1)
Refer to the diagram for a pure monopolist. Monopoly price will be:
A.e.
B.c.
C.b.
D.a.
2)
Refer to the diagram for the corn market. Assuming no externalities, a price support of
B causes:
A.economies of scale.
B.production to be less profitable to farmers.
C.an underallocation of resources to this product.
D.an overallocation of resources to this product.
3)
Refer to the above graph. Assume the market for this product is in equilibrium at the
intersection of D2 and S1. The shift in supply from S1 to S2 is due to an excise tax
imposed on the product. The incidence of the tax is:
A.$1 from the buyers and $3 from the sellers
B.$3 from the buyers and $3 from the sellers
C.$1 from the buyers and $1 from the sellers
D.$4 from the buyers and $0 from the sellers
4) Social security contributions are part of:
A.Excise taxes
B.Payroll taxes
C.Reverse taxes
D.Indirect taxes
5) Nonexcludability describes a condition where:
A.one person’s consumption of a good does not prevent consumption of the good by
others.
B.there is no effective way to keep people from using a good once it comes into being.
C.sellers can withhold the benefits of a good from those unwilling to pay for it.
D.there is no potential for free-riding behavior.
6) If the government tightens up on drug dealers and raises the costs of dealing illegal
drugs, then the drug addicts’ dollar expenditures to feed their addiction will tend to:
A.Increase because their demand is price-elastic
B.Decrease because their demand is price-Inelastic
C.Decrease because their demand is price-elastic
D.Increase because their demand is price-Inelastic
7) The optimal market structure for technological advance seems to be an industry in
which:
A.Most firms are purely competitive
B.There is a natural monopoly with a large market for the product
C.There are oligopolistic firms and several small and highly innovative firms
D.The government provides some funding for research and development
8) If the rate of exchange for a pound is $4, the rate of exchange for the dollar is:
A. pound.
B.4 pounds.
C.$.25.
D.$1.00.
9) If in a system of fixed exchange rates the dollar price of euros is above the market
equilibrium level:
A.gold will flow from the United States to Europe.
B.there will be a surplus of euros.
C.the U.S. government will have to ration euros to U.S. importers.
D.there will be a shortage of euros.
10) The following table contains hypothetical data for the 2012 U.S. balance of
payments. Answer the question on the basis of this information. All figures are in
billions of dollars.
Refer to the given data. The United States’ balance on financial account is a:
A.$20 billion surplus.
B.$15 billion surplus.
C.$30 billion deficit.
D.$20 billion deficit.
11) Suppose that a firm produces 200,000 units a year and sells them all for $10 each.
The explicit costs of production are $1,500,000 and the implicit costs of production are
$300,000. The firm earns an accounting profit of:
A.$500,000 and an economic profit of $200,000
B.$400,000 and an economic profit of $200,000
C.$300,000 and an economic profit of $400,000
D.$200,000 and an economic profit of $500,000
12) The table shows the total output a firm will be able to produce if it employs varying
amounts of resource X while holding the amounts of the other resources constant.
Assume that the product price is constant at $3.00 per unit.
Refer to the above table and information. How many units of resource X will be
employed if its price is $24 per unit?
A.3
B.4
C.5
D.6
13) Government can reallocate resources away from private goods towards public
goods, usually through:
A.Import tariffs and quotas
B.The laws of supply and demand
C.Taxes and government spending
D.Positive and negative externalities
14) Use the following graph to answer question. It shows the extraction costs for TX
Oil Company in the first year in a situation where it will extract oil from a reserve over
two years.
Refer to the above graph. What will be the quantity extracted if user costs are
considered compared to the case where they are not considered?
A.10 units versus 20 units
B.20 units versus 10 units
C.10 units versus 30 units
D.20 units versus 40 units
15) Competition is more likely to exist when:
A.There is easy entry into and exit out of industries
B.A government-issued license is required to set up a firm in an industry
C.The government purchases most goods and services
D.Economic power is concentrated among a few large firms