1)
Refer to the above graph. Consider a situation where price increases from P3 to P4. In
this price range, demand is relatively:
A.Inelastic because the loss in total revenue (areas E + F + G) is greater than the gain in
total revenue (area A)
B.Elastic because the loss in total revenue (areas E + F + G) is greater than the gain in
total revenue (area A)
C.Elastic because the loss in total revenue (area A) is greater than the gain in total
revenue (areas E + F + G)
D.Inelastic because the loss in total revenue (area A) is greater than the gain in total
revenue (areas E + F + G)
2)
Refer to the table. In a choice between the highway and the lighthouse:
A.a majority of voters favor the lighthouse.
B.a majority of voters favor the highway.
C.the voters are indifferent as between the two.
D.no voter decision is possible.
3) If a firm is selling in an imperfectly competitive product market, then:
A.average product will be less than marginal product for any number of workers hired.
B.the marginal products of successive workers must be sold at lower prices.
C.the marginal products of successive workers can be sold at higher prices.
D.the marginal products of successive workers can be sold at a constant price.
4) Facets of the U.S. government’s ethanol program include the following, except:
A.Tariffs on imported ethanol
B.Mandated use of ethanol in gasoline
C.Subsidies to oil refineries that use ethanol
D.Price-ceiling to reduce the price of corn needed to make ethanol
5) A monopoly results in productive inefficiency because at the profit-maximizing
output level:
A.MR is not zero
B.ATC is not at its minimum level
C.MC is not at its minimum level
D.P> AVC
6) Which is not a common form of nonprice competition in monopolistic competition?
A.Customer services such as liberal guarantee and repair policies
B.Advertising featuring brand names
C.Cash rebates and discount coupons
D.Annual design and model changes
7)
Refer to the above graph. If the price is P3, then the total revenue is represented by
area:
A.B + C + D
B.E + F + G
C.B + C + D + E + F + G
D.A + B + C + D + E + F + G
8) The main purpose of HMOs and PPOs is to:
A.reduce health care costs for employers and their employees.
B.reduce medical malpractice suits.
C.enable groups of physicians to increase their fees.
D.direct patients to specialists rather than to more expensive primary-care physicians.
9) The so-called government tax subsidy for health insurance comes in the form of:
A.Health-insurance benefits to employees that are treated as tax-exempt income
B.Employer-provided insurance policies that are part of employees’ compensation
C.Government subsidies to households in the form of Medicare and Medicaid
D.Subsidies provided to firms for offering health insurance coverage to employees
10) You are told that the four-firm concentration ratio in an industry is 20. Based on this
information you can conclude that:
A.Each of the top four firms has 20 percent of industry sales
B.The four largest firms account for a combined 80 percent of the industry sales
C.The four largest firms account for 20 percent of industry sales
D.Each of the four largest firms accounts for 5 percent of industry sales
11) A strategy that is better than any alternative strategy – regardless of what the other
firm does – is called a:
A.Dominant strategy
B.Nash strategy
C.Positive-sum strategy
D.Best strategy
12) Pure monopolists:
A.Maximize MR
B.Are price takers
C.Operate where P> MC
D.Face demand curves that are perfectly inelastic
13)
Refer to the graph above, which shows the supply and demand for British pounds. D1
and S1 represent the initial demand and supply curves. If there is a huge increase in the
desire of U.S. buyers to consume UK products, and the British government starts
buying U.S. dollars in order to fix the exchange rate at the initial level, then the new
equilibrium will be at point:
A.F
B.J
C.C
D.H
14) If a competitive firm successfully adopts a better production technology ahead of
the others, then:
A.Its product price will become lower than the others’
B.Its average cost will become higher than the others’
C.Its profits will become higher than the others’
D.Its marginal revenue will become higher than the others’
15) If consumer desire for product X increases, all of the following will occur except:
A.an increase in the profits of industry X.
B.an increase in the quantity of resources employed by industry X.
C.an increase in the output of industry X.
D.a decrease in the quantity of resources employed in industry X.
16) The tax rates embodied in the federal personal income tax are such that:
A.a rising absolute amount, but a declining proportion, of income is paid in taxes.
B.the marginal and average tax rates are equal, making the tax progressive.
C.the average tax rate rises more rapidly than does the marginal tax rate.
D.the marginal tax rate is higher than the average tax rate, causing the average tax rate
to rise.
17)
Refer to the diagram. Line (1) reflects a situation where resource prices:
A.decline as industry output expands.
B.increase as industry output expands.
C.remain constant as industry output expands.
D.are unaffected by the level of output in the industry.
18) A cost-minimizing firm using two inputs, x and y, will employ inputs so that:
A.MPx = MPy
B.Px/MPy = Py/MPx
C.MPx/Px = MPy/Py
D.Px = Py
19) The introduction of ATM machines has:
A.Increased the demand for a substitute resource-human tellers
B.Increased the demand for a complementary resource-human tellers
C.Decreased the demand for a substitute resource-human tellers
D.Decreased the demand for a complementary resource-human tellers
20) If the price of Pepsi decreases, other factors constant, then we’d expect to see a
consequent shift of the demand curve for:
A.Coke to the left
B.Coke to the right
C.Pepsi to the left
D.Pepsi to the right