1) The mass affordability of the iPhone is the results of the following, except:
A.Mass production and spreading of fixed costs
B.The law of diminishing returns in manufacturing
C.Economies of scale and large volumes
D.Mass sales and distribution cost-savings
2) In ProgressandPoverty (1879), Henry George argued for:
A.A progressive income tax
B.A heavy tax on land-rent income
C.A flat tax
D.A subsidy for land
3) Harvey quit his job at State University where he earned $45,000 a year. He figures
his entrepreneurial talent or foregone entrepreneurial income to be $5,000 a year. To
start the business, he cashed in $100,000 in bonds that earned 10 percent interest
annually to buy a software company, Extreme Gaming. In the first year, the firm sold
11,000 units of software at $75 for each unit. Of the $75 per unit, $55 goes for the costs
of production, packaging, marketing, employee wages and benefits, and rent on a
building.
Refer to the above information. The normal profits for Harvey in the first year were:
A.$5,000
B.$160,000
C.$220,000
D.$780,000
4)
Which diagram best represents the problem faced by farms in the long run?
A.A
B.B
C.C
D.D
5)
What is the quota for “diversity immigrants” into the U.S.?
A.1 million per year
B.500,000 per year
C.50,000 per year
D.25,000 per year
6) If quantity demanded is completely unresponsive to price changes, demand is:
A.perfectly inelastic.
B.perfectly elastic.
C.relatively inelastic.
D.relatively elastic.
7) Unions may increase productivity by:
A.providing an exit mechanism for workers.
B.increasing worker turnover so that younger workers are more likely to be employed.
C.reducing the amount of capital used per worker.
D.providing a voice mechanism for workers.
8) Economists who criticize trade adjustment assistance argue that:
A.it only benefits a very small fraction of all unemployed workers.
B.money spent on the program overstimulates aggregate demand and threatens to cause
inflation.
C.benefits are too low to provide unemployed workers with a livable wage.
D.it distorts patterns of foreign trade, reducing the gains from trade.
9) The flow of “net taxes” in the circular flow model with a government sector accounts
for the following items, except:
A.Transfer payments such Social Security benefits
B.Subsidies to farmers, airlines, and others
C.Proprietary income generated by public utilities and state lotteries
D.Salaries to military personnel, public school teachers, and government inspectors
10) Suppose a firm is hiring resources l and m under purely competitive conditions to
produce product Y, which sells for $2 in a purely competitive market. The prices of l
and m are $10 and $4 respectively. In equilibrium the MPs of l and m, respectively, are:
A.1 and 1
B.2 and 5
C.10 and 4
D.5 and 2
11) In a free-market economy, a product which entails a positive externality will be:
A.Overproduced
B.Underproduced
C.Produced at the optimal level
D.Provided solely by the government
12) The oft-heard “I-knew-it-all-along” comment that many people make illustrates the:
A.Confirmation bias
B.Framing effect
C.Hindsight bias
D.Self-serving bias
13)
Refer to the above graph of the market for wheat. The government adopts a price
support program for wheat, and supports the wheat price at P2. The area Q1ABQ2
represents the:
A.Parity ratio
B.Taxpayers’ burden
C.Efficiency gain
D.Efficiency loss
14) According to the piece “Wannamaker’s Lament,” how have firms responded to the
evidence that most advertising campaigns have little impact on sales?
A.Firms have substantially cut their advertising budgets to focus more on product
quality.
B.Firms have substantially increased their advertising budgets in order to hit the
spending threshold necessary to impact sales.
C.Firms have substantially cut their advertising budgets to focus more on new product
development.
D.Firms have conducted a lot of simple experiments to determine what might increase
sales.