1) Technological advance includes new and improved products, new and improved
production techniques, and new and improved distribution methods.
2) The Federal government has not paid subsidies to farmers since passage of the
Freedom to Farm Act in 1996.
3) Fish in the open ocean are protected by strong property rights.
4) TAC policies help reduce overfishing and reduce costs for fishers.
5) the lower the consumer’s income, the higher his or her budget line.
6) The following information. Assume that by devoting all its resources to the
production of X, nation Alpha can produce 40 units of X. By devoting all its resources
to Y, Alpha can produce 60Y. Comparable figures for nation Beta are 60X and 40Y.
Refer to the above information. Alpha would prefer terms of trade at, or close to, 1X =
2/3Y.
7) in descending order the three most important sources of federal tax revenue are the
personal income tax, payroll taxes, and corporate income taxes.
8) preferred provider organizations (ppos) are a type of managed-care organization.
9) A firm should reduce its employment of a resource whose marginal resource cost
exceeds its marginal revenue product.
10) a competitive market system promotes growth by providing producers with market
signals on which to base investment and production decisions.
11) proponents of economic growth claim that growth leads to greater equality of
income in an economy.
12) ITQs both limit catches and encourage fishing in the least costly way.
13) As oil prices rise, alternative energy sources become economically viable.
14) an increase in demand accompanied by an increase in supply will increase the
equilibrium quantity but the effect on equilibrium price will be indeterminate.
15) firms in a monopolistically competitive industry have no reason to engage in
nonprice competition because their products are uniquely different from other sellers in
the market.
16) suppose an increase in product demand occurs in a decreasing-cost industry. as a
result:
a.the new long-run equilibrium price will be lower than the original long-run
equilibrium price.
b.equilibrium quantity will decline.
c.firms will eventually leave the industry.
d.the new long-run equilibrium price will be higher than the original price.
17) when the price of oil declines significantly, the price of gasoline also declines. the
latter occurs because of a(n):
a.increase in the demand for gasoline.
b.decrease in the demand for gasoline.
c.increase in the supply of gasoline.
d.decrease in the supply of gasoline.
18) Using the balance sheet below and assuming a required reserve ratio of 33%,
answer the following: (a) What is the amount of excess reserves? (b) This bank can
safely expand its loans by what amount? (c) By expanding its loans by this amount in
part (b), its checkable deposits would expand to what amount (if all loans were made to
checking account customers)? (d) If checks clear against the bank equal to the amount
loaned in (b), how much would remain in reserves and in checkable deposits?
19) (Advanced analysis) Answer the next question(s) on the basis of the following
information for a mixed open economy. The letters Y, Ca, Ig, Xn, G, and T stand for
GDP, consumption, gross investment, net exports, government purchases, and net taxes
respectively. Figures are in billions of dollars.
Refer to the above information. The multiplier for this economy is:
A.4.
B.3.
C.2.
D.2.33.
20) Some people argue that the three main television networks all have similar
programming. If true, this observation might best be explained by the:
A.paradox of voting.
B.median-voter model.
C.law of diminishing marginal utility.
D.ability-to-pay principle.
21) Which of the following statements concerning the equilibrium level of GDP is
incorrect?
A.there will be no tendency for businesses to alter the aggregate rate of production
B.full employment will necessarily be realized
C.no unintended changes in inventories will occur
D.leakages equal injections
22) In economists’ models, technological advance occurs in:
A.the very long run.
B.either the short run, long run, or very long run.
C.manufacturing industries but not in service industries.
D.pure competition, but not in monopolistic competition, oligopoly, and pure
monopoly.
23) answer the next question(s) on the basis of the following information about the
hypothetical economy of scoob. all figures are in millions.
refer to the above information. if the natural rate of unemployment in scoob is 5
percent, then:
a.structural unemployment is about 3 percent.
b.frictional unemployment is about 2 percent.
c.cyclical unemployment is about 2 percent.
d.hidden unemployment is about 5 percent.
24) The following table for a commercial bank or thrift:
Refer to the above table. When the legal reserve ratio is 10 percent, the money creating
potential of this single bank is:
A.$0.
B.$6,000.
C.$30,000.
D.$60,000.
