1) Suppose a single firm has the marginal revenue product schedule for a particular type
of labor given in the left table. Assume there are 150 firms with the same
marginal-revenue-product schedules for this particular type of labor.
Refer to the above table and information. What will be the marginal labor cost and
wage rate for the individual firm?
A.$6
B.$7
C.$8
D.$9
2) Prices are likely to be least flexible:
A.in oligopoly.
B.in monopolistic competition.
C.where product demand is inelastic.
D.in pure competition.
3) As president and owner of the Sour Grapes Lemonade Company, you know that you
face:
To maximize your financial well-being, you should:
A.Continue to operate in the short run because rent is less than sales
B.Shut down because variable costs exceed fixed costs
C.Shut down because the company is losing money
D.Continue operating in the short run
4) One explanation for why major construction projects often get completed way
behind schedule is the:
A.Planning fallacy
B.Framing effect
C.Hindsight bias
D.Availability heuristic
5) “Tragedy of the Commons” points out all of the following, except:
A.The crucial role that individual property rights play in resource preservation
B.Common property will tend to be over-exploited
C.Common property makes its users try to use as much as possible and as soon as
possible
D.Individual property rights tend to be tragically abused by the owners
6) The introduction of ATM machines allowed financial institutions to handle more
transactions at less cost, thus decreasing the demand for human tellers. The best
explanation for this change is that the:
A.Marginal product of ATMs was equal to its price
B.Marginal product of human tellers was equal to its price
C.Marginal product of human tellers divided by its price was greater than that for ATMs
D.Marginal product of ATMs divided by its price was greater than that for human tellers
7) Aluminum competes with copper in the market for power transmission lines. This
illustrates:
A.mutual interdependence.
B.differentiated oligopoly.
C.interindustry competition.
D.homogeneous oligopoly.
8) Which of the following facts is not a basis for prospect theory in behavioral
economics?
A.People evaluate gains and losses in relation to the status quo, not in absolute terms
B.People feel losses much more intensely than they feel gains
C.People experience diminishing marginal disutility for losses
D.People do not experience diminishing marginal utility for gains
9)
Refer to the graph above, which shows a change in the demand for pounds from D to
D’. Under a system of fixed exchange rates, the:
A.Price of a pound will increase to $3
B.Price of a dollar will increase to 3 pounds
C.Shortage equal to ab would be met using international monetary reserves
D.Payment deficit will cause changes in price and income levels, which reestablishes
the original exchange rate
10) Which of the following is a fundamental characteristic of the market system?
A.Property rights.
B.Central planning by government.
C.Unselfish behavior.
D.Government-set wages and prices.
11) Product variety in monopolistic competition comes at the cost of:
A.Nonprice competition
B.Barriers to entry
C.Diminishing returns
D.Excess capacity
12) Other things equal, an increase in the equilibrium interest rate will:
A.increase R&D spending.
B.rise when the supply of loanable funds increases.
C.decrease purchases of capital goods and reduce R&D spending.
D.increase bank lending.
13) In 2004, Congress passed a corporate tax relief bill with 276 provisions for tax
breaks to groups such as restaurant owners, Hollywood producers, and NASCAR track
owners. This is an example of the:
A.special-interest effect.
B.benefits-received principle.
C.paradox of voting.
D.principal-agent problem.
14) Which of the following statements is true?
A.Comparative advantage means that total world output will be greatest when each
good is produced by the nation that has the highest domestic opportunity cost of
producing it
B.Comparative advantage means that a nation can gain from trade only if it has a lower
labor productivity than its trading partner
C.Specialization will be complete among nations when opportunity costs increase as the
nations produce more of a particular product
D.Specialization will be less than complete among nations when opportunity costs
increase as the nations produce more of a particular product
15)
Refer to the diagram for a noncollusive oligopolist. Suppose that the firm is initially in
equilibrium at point E, where the equilibrium price and quantity are P and Q. Which of
the following statements is correct?
A.Demand curve D1 assumes that rivals will match any price change initiated by this
oligopolist.
B.Demand curves D1 and D2 both assume that rivals will ignore any price change
initiated by this oligopolist.
C.Demand curves D1 and D2 both assume that rivals will match any price change
initiated by this oligopolist.
D.Demand curve D2 assumes that rivals will match any price change initiated by this
oligopolist.
16) Which of the following best describes the efficiency results in oligopoly?
A.P > MC and P = minimum ATC
B.P = MC and P > minimum ATC
C.P = MC and P = minimum ATC
D.P > MC and P > minimum ATC