1)
Refer to the graph above, showing the long-run supply and demand curves in a purely
competitive market. We know that in this market, the marginal:
A.Cost equals marginal benefit at P1Q1
B.Benefit exceeds marginal cost at the output level of Q2
C.Cost exceeds marginal benefit at the output level of Q2
D.Cost equals marginal benefit at all points on the supply curve
2) Monthly premiums for Medicare insurance that private individuals pay cover how
much of the cost of benefits provided by the program?
A.One-fourth
B.One-half
C.Three-fourths
D.100 percent
3) The following is cost information for the Creamy Crisp Donut Company:
Entrepreneur’s potential earnings as a salaried worker = $50,000
Annual lease on building = $22,000
Annual revenue from operations = $380,000
Payments to workers = $120,000
Utilities (electricity, water, disposal) costs = $8,000
Value of entrepreneur’s talent in the next best entrepreneurial activity = $80,000
Entrepreneur’s forgone interest on personal funds used to finance the business = $6,000
Refer to the data. Creamy Crisp’s total economic costs are:
A.$286,000.
B.$150,000.
C.$94,000.
D.$156,000.
4) Cross elasticity of demand is:
A.Negative for complementary goods
B.Negative for substitute goods
C.Unitary for inferior goods
D.Positive for inferior goods
5) The following table applies to a purely competitive industry composed of 100
identical firms.
Refer to the table. If each of the 100 firms in the industry is maximizing its profit and
earning only a normal profit, each must have a total cost of:
A.$18,000.
B.$20,000.
C.$22,000.
D.$14,000.
6) Why have commodity prices fallen since 1850?
A.The demand for productive resources has fallen faster than the supply of those
resources.
B.The demand for productive resources has grown faster than the supply of those
resources.
C.The supply of productive resources has increased, while the demand has fallen.
D.The supply of productive resources has grown faster than the demand for those
resources.
7)
The elimination of barriers to the international flow of labor tends to:
A.Lower the wage rates for all labor
B.Raise the wage rates for all labor
C.Increase worldwide production efficiency
D.Decrease worldwide production efficiency
8) If a good that generates positive externalities were produced and priced to take into
account these spillover benefits, then its:
A.price and output would increase.
B.output would increase, but price would remain constant.
C.price would increase and output would decrease.
D.price would increase, but output would remain constant.
9) Behavioral economics recognizes that people use System 1 to make decisions more
often than they use System 2. Which of the following is an implication of that
decision-making process?
A.A majority of decisions are not made according to the neoclassical assumption of
rational behavior.
B.Most decisions involve careful calculation of costs and benefits.
C.Even though most decisions are irrational, the neoclassical model still accurately
predicts outcomes.
D.System 1 is best at making optimal decisions.
10) Answer the question on the basis of the following five data sets wherein it is
assumed that the variable shown on the left is the independent variable and the one on
the right is the dependent variable. Assume in graphing these data that the independent
variable is shown on the horizontal axis and the dependent variable on the vertical axis.
Refer to the data sets. The equation for data set 5 is:
A.V = .5Y.
B.U = -.5V.
C.U = V.
D.V = 2U.
11) Answer the question on the basis of the following cost data for a firm that is selling
in a purely competitive market.
Refer to the data. We can infer that, at zero output, this firm’s total fixed, total variable,
and total costs are:
A.zero, zero, and zero, respectively.
B.zero, $25, and $175, respectively.
C.$150, $25, and $175, respectively.
D.$150, zero, and $150, respectively.
12)
Refer to the table. Over the $8-$6 price range, supply is:
A.inelastic.
B.elastic.
C.perfectly inelastic.
D.perfectly elastic.
13)
Refer to the above graph for a purely competitive firm. When the firm is in equilibrium
in the short run, the amount of economic profit per unit is:
A.EH
B.DE
C.DH
D.DB