25)
Refer to the above diagram which relates to Firm A. Which of the following would shift
A’s average total cost curve from ATC1 to ATC2?
A.replacement of old equipment with new, more productive equipment embodying
technological advance
B.a decrease in the incomes of A’s customers
C.a move along A’s total product curve (not shown)
D.the increase in the price of one of the major inputs used to produce A’s product
26) the law of increasing opportunity costs is reflected in a production possibilities
curve that is:
a.an upsloping straight line.
b.a downsloping straight line.
c.concave to the origin.
d.convex to the origin.
27) assume that the demand schedule for product c is downsloping. if the price of c falls
from $2.00 to $1.75:
a.a smaller quantity of c will be demanded.
b.a larger quantity of c will be demanded.
c.the demand for c will increase.
d.the demand for c will decrease.
28) (Advanced analysis) Answer the next question(s) on the basis of the following data
for a private closed economy. The letters Y, C, S, and I are used to represent real GDP,
consumption, saving, and investment respectively.
The equation representing the consumption schedule for the above economy is:
A.C = Y – .6S.
B.Y = C + S.
C.C = 60 + .4Y.
D.C = 60 + .6Y.
29) Marginal resource cost refers to the:
A.increase in total revenue resulting from the sale of the extra output of one more
worker.
B.price at which additional units of a resource can be hired in an imperfectly
competitive resource market.
C.increase in total cost resulting from the production of one more unit of output.
D.amount by which a firm’s total resource cost increases as the result of hiring one
more unit of the resource.
30) in the 1990s, corporations attempted to address the principal-agent problem by:
a.providing stock or stock options as part of executive compensation.
b.hiring additional managers to oversee potentially unscrupulous agents.
c.supporting increased government oversight of corporate boards of directors.
d.firing a significant number of managers believed to be acting contrary to the owners’
interests.
31) suppose a firm is in a range of production where it is experiencing economies of
scale. knowing this, we can predict that:
a.the long-run average total cost curve is upsloping.
b.a 10 percent increase in all inputs will increase output by less than 10 percent.
c.a 10 percent increase in all inputs will increase output by more than 10 percent.
d.the firm is encountering problems of managerial bureaucracy because of its size.
32) In exchange for a share of ZYX’s profits if it succeeds, Firm ABC provides
development funds to newly formed ZYX which is developing an innovative product.
ABC funds are called ____________ while ZYX is known as a ____________.
A.venture capital; startup
B.retained earnings; entrepreneurial firm
C.mutual funds; startup
D.transfer payments; entrepreneurial firm
33) there will be a surplus of a product when:
a.price is below the equilibrium level.
b.the supply curve is downward sloping and the demand curve is upward sloping.
c.the demand and supply curves fail to intersect.
d.consumers want to buy less than producers offer for sale.
34) A merger between an automobile manufacturer and a maker of automobile tires is
an example of a:
A.conglomerate merger.
B.horizontal merger.
C.vertical merger.
D.tying contract.
35) government-set prices
if government set a minimum price of $50 in the above market, a:
a.shortage of 21 units would occur.
b.shortage of 125 units would occur.
c.surplus of 21 units would occur.
d.surplus of 125 units would occur.
36) Illegal immigration has been shown to have an overall negative fiscal impact on
local and state governments. Describe the fiscal benefits and cost of illegal immigration
for local and state governments.
37) What is the official reserves account and how is it used in the balance of payments?
38) (Consider This) Are credit cards money? Explain.
39) Migration to the United States will occur as long as wages are higher in the United
States than in the other country. Evaluate.
40) How do direct controls and specific taxes affect externalities? Briefly explain in
terms of supply and demand.
41) In the table below are the marginal product data for resource Y. Assume that the
quantities of other resources employed by the firm remain constant. Compute the total
product (output) of the firm for each of the seven quantities of resource Y employed and
enter these figures in the table. Assume that the firm sells its output in an imperfectly
competitive market and that the prices at which it can sell its product are those given in
the table. Compute and enter in the table total revenue and the marginal revenue
product for each of the seven units of resource Y.
How many units of resource Y would the firm employ at each of the following resource
prices?
42) What are information problems affecting sellers? Give an example that illustrates
how these types of problems are resolved.