1)
Refer to the diagram for a nondiscriminating monopolist. The profit-maximizing output
for this firm is M.
2) Creative destruction entails both costs as well as benefits.
3) The United States has had significant trade and current account surpluses in recent
years.
4) In purely competitive market, the entry and exit of firms will push price towards
equality with marginal revenue.
5) Heuristics help people make faster, error-free decisions.
6) Monopolistically competitive sellers realize economic profits in the long run because
entry barriers are significant.
7) It is generally believed that, because of the election process, the incentives and
pressures for internal efficiency are stronger in the public sector than in the private
sector.
8) A budget deficit will require the government to issue bonds to fill in the gap in the
budget.
9) Trade protection in most instances transfers wealth from consumers to domestic
producers.
10)
Refer to the diagram. Given production possibilities curve a, point Y indicates that
society is failing to use available resources efficiently.
11) The top 20 percent of U.S. income earners receive nearly 80 percent of total U.S.
income.
12) Costs can be defined as total payments made to workers, land owners, and capital
suppliers less payments to the entrepreneur for organizing and combining the other
resources used to produce a good.
13) All other things equal, the larger the number of firms in an oligopolistic industry,
the more difficult it is for those firms to collude.
14)
In the diagram, the optimal amount of R&D is:
A.$20 million.
B.$80 million.
C.$40 million.
D.$60 million.
15) When the price of gasoline increases significantly, the delivery companies like UPS,
FedEx, and the USPS all find:
A.Their TVC curves shifting up
B.Their TFC curves shifting up
C.Themselves moving up along their TC curves
D.Themselves moving up along their TVC curves
16) The eligibility basis for the Supplemental Nutrition Assistance Program (or SNAP,
formerly called the food-stamp program) is:
A.Age
B.Illness
C.Income
D.Disability
17) Other things equal, extracting oil from shale becomes economically viable (as or
less costly than using conventionally extracted oil) when oil prices reach _____ or more
per barrel.
A.$80
B.$60
C.$50
D.$40
18) Frederic Bastiat’s satirical argument against protectionism called for protecting
domestic producers from:
A.fire.
B.the sun.
C.other European countries.
D.invention of the electric light.
19) A major purpose of usury laws is to make more funds available to low-income
borrowers. Economic analysis suggests that usury laws:
A.are effective in achieving this goal.
B.allocate available funds to high-income borrowers.
C.have no impact on the allocation of funds between high-income and low-income
people.
D.help low-income people only when the legal interest rate is above the market rate.
20) The federal income tax is consistent with the __________ principle of taxation,
whereas an excise tax on sporting event tickets is consistent with the ___________
principle of taxation.
A.benefits-received; ability-to-pay.
B.benefits-received; pay-as-you-go.
C.ability-to-pay; benefits-received.
D.ability-to-pay; pay-as-you-go.
21) In recent years, many DVCs have come to realize that:
A.Expanded international trade is harmful to DVCs
B.Private capital investment is essential for economic growth in DVCs
C.The International Monetary Fund is the major institutional barrier to economic
growth
D.Government involvement in economic development is the only avenue for economic
growth
22) What are two major outcomes from the large U.S. trade deficits?
A.An increase in domestic consumption and U.S. indebtedness
B.A decrease in domestic consumption and U.S. indebtedness
C.An increase in domestic consumption and a decrease in U.S. indebtedness
D.A decrease in domestic consumption and an increase in U.S. indebtedness
23) The average tax rate is:
A.equal to the marginal tax rate if the tax is progressive.
B.the total tax rate minus the marginal tax rate.
C.the ratio of total taxes paid to total taxable income.
D.the tax rate that applies to incremental dollars of income.
24) In firm X, labor costs are 85 percent of production costs, while in firm Y labor costs
are 40 percent of production costs. A 20 percent increase in wages would increase
production costs by:
A.23 percent in firm X and 20 percent in firm Y
B.19 percent in firm X and 15 percent in firm Y
C.15 percent in firm X and 6 percent in firm Y
D.17 percent in firm X and 8 percent in firm Y
25)
Refer to the graph. A move from b to a along labor demand curve D1 would result
from:
A.a decrease in the price of a substitute resource, assuming that the substitution effect
exceeds the output effect.
B.an increase in the wage rate.
C.a decrease in the wage rate.
D.an increase in the demand for the product that this labor is helping to produce.
26)
In the graph above, a decrease in the price of good Y will result in:
A.A decrease in demand for good Y
B.An increase in demand for good Y
C.An increase in demand for good X
D.A decrease in demand for good X
27) Out-of-pocket costs of health care to consumers are mostly in the form of:
A.Premiums and copayments
B.Health taxes and premiums
C.Premiums and deductibles
D.Copayments and deductibles
28) How have firms and organizations devised ways to overcome information problems
without government intervention? Give three examples.
29) What is a balance-of-payments surplus?
30) Use the information in the table below to identify the income elasticity type of each
of the following products, A to E.
31) What are the basic differences between public choice theory and the economics of
taxation?
32) What are the three different union strategies pursued to increase wages?
33) Why might a government intervene in the foreign exchange markets to try to
increase or decrease the value of its currency?
34) In many large cities auto commuters are given quantity discounts on tickets to use
bridges, tunnels, and toll roads. Some argue that these discounts are a subsidy to traffic
congestion and air pollution. Do you agree? Explain.
35) Evaluate the statement: A market that produces an identical product cannot be
become an oligopoly.
36) Why is the monopolistic competitors demand curve more elastic than a pure
monopolists, but less elastic than a pure competitors? What factors determine the price
elasticity of demand for a monopolistic competitor?
37) What is the magnitude of the differences in GDP per capita between industrially
advanced countries and developing countries?