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1) Which of the following countries had the highest fertility rate in 2012?
A.Japan
B.China
C.Germany
D.The United States
2) If a pure monopolist is producing at that output where P = ATC, then:
A.its economic profits will be zero.
B.it will be realizing losses.
C.it will be producing less than the profit-maximizing level of output.
D.it will be realizing an economic profit.
3) In which of the following cases was the firm found not guilty of violating the
Sherman Act?
A.Standard Oil case.
B.Microsoft case.
C.Alcoa case.
D.DuPont cellophane case.
4) Money is not considered to be an economic resource because:
A.As such it is not productive
B.Money is not a free gift of nature
C.Money is made by man
D.Idle money balances do not earn interest income
5) What combination of changes would most likely decrease the equilibrium price?
A.When supply decreases and demand increases
B.When demand increases and supply increases
C.When demand decreases and supply decreases
D.When supply increases and demand decreases
6) An industry that has increasing returns to scale and fixed factor prices will have a
long-run supply curve that is:
A.Vertical
B.Horizontal
C.Upward-sloping
D.Downward-sloping
7) Which of the following would most help a developing country (DVC) break out of
the vicious circle of poverty?
A.More consumption
B.More food production
C.An increase in the birth rate
D.An increase in labor productivity
8) The total product curve graphically shows the:
A.Minimum level of output that can be produced by a quantity of a variable resource
holding constant the quantity of other resources
B.Minimum level of output that can be produced by a quantity of a fixed resource
letting other resources vary
C.Maximum level of output that can be produced by a quantity of a fixed resource
letting other resources vary
D.Maximum level of output that can be produced by a quantity of a variable resource
holding constant the quantity of other resources
9)
Refer to the diagram for a pure monopolist. If a regulatory commission sets the price to
achieve the socially optimal allocation of resources, it will have to:
A.tax the monopolist P3P1 per unit to prevent the monopolist from realizing an
economic profit.
B.subsidize the monopolist or the monopolist will go bankrupt in the long run.
C.subsidize the monopolist P1P4 per unit to allow the monopolist to break even.
D.tax the monopolist P1P2 per unit to prevent the monopolist from realizing an
economic profit.
10) In 2011, there were about _____ million union members in the United States.
A.8.4
B.11.8
C.14.8
D.15.7
11) Assume a firm faces these costs: total cost of capital = $4,000; price paid for labor =
$20 per labor unit; and price paid for raw materials = $8 per raw-material unit.
Refer to the above information. Originally the firm produced 2,000 units of output by
combining its fixed capital with 200 units of labor and 500 units of raw materials. Now
the firm changes its production process so that it can produce 3,000 units of output by
combining its fixed capital with 100 units of labor and 500 units of raw materials. What
valid conclusion can be drawn about the effect and reasons for the change?
A.It improved economic efficiency because more units could be produced at a lower
ATC using the same amount of economic resources
B.It improved economic efficiency because more units could be produced at a lower
ATC using fewer economic resources
C.It improved economic efficiency because more units could be produced at the same
ATC using fewer economic resources
D.It reduced economic efficiency because fewer units could be produced at a higher
ATC using more economic resources
12) Which of the following is a demand factor in the market for health care?
A.The number of nurses graduating from universities
B.Productivity in the health care industry
C.Changes in medical technology
D.Physicians' treatment decisions
13) Network effects and simultaneous consumption tend to foster the development of:
A.Pure competition
B.Monopoly power
C.Net social benefits
D.Allocative efficiency
14) Suppose that a nation can only make two products: defense goods and civilian
goods. In a graph of the marginal benefit (MB) and marginal cost (MC) of defense
goods, a leftward shift of the MB curve will cause the optimal quantity of:
A.Civilian goods to decrease
B.Both civilian goods and defense goods to decrease
C.Defense goods to decrease
D.Defense goods to increase
15) Medicare and Medicaid set their payment rates for medical services above marginal
cost, but below average total cost. The rationale for doing this includes the following,
except:
A.To save taxpayers money
B.To induce health-care providers to serve Medicare and Medicaid patients
C.To make hospitals and other providers become more profitable
D.To put downward pressure on health-care costs
16) Answer the question on the basis of the following information for four highway
programs of increasing scope. All figures are in millions of dollars.
The data indicate that:
A.there is no highway program that is economically justifiable on the basis of
cost-benefit analysis.
B.the marginal cost and marginal benefit of Program A are $2 and $9 respectively.
C.the marginal cost and marginal benefit of Program C are $12 and $21 respectively.
D.the marginal cost and marginal benefit of Program A cannot be determined.
17) Other things equal, cartels and similar collusive arrangements are easier to establish
and maintain:
A.when there are ample opportunities for the firms to make secret price concessions to
selected buyers.
B.during periods of business-cycle stability and full employment.
C.when the demand and cost conditions of the participating firms differ substantially.
D.when the number of firms is relatively large.
18) The progressive structure of the income-tax system is based on the:
A.Benefits-received principle
B.Principle of diminishing returns
C.Ability-to-pay principle
D.Principle that "taxes are the price we pay for civilization"
19) If an oligopoly is faced with a kinked-demand curve that is relatively elastic above,
and relatively inelastic below, the going price, then it will:
A.increase total revenue by increasing price but lower total revenue by decreasing
price.
B.decrease total revenue by either increasing or decreasing price.
C.increase total revenue by either increasing or decreasing price.
D.increase total revenue by decreasing price but lower total revenue by increasing
price.
