new firms from entering the industry.
D.”dollar voting” by consumers mandates such a choice.
27) A major difference between industrial regulation and social regulation is that
industrial regulation:
A.Covers many industries across the economy
B.Has expanded rapidly since the 1970s
C.Is targeted at the prices charged, the costs of production, and amount of profit
D.Focuses on product design, employment conditions, and the production process
28) Assume that a consumer purchases a combination of products Y and Z and that the
MUy/Py = 25 and MUz/Pz = 25. To maximize utility, without spending more money,
the consumer should:
A.Purchase less of Y and more of Z
B.Purchase more of Y and less of Z
C.Purchase more of both Y and Z
D.Make no change in Y and Z
29)
Which of the following is an implicit cost of migration?
A.The cost of traveling to a new country
B.Having to adapt to a new culture
C.Paying application fees
D.Payment to an expediter
30) In one year the dollar would buy 162 Japanese yen, but ten years later, it would buy
only 123 yen. Relative to the yen, the value of the dollar:
A.Increased by about 32 percent
B.Decreased by about 24 percent
C.Decreased by about 32 percent
D.Increased by about 24 percent
31) Marginal cost can be defined as the:
A.Change in total fixed cost resulting from one more unit of production
B.Change in total cost resulting from one more unit of production
C.Change in average total cost resulting from one more unit of production
D.Change in average variable cost resulting from one more unit of production
32) Most economists view economic growth as:
A.good for the environment because richer economies spend more on environmental
protection.
B.bad for the environment because richer economies extract resources at a faster rate.
C.good for the environment because richer economies produce fewer chemicals.
D.bad for the environment because people in richer economies tend to care less about
the environment.
33) Use status quo bias to explain why people are more likely to super-size their meal
when asked than when not offered.
34) What is the capital accumulation problem in DVCs?
35) How does the invisible hand work in a competitive market system?
36) Explain the view of Thomas Malthus on population growth in 1789 and contrast it
with what has happened since that time.
37) What is the law of diminishing returns? Give a descriptive example.
38) Explain why underproduction or overproduction of a good results in efficiency
losses.
39) Compare and contrast the modern view of technological advance with the
traditional view.
40) The size of government is too big. Evaluate this statement.
41) Why are expectations important when discussing profits? What effects do these
profit expectations have on the economic system?