1) In a market economy, the government’s ability to coerce is beneficial in the following
cases, except in:
A.Correcting for positive externalities
B.Correcting for negative externalities
C.Producing public goods
D.Fixing resource prices
2) Answer the question on the basis of the following production possibilities tables for
two countries, North Cantina and South Cantina:
Refer to the tables. If North Cantina is producing at production alternative B, the
opportunity cost of the eleventh unit of consumer goods will be:
A.10 units of capital goods.
B.1/4 of a unit of capital goods.
C.8 units of capital goods.
D.1/8 of a unit of capital goods.
3) The dispute over the pay of chief executive officers (CEOs) of U.S. corporations
hinges on whether or not such pay:
A.should be granted for past performance or for current performance.
B.is determined in a competitive labor market or in a monopsonistic labor market.
C.is justified on productivity grounds or mainly reflects an overestimation of CEO
importance by corporate boards of directors.
D.should contain performance incentives such as stock options, stock shares, or
bonuses.
4) In the short run, total output in an industry:
A.Is absolutely fixed
B.Can vary as the result of using a fixed amount of plant and equipment more or less
intensively
C.May be altered by varying the size of plant and equipment which now exist in the
industry
D.Can vary as the result of new firms entering or leaving the industry
5)
Refer to the diagram. The monopolistically competitive firm shown:
A.will realize allocative efficiency at its profit-maximizing output.
B.cannot operate at a loss.
C.is in long-run equilibrium.
D.is realizing an economic profit.
6) About ________ of recent annual population growth in the United States is the result
of immigration.
A.one-tenth
B.one-fifth
C.one-third
D.one-half
7)
Refer to the diagram in which S is the before-tax supply curve and St is the supply
curve after an excise tax is imposed. The total amount of the tax paid by consumers is
shown by areas:
A.A + B + F.
B.A + B.
C.A + B + C.
D.E + F.
8) If there are significant economies of scale in an industry, then:
A.a firm that is large may be able to produce at a lower unit cost than can a small firm.
B.a firm that is large will have to charge a higher price than will a small firm.
C.entry to that industry will be easy.
D.firms must differentiate their products to earn economic profits.
9) A study found that the incidence of skin cancer increases along with the amount of
time people work under fluorescent light, leading some people to conclude that
fluorescent lighting is a cause of skin cancer. But further analysis found that people who
work in offices, where fluorescent light is common, suffer more sunburn on their
vacations than other workers. The sunburns, not the fluorescent light, were the cause of
the higher incidence of skin cancer. The original conclusion illustrates:
A.the fallacy of composition.
B.confusion of correlation and causation.
C.identifying marginal costs and marginal benefits.
D.biases and loaded terminology.
10) An industry where a change in the number of firms does not affect the prices of the
resources used in the industry will have a long run supply curve that is:
A.Vertical
B.Horizontal
C.Upsloping
D.Downsloping
11)
Refer to the above graph. The firm should shut down if the quantity of output that it
could sell falls below:
A.0A
B.0B
C.0C
D.0K
12) About what percentage of U.S. electricity was generated by coal-fired plants in
2012?
A.10 percent
B.20 percent
C.35 percent
D.60 percent
13) Suppose that government imposes a specific excise tax on product X of $2 per unit
and that the price elasticity of supply of X is unitary (coefficient = 1). If the incidence
of the tax is such that the consumers of X pay $1.85 of the tax and the producers pay
$0.15, we can conclude that the:
A.supply of X is highly inelastic.
B.supply of X is highly elastic.
C.demand for X is highly inelastic.
D.demand for X is highly elastic.
14) According to the International Energy Agency:
A.fracking would result in the United States becoming the world’s largest producer of
both natural gas and oil by the year 2020.
B.alternative energy sources would account for half of the world’s energy production by
2030.
C.the world will economically exhaust its oil and natural gas deposits by 2025.
D.government subsidies have hindered the development of alternative energy.
15) Economic profits in an industry suggest the industry:
A.can earn more profits by increasing product price.
B.should be larger to better satisfy consumers’ desire for the product.
C.has excess production capacity.
D.is the size that consumers want it to be.
16) What has been the effect of the outmigration of people from farming and the
consolidation of smaller farms into larger ones on net farm income per farm household?
A.It is now far greater than nonfarm income
B.It is now significantly less than nonfarm income
C.It has decreased relative to nonfarm incomes
D.It has increased relative to nonfarm incomes
17) Technological advance is a three-step process involving:
A.invention, duplication, and diffusion.
B.duplication, innovation, and diversity.
C.invention, innovation, and diffusion.
D.necessity, invention, and solution.