1)
Refer to the diagrams. The case of a normal good is represented by figure:
A.A
B.B
C.C
D.D
2) The satisfaction or pleasure one gets from consuming a good or service is called:
A.Price
B.Utility
C.Income
D.Profits
3) A firm’s labor input, total output of labor, and product price schedules are given
below. Labor is the only variable input.
Refer to the above table and information. How many workers will the
profit-maximizing firm hire if the wage rate is $8 per day?
A.3
B.4
C.5
D.6
4) Assume the price of product Y (the quantity of which is on the vertical axis) is $15
and the price of product X (the quantity of which is on the horizontal axis) is $3. Also
assume that money income is $60. The absolute value of the slope of the resulting
budget line:
A.is 5.
B.is 1/5.
C.is 4.
D.is 20.
5) Answer the question on the basis of the following information: The equations for the
demand and supply curves for a particular product are P = 10 – .4Q and P = 2 + .4Q,
where P is price and Q is quantity expressed in units of 100. After an excise tax is
imposed on the product, the supply equation is P = 3 + .4Q.
Refer to the given information. Government’s revenue from this tax is:
A.$750.
B.$1,500.
C.$875.
D.$800.
6) The graphs below illustrate the market for a product on which an excise tax has been
imposed by government.
Refer to the above graph. How much is the total amount of tax revenue going to the
government?
A.$77
B.$80
C.$42
D.$56
7) If all workers are homogeneous, all jobs are equally attractive to workers, and labor
markets are perfectly competitive:
A.compensating differences would cause wage differentials.
B.noncompeting groups of workers would result in wage differentials.
C.all workers would receive the same wage rate.
D.worker mobility would occur such that wage differentials would widen.
8) Assume that society places a higher value on the last unit of X produced than the
value of the resources used to produce that unit. With no spillovers, this information
means that:
A.total cost is greater than total revenue.
B.price is greater than marginal cost.
C.marginal cost is greater than price.
D.resources are being overallocated to X
9) The following are explanations of the Law of Demand, except:
A.Expectations effect
B.Diminishing marginal utility
C.Income effect
D.Substitution effect
10) Johnny Deer exclusively grew corn in each of the past three years. Under the Food,
Conservation, and Energy Act of 2008, Deer:
A.must grow corn in the current year in order to receive direct payments from the
federal government.
B.can grow whatever crop he wants to in the current year but will only receive direct
payments from the federal government if the price of corn falls below a targeted price.
C.will receive countercyclical payments if the price of corn falls below a targeted price,
even though he does not grow corn in the current year.
D.must grow something other than corn to qualify for direct payments from the federal
government.
11)
The shift of the budget line from cd to ab in the figure is consistent with:
A.decreases in the prices of both M and N.
B.an increase in the price of M and a decrease in the price of N.
C.a decrease in money income.
D.an increase in money income.
12) According to economists, gift registries, returning gifts for cash refunds, and
“recycling gifts”:
A.are inefficient because the time spent in these activities is never worth the benefit
recipients receive from doing them.
B.are equally efficient because the recipient gets exactly what he wants.
C.are more efficient than if givers simply gave cash gifts.
D.increase the efficiency of gift-giving because they allow the recipient to consume
goods that provide greater utility and transfer away those goods that are less satisfying.
13) Graphical analysis of tariffs reveals that:
A.they benefit domestic consumers at the expense of domestic producers.
B.revenue gains outweigh the costs to domestic consumers.
C.they increase domestic production of the good for which imports face tariffs.
D.although the benefits are not shared equally, everyone in the domestic economy
benefits from tariffs.