1) In the dollar/yen market, if the supply of yen increases other things being equal, the
dollar will appreciate.
2) If a purely competitive firm is producing a level of output greater than its
profit-maximizing output, then its profits must be negative.
3)
Refer to the diagram. The movement from curve a to curve c suggests an improvement
in civilian goods technology but not in war goods technology.
4) An example of the special interest effect is a farm program from which a large group
receives small benefits at the expense of a smaller group who individually suffer large
losses.
5) If per-capita energy usage has leveled off while per capita GDP has risen, then it
must mean that each dollar of output produced required a larger amount of energy.
6) International trade based on the principle of comparative advantage creates a more
efficient allocation of world economic resources.
7) Structuralists take the position that:
A.the rule of reason is appropriate and desirable in interpreting the Sherman Act.
B.only unreasonable anticompetitive acts should be regarded as violations of the
antitrust laws.
C.industries should be judged on the basis of their technological progress and their
price-output behavior.
D.an industry that is highly concentrated will behave monopolistically.
8) The equilibrium interest rate:
A.affects both the size of total output and its composition.
B.falls when the demand for loanable funds increases.
C.determines the composition of R&D spending but not its total amount.
D.increases when the expected rate of return on R&D spending falls.
9) In 2010, the top 1 percent of all taxpayers in the United States paid what percent of
the federal income tax?
A.23.2 percent.
B.37.4 percent.
C.39.6 percent.
D.59.1 percent.
10) Which of the following definitions is correct?
A.Accounting profit + economic profit = normal profit.
B.Economic profit – accounting profit = explicit costs.
C.Economic profit = accounting profit + implicit costs.
D.Economic profit – implicit costs = accounting profits.
11) Brinley says that “gas prices are rising because there aren’t enough oil refineries.”
Katie argues that “gas prices are rising because of the growing demand for gasoline
from China and India.” We can conclude that:
A.Brinley’s statement is positive; Katie’s statement is normative.
B.Brinley’s statement is normative; Katie’s statement is positive.
C.Both statements are positive.
D.Both statements are normative.
12) Which of the following persons is most likely to be insured for health care?
A.A minimum-wage teenager working for a fast-food restaurant.
B.A skilled worker employed by a large multinational corporation.
C.An unemployed retail clerk.
D.A part-time groundskeeper for a small manufacturing plant.
13) Mainly because of large current account deficits, the United States:
A.is the leading exporting nation in the world.
B.has the world’s largest external debt.
C.has the world’s highest saving rate.
D.is experiencing an increase in its net inflow of investment income.
14) A firm is employing inputs such that the marginal product of labor is 25 and the
marginal product of capital is 40. The price of labor is $5 and the price of capital is $8.
If the firm wants to minimize costs, then it should:
A.Use more labor and less capital
B.Use less labor and less capital
C.Use less labor and more capital
D.Make no change in resource use
15)
Answer on the basis of the relationships shown in the four figures. The amount of y is
inversely related to the amount of x in:
A.2 only.
B.Both 1 and 3.
C.3 only.
D.1 only.
16) Unemployment:
A.causes the production possibilities curve to shift outward.
B.can exist at any point on a production possibilities curve.
C.is illustrated by a point outside the production possibilities curve.
D.is illustrated by a point inside the production possibilities curve.
17)
Refer to the diagrams. In which case would the coefficient of income elasticity be
positive?
A.A
B.B
C.C
D.D
18) Assume a firm faces these costs: total cost of capital = $4,000; price paid for labor =
$20 per labor unit; and price paid for raw materials = $8 per raw-material unit.
Refer to the above information. Originally the firm produced 2,000 units of output by
combining its fixed capital with 200 units of labor and 500 units of raw materials. Now
the firm improves its production process so that it can produce 3,000 units of output by
combining its fixed capital with 100 units of labor and 500 units of raw materials. What
happened to total cost?
A.TC increased by $2,000
B.TC decreased by $2,000
C.TC decreased by $4,000
D.TC remained unchanged
19) Asymmetric information in a market transaction occurs when there is unequal
knowledge possessed by the:
A.Buyer and the government
B.Seller and the government
C.Taxpayer and the government
D.Buyer and the seller
20)
Refer to the diagram. Total revenue at price P1 is indicated by area(s):
A.C + D
B.A + B
C.A + C
D.A
21) Which is of the following statements is correct?
A.If demand increases, then price will decrease
B.If demand decreases, then price will decrease
C.If price increases, then demand will decrease
D.If price decreases, then demand will decrease
22) The marginal rate of substitution of beef for chicken is the:
A.Number of units of chicken the consumer is prepared to give up to obtain one more
unit of beef
B.Number of units of beef the consumer is prepared to give up as income falls
C.Number of units of beef the consumer must sacrifice to obtain one more unit of
chicken
D.Rate at which units of beef may be exchanged for units of chicken
23) A nation can produce two products: tanks and autos. The table below is the nation’s
production possibilities:
Given the production possibilities schedule above, a combination of 3 tanks and 350
autos:
A.Illustrates the tradeoff between tanks and autos
B.Is attainable but entails some unemployment or inefficient use of society’s resources
C.Cannot be produced by society, given its current resources and production technology
D.Is not attainable because this combination is not listed in the schedule
24) The price elasticity of demand increases with the length of the period considered
because:
A.Consumers’ incomes will increase over time
B.The demand curve will shift outward as time passes
C.All prices will increase over time
D.Consumers will be better able to find substitutes
25) Given the products below and the events that affect them, indicate what happens to
demand or supply, and the equilibrium price and quantity in a competitive market.
Identify the determinant of demand or supply that causes the shift.
(a)Digital cameras. There are improvements in the technology that increase the
economic efficiency of production.
(b)Automobiles. Consumer incomes rise as the economy moves out of recession.
(c)Beef. Chicken prices fall because of a decline in the cost of feeding chickens.
(d)Fast-food meals. The government imposes a significant tax on fast-food meals.
26) Use the below graph to answer the next three questions.
(a)Why does the MRC curve lie above the labor supply curve?
(b)What would be the equilibrium wage and level of employment in a monopsonist
market without an industrial union? Explain.
(c)What if an industrial union was formed to negotiate with the monopsonist? What
would be the equilibrium wage and level of output in this case? Explain.
27) The possibility for gains trade is due to the fact that different countries face
different resource endowments, production costs and geographical locations. Interpret
and expand with examples.
28) What is the major difference between the long run and the short run in pure
competition? Explain in terms of the number of firms and the flexibility of firms.
29) How do economists differentiate present value from future value?
30) What is the difference between average, total, and marginal revenue? What is the
shape of the total and marginal revenue curves for the individual competitive firm?
31) In a well-functioning cap-and-trade system for pollution rights, the right to pollute
will go to those who are able to acquire the largest net benefit from using the scarce
resource “clean air”.
32) What are the economic effects of imposition of a new occupational license or
examination on a labor market?
33) How do U.S. exports of agricultural products affect the demand for agricultural
products?
34) Describe the three types of mergers and give examples.