1) Assume that a consumer purchases a combination of product A and product B such
that the MUa/Pa = 8 and MUb/Pb = 6. To maximize utility without spending more
money, the consumer should:
A.Purchase less of product A and more of product B
B.Purchase more of product A and less of product B
C.Purchase more of both product A and product B
D.Make no change in purchases of products A and B
2)
Refer to the diagram. Flow 4 represents:
A.wage, rent, interest, and profit income.
B.land, labor, capital, and entrepreneurial ability.
C.goods and services.
D.consumer expenditures.
3) Answer the question on the basis of the following demand schedule:
Refer to the data. The price elasticity of demand is relatively inelastic:
A.in the $6-$4 price range.
B.over the entire $6-$1 price range.
C.in the $3-$1 price range.
D.in the $6-$5 price range only.
4)
Refer to the total revenue graph above. An increase in the quantity of product X
demanded from 14,000 to 16,000 units implies that the price of product X was:
A.Reduced and the demand is elastic
B.Increased and the demand is elastic
C.Reduced and the demand is inelastic
D.Increased and the demand is inelastic
5) The earned income tax credit (EITC) is, in essence:
A.A tax credit for corporate contributions to charity
B.A tax break for businesses that invest in community programs
C.An income payment to those individuals who are not able to work
D.A wage subsidy for low-income workers to offset Social Security taxes
6) Which is a payment or wage subsidy made by the Federal government to offset
Social Security taxes for low-income workers?
A.Food stamp program
B.Supplement Security Income
C.Earned-income tax credit
D.Temporary Assistance to Needy Families
7) To derive the demand curve of a product in indifference curve analysis, the:
A.Budget line is assumed to stay in a fixed position
B.Money income of the consumer is assumed to be variable
C.The prices of both products are assumed to be variable
D.Tastes and preferences of the consumer are assumed to be fixed
8) An increase in the quantity demanded means that:
A.given supply, the price of the product can be expected to decline.
B.price has declined and consumers therefore want to purchase more of the product.
C.the demand curve has shifted to the right.
D.the demand curve has shifted to the left.
9) In the corporate world of business, the principal-agent problem arises between:
A.Workers and managers
B.Managers and stockholders
C.Stockholders and bondholders
D.Corporations and their banks
10) The nondiscriminating monopolist’s demand curve:
A.is less elastic than a purely competitive firm’s demand curve.
B.is perfectly elastic.
C.coincides with its marginal revenue curve.
D.is perfectly inelastic.
11) Which would result in a decrease in the elasticity of demand for a particular
resource?
A.A decrease in the rate at which the marginal product of that resource declines
B.An increase in the elasticity of demand for the product that the resource helps to
produce
C.A decrease in the percentage of the firm’s total costs accounted for by the resource
D.An increase in the substitutability of other resources for the particular resource