1) A firm is hiring resources X, Y, and Z in the profit-maximizing amounts when:
A.MRPx/Px equals MRPy/Py equals MRPz/Pz equals 1.
B.the sum of the MRPs of the three resources is at a minimum.
C.the marginal revenue productivity of all three resources is the same.
D.the marginal revenue product of the last dollar spent on each of the three resources is
the same.
2) A major complaint of DVCs about foreign aid from IACs is that it:
A.Is allocated just to the poorest nations
B.Is equally borne by the donor nations
C.Needs to be quantitatively larger for DVCs
D.Takes too long a time to reach DVCs
3) Consumer sovereignty and “dollar votes” guide the market system in dealing with
which fundamental economic question?
A.Which output will be produced?
B.How is the output to be produced?
C.How can the system accommodate change?
D.Who is to receive the output?
4) An unprofitable motel will stay open in the short run if:
A.price (average nightly room rate) exceeds average variable cost.
B.marginal revenue exceeds marginal cost.
C.price (average nightly room rate) exceeds average fixed cost.
D.marginal revenue exceeds price.
5) At an output of 20,000 units per year, a firm’s variable costs are $80,000 and its
average fixed costs are $3. The total costs per year for the firm are:
A.$80,000
B.$100,000
C.$140,000
D.$240,000
6) Which of the following is a market imperfection that might explain persistent wage
differentials within an occupation?
A.Movement of labor from lower-wage to higher-wage jobs.
B.Readily available information about job opportunities and pay.
C.Principal-agent problems.
D.Discrimination.
7) If a European importer can buy $10,000 for 11,100 euros, the exchange rate for the
euro is:
A.1 euro = $0.80
B.1 euro = $0.90
C.1 euro = $0.95
D.1 euro = $1.11
8)
Refer to the diagram pertaining to two nations and a specific product. Lines FC and GD
are:
A.domestic supply curves for two countries.
B.domestic demand curves for two countries.
C.import demand curves for two countries.
D.export supply curves for two countries.
9) Use the following data to answer the question. The letters A, B, and C designate
three successively larger plant sizes.
Refer to the data. In the long run the firm should use plant size “C” for:
A.all possible levels of output.
B.10 to 30 units of output.
C.40 to 70 units of output.
D.all units of output greater than or equal to 80
10) In a market economy, the distribution of output will be determined primarily by:
A.consumer needs and preferences.
B.the quantities and prices of the resources that households supply.
C.government regulations that provide a minimum income for all.
D.a social consensus as to which distribution of income is most equitable.
11) Which of the following is correct?
A.Income is a stock and wealth is a flow concept.
B.Both income and wealth are flow concepts.
C.Both income and wealth are stock concepts.
D.Income is a flow and wealth is a stock concept.
12) Answer the question on the basis of the following demand and cost data for a
specific firm:
Refer to the data. Suppose that entry into the industry changes this firm’s demand
schedule from columns (1) and (3) shown to columns (2) and (3). Economic profit will:
A.fall by $10.
B.fall to $6.
C.increase by $10.
D.decline to zero.
13) A monopsonistic employer in an unorganized (nonunion) labor market will:
A.pay a wage rate less than labor’s MRP.
B.pay the same wage rate but hire fewer workers than if the market was purely
competitive.
C.hire the number of workers indicated by the intersection of the MRC and the labor
supply curves.
D.pay a wage rate in excess of labor’s MRP.
14) According to the concept of framing effects:
A.advertising power is limited because of the inability of firms to change consumers’
perspectives.
B.all people will assign the same utility to a given situation, regardless of their previous
status quo.
C.whether a new situation is viewed as a gain or a loss depends on one’s starting
position.
D.firms should never raise prices or reduce wages.