1) Assume that an industry is significantly affected by import competition from foreign
suppliers. Taking this factor into account, it would mean that:
A.The Herfindahl index would be significantly higher in that industry because there are
more firms in the industry
B.The industry is less concentrated than suggested by domestic concentration ratios
C.There is a high degree of interindustry competition
D.There is a low degree of interindustry competition
2) Noncash gifts:
A.increase the utility of recipients by introducing them to products they have not
consumed before.
B.reduce recipient utility relative to a cash gift because noncash gifts often fail to match
recipient preferences.
C.entail as much utility as do cash gifts.
D.increase the utility of recipients because many people are uncertain of their own
preferences.
3) Which is not a serious disadvantage associated with freely fluctuating exchange
rates?
A.Uncertainty which tends to diminish trade
B.Greater instability in unemployment levels
C.Longer lags in eliminating balance of payments surpluses or deficits
D.Swings in the terms of trade related to currency appreciation or depreciation
4) Discrimination creates a:
A.redistribution of a larger domestic output.
B.larger domestic output but no redistribution.
C.smaller domestic output but no redistribution.
D.redistribution of a smaller domestic output.
5) Assume that U.S. and European governments adopt a system of flexible exchange
rates, and the figure below shows the market for euros.
Refer to the graph above. One U.S. dollar will purchase how many euros?
A.0.90 euro
B.1.00 euro
C.1.11 euro
D.1.90 euro
6) Answer the question on the basis of the data contained in the following table.
Assume that the firm is hiring labor in a purely competitive market.
Refer to the given data. If the wage rate is $11, how many workers will the firm choose
to employ?
A.5
B.4
C.3
D.2
7) Economists use the term “demand” to refer to:
A.a particular price-quantity combination on a stable demand curve.
B.the total amount spent on a particular commodity over a fixed time period.
C.an upsloping line on a graph that relates consumer purchases and product price.
D.a schedule of various combinations of market prices and amounts/quantities
demanded.
8) Behavioral economic theories are developed based on the following, except:
A.Assuming that people always make rational decisions and choices
B.Observing people’s actual behavior, including irrational behavior
C.Trying to explain people’s tendency to make systematic errors in certain situations
D.Dropping the neoclassical assumption that people are fundamentally rational
9) Which of the following is an example of creative destruction?
A.An economic recession forces firms out of business.
B.Automobile production causes the wagon industry to shut down.
C.Apple earns more economic profits than other manufacturers of MP3 players.
D.Starbucks shuts down stores to create greater demand for its remaining outlets.
10) Which of the following is not inversely related to per capita income?
A.Mortality rates for children under five years of age.
B.Adult illiteracy rates.
C.Per capita energy consumption.
D.Population growth rates.
11) Amanda buys a ruby for $330 for which she was willing to pay $340. The minimum
acceptable price to the seller, Tony, was $140. Amanda experiences:
A.a consumer surplus of $10 and Tony experiences a producer surplus of $190.
B.a producer surplus of $200 and Tony experiences a consumer surplus of $10.
C.a consumer surplus of $670 and Tony experiences a producer surplus of $200.
D.a producer surplus of $10 and Tony experiences a consumer surplus of $190.
12) Which of the following best explains the difference between neoclassical economics
and behavioral economics?
A.Neoclassical economics believes that government should play a minimal role in the
economy, while behavioral economics calls for a more active role for government.
B.Neoclassical economics assumes that people are rational in their decision making,
while behavioral economics believes people make systematic errors.
C.There is no real difference; behavioral economics just studies more intently how the
rational decision-making process works.
D.Neoclassical economics no longer offers valid explanations for economic outcomes,
while behavioral economics does.
13) In 2011, Congress funded a sanctuary for white squirrels, a giant roadside coffee
pot, and an antique bicycle museum. This is an example of:
A.the paradox of voting.
B.pork barrel politics.
C.the benefits-received principle.
D.the adverse selection problem.
14)
Native-born workers are more likely to be harmed by immigration if:
A.They are complementary resources to immigrant workers
B.They are substitute resources to immigrant workers
C.Demand for their labor is inelastic
D.There is a substantial amount of backflow
15) Which one of the following is a correct description of the relationship between the
price of oil and the production of alternative energy sources?
A.As the price of oil falls, the production of alternative energy sources rises
B.As the price of oil rises, the production of alternative energy sources falls
C.As the price of oil rises, the production of alternative energy sources rises
D.As the price of oil falls, the production of alternative energy sources stays the same