1) Why do credit card companies typically require small minimum payment amounts on
their customers’ monthly credit card statements?
A.Credit card companies are concerned that their customers will be put in financial
distress if required to make higher payments.
B.Credit card companies want to promote faster repayment, and customers will be
encouraged to pay more each month if they’re able to pay well beyond the minimum.
C.Credit card companies want to increase profits by promoting slower repayment, and
actual customer payments will be anchored by the smaller payment requirements.
D.Credit card companies actually charge the highest minimum payment they are
allowed by law to charge.
2) Dan was certain that his upcoming economics test would be so easy that he could
wait to study until the night before and still do well on the exam. When he cracked open
his book and notes the night before the exam, he realized he should’ve started studying
earlier. According to behavioral economics, Dan’s error was caused primarily by:
A.a planning fallacy.
B.an overconfidence effect.
C.framing effects.
D.hindsight bias.
3) A large increase in the supply of HD-TV sets occurs simultaneously with a smaller
decrease in its demand. As a result the equilibrium price will:
A.Increase and the equilibrium quantity will decrease
B.Increase and the equilibrium quantity will increase
C.Decrease and the equilibrium quantity will decrease
D.Decrease and the equilibrium quantity will increase
4) The notion of “purposeful behavior” in the economic perspective suggests that:
A.People will tend to stick with a particular choice for a long period of time
B.Economic analysis will provide people with a single “right” way to behave
C.Economists do not believe that people can sometimes behave impulsively
D.One person’s choice may differ from another’s if their circumstances and information
differ
5)
Refer to the above cost and demand data for a pure monopolist. Suppose that this
monopoly is subjected to a regulatory commission. If the commission seeks to achieve
the most efficient allocation of resources for this industry, it should set the socially
optimal price at:
A.P1
B.P2
C.P3
D.0
6) Many people buy no more than one iPad because:
A.There’s always a shortage of iPads
B.The MU/P of a second iPad is quite low for many people
C.The price of iPads has increased significantly
D.iPads have quickly become obsolete
7)
Refer to the above graphs of D and MR for a monopolist. We know that to maximize
profits the firm will set a price:
A.Above P1
B.Below P2
C.Above P2
D.Below P3
8) Regulatory capture often occurs because of which of the following?
A.Government officials want stronger control over industry regulation.
B.Nearly everyone with expertise works in the regulated industry.
C.Patent law allows firms to gain monopoly power easily and therefore control a
market.
D.Consumer groups are effective at lobbying the government for industry regulation.
9)
Refer to the diagram. If output changes from a poor crop, Qp, to a bumper crop, Qb:
A.farm incomes will decrease.
B.farm incomes will increase.
C.price and quantity will both increase.
D.farm incomes may either rise or fall.
10) A nation with abundant capital resources tends to be an exporter of:
A.Labor-intensive products
B.Capital-intensive products
C.Natural resource-based products
D.Consumer products
11) The kinked-demand curve of an oligopolist is based on the assumption that:
A.competitors will follow a price cut but ignore a price increase.
B.competitors will match both price cuts and price increases.
C.competitors will ignore a price cut but follow a price increase.
D.there is no product differentiation.
12) If a product such as cement or bricks is costly to ship and, therefore, markets are
very localized, the national concentration ratio for that industry:
A.will be greater than 50 percent.
B.may understate the degree of monopoly.
C.may overstate the degree of monopoly.
D.will yield an accurate impression of the degree of monopoly.
13) A purely competitive firm is precluded from making economic profits in the long
run because:
A.it is a “price taker.”
B.its demand curve is perfectly elastic.
C.of unimpeded entry to the industry.
D.it produces a differentiated product.
14)
Refer to the above graph. If the price increases from P1 to P2, then the total revenue
will gain area:
A.B + E, but it will lose area H + I + J
B.C + F + H, but it will lose area J
C.E + F + G, but it will lose area J
D.A + B + C, but it will lose area G + I + J
15) A monopolistically competitive firm is producing at a short-run output level where
average total cost is $10.00, marginal cost is $5.00, marginal revenue is $6.00, and price
is $12.00. In the short run, the firm should:
A.Decrease the level of output
B.Increase the level of output
C.Make no change in the level of output
D.Increase product price
16)
Suppose an individual’s budget line moved as shown above. Which of the four pairs of
graphs, each showing the demand for Good X and a separate demand for Good Y, is the
most consistent with the given change in the top graph?
A.Pair A
B.Pair B
C.Pair C
D.Pair D
17) Assume that the market for corn is purely competitive. Currently, firms growing
corn are suffering economic losses. In the long run, we can expect:
A.New firms to enter causing the market price of corn to fall
B.New firms to enter causing the market price of corn to rise
C.Some firms to exit causing the market price of corn to fall
D.Some firms to exit causing the market price of corn to rise
18)
Illegal immigrants from Mexico who work continuously in the U.S. have the following
characteristics, except:
A.They are mostly working in farms
B.They make up a majority of the illegal immigrants in the U.S.
C.On average, they have higher educational levels than the Mexicans who don’t migrate
D.They do not frequently move back and forth across the border
19)
Refer to the table. In a choice between parks and education:
A.no voter decision is possible.
B.a majority of voters would favor education.
C.the outcome would depend on which item was listed first on the ballot.
D.a majority of voters would favor parks.
20)
Refer to the diagram, which pertains to a purely competitive firm. Curve A represents:
A.total revenue and marginal revenue.
B.marginal revenue only.
C.total revenue and average revenue.
D.total revenue only.
21) (Consider This) Explain the importance in understanding the difference between
income inequality and consumption inequality.
22) Why is the marginal revenue product schedule a demand schedule for the individual
firm in a purely competitive resource market and selling output in a purely competitive
product market?
23) What are negative externalities and positive externalities? How do they affect
supply and demand curves?
24) What do wages and wage rates mean in economics? How do they differ from labor
earnings?
25) Differentiate between government purchases of goods and services and government
transfer payments.
26) Purely competitive firms sell their product at the same price. This is also true in
some oligopolistic markets with standardized products. Therefore, these oligopolies are
actually highly competitive. Evaluate critically.
27) Discuss the decision a criminal must make before deciding whether or not to steal.