1) The U.S. government has been increasing the portion of its budget and its spending
on R&D activities, for the nation’s long-term growth.
2) The economy of the United States can best be described as laissez-faire capitalism.
3) Products and services are scarce because resources are scarce.
4) Under freely flexible (floating) exchange rates, if the dollar price of pounds rises, the
pound price of dollars will fall.
5) Producers should hire resources until the total output of each is equal.
6) The lower the consumer’s income, the higher his or her budget line.
7) If a consumer is initially in equilibrium, an increase in money income will:
A.Move the consumer to a new equilibrium on a lower indifference curve
B.Move the consumer to a new equilibrium on a higher indifference curve
C.Make the slope of the consumer’s indifference curves steeper
D.Have no effect on the equilibrium position
8) If the long-run average total cost curve for a firm is horizontal in the relevant range
of production, then it indicates that there:
A.Is a minimum efficient scale
B.Are constant returns to scale
C.Are diseconomies of scale
D.Are economies of scale
9) Which of the following constitutes an implicit cost to the Johnston Manufacturing
Company?
A.Payments of wages to its office workers.
B.Rent paid for the use of equipment owned by the Schultz Machinery Company.
C.Use of savings to pay operating expenses instead of generating interest income.
D.Economic profits resulting from current production.
10) Assume labor is the only variable input and that an additional input of labor
increases total output from 72 to 78 units. If the product sells for $6 per unit in a purely
competitive market, the MRP of this additional worker is:
A.$6.
B.$12.
C.$36.
D.$72.
11) Which of the following is not a major category of business structure?
A.Sole proprietorship
B.Partnership
C.Public agency
D.Corporation
12) The Herfindahl index:
A.measures the prices charged by oligopolistic manufacturers.
B.is another name for the four-firm concentration ratio.
C.tells us whether oligopolistic firms are engaging in collusion.
D.gives much greater weight to larger firms than to smaller firms in an industry.
13) In the U.S., society makes decisions on the direction of government policies and the
provision and financing of public goods through a process that relies heavily on:
A.Unanimous voting
B.General voting
C.Universal voting
D.Majority voting
14) The DVCs are:
A.located primarily in Northern Europe.
B.located primarily in Western Europe.
C.located primarily in Africa, Asia, and Latin America.
D.more or less evenly distributed over the various continents.
15) Economic analysis assumes “purposeful behavior”, which means that people will
pursue decisions or actions:
A.That will increase their well-being
B.Always based on full or complete information
C.With minimal consideration for their emotions
D.Without any logical faults
16) One common measure of the ‘standard of living” in a nation is:
A.Per capita real income
B.Unemployment rate
C.Real GDP
D.Population size
17) A source of demand volatility for agricultural products is:
A.The strict application of “100 percent parity” by the Department of Agriculture
B.A sharp fluctuation in foreign demand for U.S. farm products
C.The large grain harvest which resulted from excellent weather
D.The increasing mechanization of farms
18) Answer the question on the basis of the following information for a pure
monopolist:
The given nondiscriminating monopolist should set its price at:
A.$300.
B.$250.
C.$200.
D.$150.
19)
20) Why is the level of output at which marginal revenue equals marginal cost the
profit-maximizing output?
21) Define a simultaneous one-time game.
22) What are the two reasons neoclassical economists give for making simplifying
assumptions?
23) What are the differences between competition in a purely competitive industry and
competition in an industry with technological advance and innovation?