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1) If price changes and total revenue changes in the opposite direction, demand is
relatively elastic.
2) An increase in the expected rates of return on investments would most likely increase
the supply of loanable funds.
3) The price and income support programs for agriculture have given the most benefit
to those farmers with the most need for the government assistance.
4) The federal government has not paid subsidies to farmers since passage of the
Freedom to Farm Act in 19
5) Capital flight refers to the fact that many DVCs must use their export earnings to pay
interest on their outstanding external debts.
6) If the price-elasticity coefficient for a product is 0.68 and the seller wants to raise
revenues by changing its price, then the seller should cut the price of the product.
7) The long-run supply curve for a competitive, decreasing-cost industry is
downward-sloping.
8) In the long run equilibrium, a monopolist will earn zero economic profits.
9) Someone who pays $800 to fly from one city to another instead of paying only $100
for a bus trip between the two cities is making an irrational choice and is thus not
maximizing his utility.
10) Innovation pertains to commercialization, while invention pertains more to
scientific research.
11) Because of health insurance, resources are underallocated to the health care
industry.
12) The rule of reason in antitrust applications means that if a firm has a dominant share
of the market, it stands to reason that it will exploit its monopoly power to gain an
unfair advantage over its rivals.
13)
At the heart of U.S. immigration laws are immigration quotas.
14) Critics of government contend that the market system creates incentives and
pressures for internal efficiency which are absent in the public sector.
15) Heuristics generally operate in brain System 2.
16) The total supply of land is:
A.upsloping.
B.perfectly elastic.
C.perfectly inelastic.
D.greater in the short run than in the long run.
17) All of the following are designed to reduce health care expenses for consumers
except:
A.HMOs.
B.PPOs.
C.the DRG payment system.
D.the fee-for-service system.
18)
Refer to the above graph of the representative firm in monopolistic competition. The
long-run equilibrium price and output for this firm will be:
A.A and C
B.B and D
C.A and D
D.B and C
19)
Refer to the diagram. If line (c) represents the distribution of income before taxes and
transfers and line (b) represents the distribution after taxes and transfers, then taxes and
transfers have:
A.added to income inequality.
B.decreased the Gini ratio.
C.increased poverty.
D.reduced real GDP per person.
20) 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 vertical intercept is positive for:
A.all five data sets.
B.data sets 1 and 3 only.
C.data sets 1, 3, and 5 only.
D.data set 2 only.
21) Martha's Milkshake Company buys earthquake insurance from the Stable Ground
Insurance Company. Based on this purchase, economists would conclude that:
A.Martha's believes a damaging earthquake is imminent.
B.Stable Ground believes no damaging earthquakes will occur.
C.Martha's has a lower tolerance for earthquake risk than Stable Ground.
D.Martha's has a greater tolerance for earthquake risk than Stable Ground.
22) From society's point of view, the economic function of profits and losses is to:
A.promote the equal distribution of real assets and wealth.
B.achieve full employment and price level stability.
C.contribute to a more equal distribution of income.
D.reallocate resources from less desired to more desired uses.
23) In the theory of comparative advantage, a good should be produced in that nation
where:
A.the production possibilities line lies further to the right than the trading possibilities
line.
B.its cost is least in terms of alternative goods that might otherwise be produced.
C.its absolute cost in terms of real resources used is least.
D.its absolute money cost of production is least.
24) When a U.S. agribusiness company sells 10,000 units of cow vaccine to a company
in France, this transaction will represent a:
A.Credit on the current account of the U.S. balance of payments
B.Debit on the current account of the U.S. balance of payments
C.Credit on the financial account of the U.S. balance of payments
D.Debit on the financial account of the U.S. balance of payments
25) Each of the following has contributed to growing income inequality in the United
States since 1975 except:
A.the decline in unionism.
B.greater demand for highly skilled workers.
C.stronger international competition from imports.
D.government transfers.
26) Explain two ways inefficiencies associated with majority voting may get resolved.
27) Who belongs to unions? Answer in terms of the types of industries and occupations,
and the personal characteristics of workers.
28) Since a public good is enjoyed by all members of society, willingness to pay for the
good will not diminish as the amount produced increases. Evaluate and use an example
to support your answer.
29) After looking at this years Census figures on income, your friend Eddie remarks
disgustedly, Income inequality is such a major problem in this country. How might you
use the consideration of time to temper his statement?
30) Make the case that the United States is not running out of oil or energy.
31) Draw and explain a diagram that illustrates the vicious circle of poverty in DVCs.
32) How can unions decrease productivity?
33) Explain the marginal revenue and marginal cost approach to profit maximization
and use it to describe profit, loss, and shut down situations for the purely competitive
firm.
