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Figure: Monopolistic Competition II
(Figure: Monopolistic Competition II) Which panel(s) in the figure Monopolistic
Competition II show(s) a monopolistic competitor producing where price is greater than
marginal revenue?
A) panel (a)
B) panel (b)
C) panel (c)
D) panels (a), (b), and (c)
As the premium for an insurance policy falls, there is an increase in the _____
insurance.
A) demand for
B) supply of
C) quantity demanded of
D) quantity supplied of
When building a model, economists:
A) simplify reality to highlight what really matters.
B) attempt to duplicate reality in all of its complexity.
C) ignore the facts and instead try to determine what the facts should be.
D) are careful to avoid the scientific method.
Markets for the right to pollute are:
A) established by individual firms when they reduce emissions.
B) established by government when it issues tradable pollution permits.
C) likely to result in fewer incentives to develop and implement technology that reduces
pollution.
D) a means by which more pollution is encouraged.
Sarah's accountant tells her that she made a profit of $43,002 running a pottery studio in
Orlando. Sarah's husband, an economist, claims Sarah lost $43,002 running her pottery
studio. This means her husband is claiming that she incurred _____ in _____ costs.
A) $86,004; implicit
B) $43,002; implicit
C) $43,002; explicit
D) $86,004; explicit
Which of the following statements is CORRECT?
A) A change in demand is a movement along the demand curve, and a change in
quantity demanded is a shift of the demand curve.
B) Both a change in quantity demanded and a change in demand are movements along
the demand curve, only in different directions.
C) Both a change in quantity demanded and a change in demand are shifts of the
demand curve, only in different directions.
D) A change in quantity demanded is a movement along the demand curve, and a
change in demand is a shift of the demand curve.
The expected value of a random variable is:
A) the most frequently occurring value of that variable.
B) the most recent value of that variable.
C) the weighted average of all possible values, where the weights on each possible
value correspond to the probability of that value occurring.
D) impossible to determine.
If the price of a ticket to a Minnesota Wild hockey game is $60 and the price of a snow
shovel is $40, the price of the hockey ticket relative to that of shovels is _____.
A) 40
B) 23.
C) 1.5
D) 6
Utility is most closely related to:
A) usefulness.
B) satisfaction.
C) requirement.
D) necessity.
(Table: Marginal Utility per Dollar of M&Ms) Look at the table Marginal Utility per
Dollar of M&Ms. The price of M&Ms is $2 per bag. The marginal utility per dollar of
the third bag of M&Ms is:
A) 1.
B) 1.5.
C) 3.
D) 13.
Figure: The Profit-Maximizing Firm in the Short Run
(Figure: The Profit-Maximizing Firm in the Short Run) Look at the figure The
Profit-Maximizing Firm in the Short Run. If the market price is P4:
A) firms will leave the industry and the price will fall in the long run.
B) there will be economic profits and firms will enter the industry in the long run.
C) the market supply curve will shift to the left and price will fall in the long run.
D) the firm will produce q4.
(Table: Coffee and Salmon Production Possibilities) Look at the table Coffee and
Salmon Production Possibilities. The table shows the maximum amounts of coffee and
salmon that Brazil and Alaska can produce if they just produce one good. The
opportunity cost of producing 1 unit of coffee for Brazil is:
A) 2 salmon.
B) 0.25 salmon.
C) 1 salmon.
D) 0.5 salmon.
(Table: Price, Quantity Demanded, and Quantity Supplied) Look at the table Price,
Quantity Demanded, and Quantity Supplied. A straight line represents the relation
between:
A) price and quantity demanded.
B) price and quantity supplied.
C) price and quantity demanded minus quantity supplied.
D) quantity demanded and quantity supplied.
If the price of chocolate-covered peanuts decreases from $1.10 to $0.95 and the
quantity demanded increases from 190 bags to 215 bags, then the price elasticity of
demand (by the midpoint method) is:
A) 1.25.
B) 0.5.
C) 0.8.
D) 2.
Figure: Production Possibility Frontier Curve for Tealand
(Figure: Production Possibility Frontier
for Tealand) Look at the figure Production Possibility Frontier for Tealand. Tealand is
producing at point C on its production possibility frontier. What is the opportunity cost
of increasing the production of tea from 20 million cups to 30 million cups?
A) 10 million cups of tea
B) 5 million scones
C) 10 million scones
D) The answer is impossible to determine from the information given.
Health insurance policies include deductibles:
A) to minimize moral hazard.
B) because when it comes to health, most people are risk-averse.
C) to minimize adverse selection.
D) because many health insurance companies own hospitals.
Which of the following policies is MOST likely to reduce traffic congestion in a large
metropolitan area because people usually exploit opportunities to make themselves
better off?
A) a limited number of free early-bird parking passes given only to those who arrive
prior to 6 A.M.
B) a toll road that requires each car to pay a fee to enter the city center
C) an increase in the price of subway and bus fare to and from the city
D) asking citizens to carpool
The job creation argument for protection against free trade:
A) is that keeping out foreign imports allows the goods and services to be produced by
domestic workers.
B) is frequently put forward by economists.
C) is mostly that we need full employment to defend the security of the nation.
D) is that we need full employment to prevent currency depreciation.
Figure: A Perfectly Competitive Firm in the Short Run
(Figure: A Perfectly Competitive Firm in the Short Run) Look at the figure A Perfectly
Competitive Firm in the Short Run. If market price is G, the firm's total revenue from
the sale of its most profitable level of output is:
A) 0GLD.
B) 0GHB.
C) BH.
D) DL.
The long-run price elasticity of supply of crude oil is _____ the short-run price
elasticity of supply of crude oil.
A) less than
B) greater than
C) equal to
D) not comparable to
Which of the following is a limit to the ability of diversification to reduce risk?
A) losses due to bad decision making
B) key raw materials
C) industrial life cycles
D) economic losses from bad weather
Figure: The Market for Productivity Apps
(Figure: The Market for Productivity Apps) Look at the figure The Market for
Productivity Apps. If the government imposes a tax of $1 in this market, producers will
receive _____ less per app and sell _____ fewer apps.
A) $1; 5
B) $1; 25
C) $0.50; 5
D) $0.50; 20
For which of the following decisions would marginal analysis be MOST relevant?
A) Should I invest all of my savings in real estate or should I keep it all in a savings
account?
B) After I graduate from college, should I go to graduate school or should I get a job?
C) After meeting my basic needs, how should I allocate the remainder of my monthly
budget?
D) Should I keep a pet?
The marginal product of labor is the change in _____ divided by the change in _____.
A) labor; total product
B) total output; the quantity of labor
C) average output; the quantity of labor
D) total costs; the quantity of labor
The adverse selection death spiral occurs when private insurance companies:
A) charge higher-than-average prices for health insurance, which in turn drives off
healthy individuals and leaves only sicker, high-cost individuals, resulting in yet higher
premiums the following period.
B) find themselves with only healthy individuals to insure.
C) offer health insurance at average cost, which results in losses to the company.
D) refuse to insure very sick individuals.
Marginal benefit:
A) is the subsidiary benefit from an activity; for example, the main benefit from weight
training is an increase in muscle mass, and the subsidiary or marginal benefit might be a
reduction in cholesterol.
B) is the addition to total benefit due to undertaking one more unit of an activity.
C) must be increasing if total benefit is increasing.
D) normally increases as more of an activity is undertaken.
