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1) In a graph showing the market supply and demand for British pounds in terms of
U.S. dollars, the supply-of-pounds curve is upsloping because:
A.Fewer British pounds can be purchased per dollar if U.S. dollars become more
expensive
B.Fewer U.S. dollars can be purchased per pound if the British pounds become less
expensive
C.The British will purchase more U.S. goods or services when the dollar price of
pounds rises
D.The British will purchase more U.S. goods or services when the dollar price of
pounds falls
2) The following table shows cost data for a firm that is selling in a purely competitive
market.
Refer to the above table. If the market price for the firm's product is $80, the firm will:
A.Produce 4 units
B.Produce 5 units
C.Produce 6 units
D.Shut down
3) Suppose that by devoting all of its resources to the production of A, the nation of
Econia can produce 50 A. By devoting all of its resources to the production of B,
Econia can produce 25 B. The comparable figures for the nation of Optima are 5 A and
5 B. According to the principle of comparative advantage, which nation will specialize
in which product? What are the limits to the terms of trade?
4) An indifference map implies that:
A.money income is constant, but the prices of the two products vary directly with the
quantities purchased.
B.the two products under consideration are perfectly substitutable for one another.
C.a consumer is better off to be at some point high on a given curve as opposed to a
point low on the same curve.
D.curves farther from the origin yield higher levels of total utility.
5)
Refer to the diagram in which the downsloping lines are budget lines and I1, I2, and I3
comprise an indifference map. The combinations of products M and N indicated by
points 1, 3, and 5 are such that:
A.all three imply the same level of utility.
B.1 and 5 imply a higher level of utility than does 3.
C.3 implies a higher level of utility than does 1 or 5.
D.the person is indifferent among the three combinations.
6) All of the following would reduce property crime by increasing its "price," except:
A.imposing greater penalties for those who are caught and convicted.
B.using more sophisticated security systems.
C.enhancing the legitimate earnings of potential criminals.
D.cutting out the middlemen ("fences") by selling stolen goods via Internet auction
sites.
7) Usury laws:
A.allocate funds from low-productivity to high-productivity investments.
B.establish a legal ceiling on interest rates.
C.make more funds available to low-income borrowers.
D.create a surplus of loanable funds.
8) Which of the following statements, if any, is correct for a nation that is producing
only consumer and capital goods?
A.Other things equal, the more consumer goods a nation produces, the greater will be
its future growth rate.
B.Other things equal, the more capital goods a nation produces, the greater will be its
future growth rate.
C.There is no general relationship between the current division of output between
consumer and capital goods and the future growth rate.
D.None of these statements is correct.
9) In the taste for discrimination model, the perceived cost for a prejudiced white
employer for hiring an African-American worker is:
A.The ratio of the wages of African-American workers to white workers
B.The ratio of the wages of white workers to African-American workers
C.The wages of African-American workers plus the monetary value of the disutility
from hiring an African-American worker
D.The wages of a white worker plus the monetary value of the disutility from hiring an
African-American worker
10)
Refer to the diagram. Suppose that the demand for loanable funds is D0 and the supply
of loanable funds initially is S0. If the supply of loanable funds declines to S1, the
equilibrium interest rate will:
A.decrease from G to F.
B.increase from E to F.
C.decrease from F to E.
D.increase from F to G.
11) The marginal benefit to a firm from its R&D expenditures is depicted by its:
A.interest-rate cost-of-funds curve.
B.expected-rate-of-return curve.
C.venture capital acquisition curve.
D.retained earnings pay-out curve.
12) Answer the question on the basis of the following cost data for a purely competitive
seller:
Refer to the data. If product price is $45, the firm will:
A.shut down.
B.produce 4 units and realize a $120 economic profit.
C.produce 5 units and realize a $15 economic profit.
D.produce 6 units and realize a $100 economic profit.
13) Which of the following statements is correct?
A.The operation of a market system eventually results in an equal distribution of
income
B.Producers are 'sovereign" in a market economy because they determine what is
produced
C.The market system is efficient at allocating resources, but not at allocating products
D.Freedom of choice and enterprise are essential elements of the market system
14) Which of the following statements is correct?
A.Economic profits induce firms to enter an industry; losses encourage firms to leave.
B.Economic profits induce firms to leave an industry; profits encourage firms to leave.
C.Economic profits and losses have no significant impact on the growth or decline of an
industry.
D.Normal profits will cause an industry to expand.
15) Camille is at the candy store with her grandmother, who offers to buy her $6 worth
of candy. If lollipops are $1 each and candy bars are $2 each, what combination of
candy can Camille's grandmother buy for her?
A.Six lollipops and three candy bars.
B.Two lollipops and two candy bars.
C.Three lollipops and two candy bars.
D.One lollipop and three candy bars.
16)
The diagram indicates that the marginal revenue of the sixth unit of output is:
A.-$1.
B.$1.
C.$4.
D.$24.
17) The table shows three short-run cost schedules for three plants of different sizes that
a firm might build in the long run.
Refer to the above table. What is the long-run average cost of producing 30 units of
output?
A.$7
B.$8
C.$9
D.$10
