1) refer to the above data. assuming that the firm is motivated by self-interest and that
the 20 units which can be produced with each technique can be sold for $2 per unit, the
firm will:
a.realize an economic profit of $10
b.realize an economic profit of $4
c.not earn any economic profit
d.close down rather than incur a loss by producing
2) refer to the above data. if a new production technique is developed that enables a
firm to produce 20 units of output with 3 units of land, 3 of labor, 1 of capital, and 2 of
entrepreneurial ability, this technique would:
a.not be adopted because, although it reduces production costs, it does not increase
profit.
b.be adopted because it would lower production costs and increase economic profit.
c.not be adopted because it entails higher production costs than other available
techniques.
d.be adopted, even though economic profits would be reduced slightly.
3) (Last Word) The use of U.S. dollars in foreign countries:
A.is illegal under international law.
B.helps foreign buyers and sellers overcome problems with their domestic currencies.
C.varies directly (positively) with U.S. interest rates.
D.is less in volume than the use of foreign currencies in the United States.
4)
Refer to the above graphs. Growth of production capacity is shown by:
A.the shift from AB to CD only.
B.the shift from X to Y only.
C.both the shift from AB to CD and the shift from X to Y
D.both the shift from AB to CD and the shift from Y to X
5) The marginal cost to society of reducing pollution rises with increases in pollution
abatement because of the law of:
A.diminishing marginal utility.
B.conservation of matter and energy.
C.demand.
6) recently a labor union argued that the standard of living of its members was falling. a
critic of the union argued that this could not possibly be true because the union had
been acquiring increases in the nominal incomes of its members through collective
bargaining. is the critic correct?
a.yes, because when you have a large nominal income your standard of living
automatically increases.
b.no, because real income may fall if prices increase more proportionately than the
increase in nominal income.
c.no, because real income may fall if prices increase less proportionately than the
increases in nominal income.
d.yes, because real income may fall if prices increase less proportionately than the
increases in nominal income.
7) In an aggregate expenditures diagram equal increases in government spending and in
lump-sum taxes will:
A.shift the aggregate expenditures line downward.
B.shift the aggregate expenditures line upward.
C.not affect the aggregate expenditures line.
D.reduce the equilibrium GDP.
8) value added refers to:
a.any increase in gdp that has been adjusted for adverse environmental effects.
b.the excess of gross investment over net investment.
c.the difference between the value of a firm’s output and the value of the inputs it has
purchased from others.
d.the portion of any increase in gdp that is caused by inflation as opposed to an increase
in real output.
9) The following information: The Fed is going to auction $30 billion in reserves using
the term auction facility. It receives the following bids:
Refer to the above information. Which of the following banks will not borrow reserves
as a result of this auction?
A.Epsilon only.
B.Beta and Delta.
C.Gamma and Epsilon.
D.All of the banks will be allowed to borrow at least a portion of their desired reserves.
10) The Food, Conservation, and Energy Act of 2008:
A.ended 60 years of U.S. price supports for American grain crops.
B.restored the U.S. price support system (for currently grown crops) that was ended in
the Freedom to Farm Act of 1996.
C.ended the “freedom to plant” approach of the Freedom to Farm Act of 1996 and
restored acreage allotments.
D.maintained the “freedom to plant” and “direct-payment” features of the Freedom to
Farm Act of 1996, and also provides countercyclical payments and marketing loans to
assist farmers.
11)
refer to the above diagram. the movement from point a to point c suggests that more:
a.private goods are being produced by employing currently idle resources.
b.public goods are being produced by employing currently idle resources.
c.public goods are being produced at the expense of fewer private goods.
d.private goods are being produced at the expense of fewer public goods.
12) Which of the following is an example of statistical discrimination?
A.An employer hires only white workers even though there are otherwise identical
African-American workers available at lower pay.
B.Women students in college business schools are overrepresented in human resource
management courses and underrepresented in finance courses.
C.A young woman who plans to work for only five to seven years after graduating
college decides that getting an advanced degree “just won’t pay off.”
D.A firm hires a man rather than a woman for a specific job because, on average,
women have higher rates of absenteeism than do men.
13) Suppose that Alpha’s real output rose from $400 billion in year 1 to $428 billion in
year 2. Its growth rate for this period was:
A.14 percent.
B.12 percent.
C.9 percent.
D.7 percent.
14) (Consider This) According to the Consider This box “Superstars,” the high pay of
superstars reflects:
A.elastic product demand.
B.high marginal revenue productivity.
C.blocked occupational entry.
D.warped societal values.
15)
The level of productivity in the above economy is:
A.2.
B..5.
C.4.
D.200.
16) A profit-maximizing company should extract a non-renewable resource in the
present up to the quantity where the:
A.selling price of the resource equals the extraction cost plus the user cost of the
resource.
B.selling price of the resource equals the total cost plus the user cost of the resource.
C.selling price of the resource equals the extraction cost of the resource.
D.extraction cost of the resource equals the user cost of the resource.