1) A monopolistically competitive industry combines elements of both competition and
monopoly. It is correct to say that the competitive element results from:
A.a relatively large number of firms and the monopolistic element from product
differentiation.
B.product differentiation and the monopolistic element from high entry barriers.
C.a perfectly elastic demand curve and the monopolistic element from low entry
barriers.
D.a highly inelastic demand curve and the monopolistic element from advertising and
product promotion.
2)
Refer to the table, in which the values for columns (2) through (5) are in acres. If the
relevant columns are (1), (2), and (4), land rent will be:
A.$100 per acre.
B.$200 per acre.
C.$300 per acre.
D.$400 per acre.
3) In the immediate market period for a highly-perishable crop like tomatoes, the
individual farmer’s supply curve tends to be:
A.Perfectly inelastic
B.Perfectly elastic
C.Quite flat
D.Downward-sloping
4) The “active antitrust perspective” in policy enforcement strongly espouses the
following beliefs, except:
A.Firms occasionally use illegal tactics to gain over competitors
B.Antitrust authorities must act like officials in a football game
C.Competition and creative destruction could lead to monopolies
D.When competition is insufficient, allocative inefficiencies will occur
5) Answer the question on the basis of the following demand and supply data for a
competitive market:
Refer to the given data. If government provides a per-unit subsidy of $2 to suppliers of
this product, equilibrium price and quantity would be:
A.$9 and 3,000
B.$7.50 and 2,250
C.$8.50 and 2,750
D.$7 and 3,000
6) Which of the following statements is correct?
A.Saving is high in less developed nations because the opportunities for consumption
are limited
B.For developing nations, the annual rate of population increase is about 5 percent
C.Most of the labor forces of developing nations are engaged in light industrial
production
D.Investment is low in developing nations, making it difficult to increase productivity
and incomes
7) If the desired real rate of interest is 5 percent and the expected rate of inflation is 15
percent, what is the nominal rate of interest?
A.5 percent
B.10 percent
C.15 percent
D.20 percent
8) The total fertility rate:
A.measures the average number of children that a woman is expected to have during
her lifetime.
B.measures the average number of children that each couple is expected to have during
their lifetime.
C.equals the rate of population change over time.
D.rises as income rises.
9) For each of the situations below use supply elasticity to explain the how the
equilibrium price and quantity change.
(a)The demand for collectable baseball cards from the 1950s increases.
(b)The demand for silver decreases.
(c)In the long run, the demand for ice cream increases.
(d)In the short run, the demand for gasoline decreases.
10) Which of the following statements is correct?
A.The pure monopolist will maximize profit by producing at that point on the demand
curve where elasticity is zero.
B.In seeking the profit-maximizing output, the pure monopolist underallocates
resources to its production.
C.The pure monopolist maximizes profits by producing that output at which the
differential between price and average cost is the greatest.
D.Purely monopolistic sellers earn only normal profits in the long run.
11)
Refer to the graph above. If demand decreases, then total revenues will:
A.Decrease
B.Increase
C.Stay the same
D.Cause supply to decrease too
12) That most people would prefer to buy meat that is 80% lean rather than meat that is
20% fat is an illustration of the:
A.Anchoring effect
B.Framing effect
C.Confirmation bias
D.Endowment effect
13)
Refer to the diagram. At output level Q total fixed cost is:
A.0BEQ.
B.BCDE.
C.0BEQ – 0AFQ.
D.0CDQ.
14) Which one of the following is not one of the so-called G8 nations?
A.Japan.
B.Canada.
C.United States.
D.China.
15) Which of the following would, other things equal, increase the demand for U.S.
farm products?
A.Poorer crops abroad.
B.Appreciation of the U.S. dollar.
C.Deteriorating trade relations with China and Russia.
D.Increases in foreign tariffs on imported farm products.
16) In which of the following cases did the final court decision result in a breakup of
the firm into competing businesses?
A.Microsoft case.
B.Standard Oil case.
C.U.S. Steel case.
D.DuPont cellophane case.
17) Given the following table for a competitive firm which is maximizing profits, if the
marginal revenue product of the last worker hired is $150 and three workers are
employed per day, the price of a unit of output must be:
A.$1,000
B.$100
C.$20
D.$10
18)
Refer to the above diagram of the market for corn. If the price in this market is at $4 per
bushel, then there will be a:
A.Surplus and the price will tend to rise
B.Shortage and the price will tend to rise
C.Surplus and the price will tend to fall
D.Shortage and the price will tend to fall