1)
Refer to the payoff matrix. Suppose that Alpha and Beta agree that they will both
pursue a high-price strategy. If Beta then cheats on the agreement in order to increase
profits, which of the following is true?
A.If this is a repeated game, Alpha can be expected to pursue a low-price strategy in
future games.
B.If this is a one-time game, a Nash equilibrium will result.
C.A Nash equilibrium cannot be reached through repeated playing of this game.
D.The game is a negative-sum game.
2) As it relates to owners and managers, the principal-agent problem results from the:
A.separation of corporate ownership and control.
B.double taxation of corporate profit.
C.limited liability of corporate owners.
D.differing interests of corporate stockholders and bondholders.
3) Economic resources are also called:
A.free gifts of nature.
B.consumption goods.
C.units of money capital.
D.factors of production.
4)
Refer to the table. Over the $6-$4 price range, supply is:
A.perfectly elastic.
B.elastic.
C.perfectly inelastic.
D.inelastic.
5) Other things equal, which of the following might shift the demand curve for gasoline
to the left?
A.The discovery of vast new oil reserves in Montana.
B.The development of a low-cost electric automobile.
C.An increase in the price of train and air transportation.
D.A large decline in the price of automobiles.
6) Sony is considering a 10 percent price reduction on its HD TV sets. If the
price-elasticity coefficient for the sets in this price range is 0.75, then the price cut will
cause:
A.Sales quantity to increase and revenues to also increase
B.Sales quantity to increase but revenues to decrease
C.Sales quantity to decrease and revenues to also decrease
D.Sales quantity to decrease but revenues to increase
7) Government-provided foreign aid to developing countries has:
A.averaged about 1 percent of the IACs’ GDP each year.
B.increased sharply since 1995.
C.dwarfed the size of foreign direct investment to the DVCs in recent years.
D.declined in the late 1990s but increased from 2000 to 2008.
8) Which of the following would best be classified as a complement for new
houses/homes?
A.Lumber or steel
B.Construction equipment
C.Mortgage loans
D.Rental apartments
9) Suppose interest rates fall sharply in the United States but are unchanged in Great
Britain. Other things equal, under a system of freely floating exchange rates, we can
expect the demand for pounds in the United States to:
A.decrease, the supply of pounds to increase, and the dollar to appreciate relative to the
pound.
B.increase, the supply of pounds to increase, and the dollar may either appreciate or
depreciate relative to the pound.
C.increase, the supply of pounds to decrease, and the dollar to depreciate relative to the
pound.
D.decrease, the supply of pounds to increase, and the dollar to depreciate relative to the
pound.
10) An increasing ratio of real GDP to BTU of energy consumption indicates that:
A.Increased energy consumption led to increased energy production
B.Increased energy production led to increased energy consumption
C.The discovery of energy sources greatly increased energy supply
D.Advances in technology greatly increased energy efficiency
11) If all resources used in the production of a product are increased by 20 percent and
output increases by 20 percent, then there must be:
A.Economies of scale
B.Diseconomies of scale
C.Constant returns to scale
D.Increasing average total cost
12) Increases in the total real output of many DVCs do not increase the nation’s
standard of living because:
A.diminishing returns may be encountered in increasing total output.
B.population increases may dissipate the increase in real output.
C.disguised unemployment in agriculture will persist.
D.surplus farm labor may move from rural areas to industrial areas, causing
unemployment.
13) Which of the following is considered a renewable natural resource?
A.Aquifers.
B.Coal.
C.Petroleum.
D.Iron.
14) Insurance companies facilitate the transfer of risk from:
A.Those who have a low-risk tolerance to those with high risk-tolerance
B.Those who have a high-risk tolerance to those with low risk-tolerance
C.The insurance companies’ owners to the insurance-policy holders
D.Insurance policyholders to the bankers who lend money to the companies
15) Natural disasters often cause shortages of critical supplies. What outcomes would
neoclassical and behavioral economics typically predict from these events?
A.Both would expect prices to rise significantly, whether from market forces or from
self-interest overwhelming any sense of compassion for others.
B.Both would expect sellers to keep prices unchanged, whether to keep customers
happy long-term or out of a sense of fairness.
C.Neoclassical economists would expect economic chaos and collapse, while
behavioral economists would expect everyone to act cooperatively.
D.Neoclassical economists would expect prices to rise dramatically as a natural result
of the greater scarcity, and behavioral economists would expect prices to increase less
or not at all as people try not to take advantage of the situation.
16)
Refer to the above graph for a purely competitive firm in the short run. What minimum
output level should the firm produce just for it to break even?
A.A
B.B
C.C
D.Greater than C
17) Diminishing marginal returns occurs as a firm adds more variable inputs to at least
one fixed input because:
A.The ability or quality of the variable inputs hired decreases as more are hired
B.The firm must lower the price of its product when it produces more units of output
C.The per unit cost it must pay for variable inputs increases as more inputs are hired
D.As more variable inputs are hired, the amount of the fixed input per variable input
decreases