1) When a bakery manager reports that at her bakery, productivity of her 15 workers
last month was 1,800 loaves per worker, she is referring to the:
A.Total product of labor
B.Average product of labor
C.Marginal product of labor
D.Total product of capital
2) A demand curve for a public good is determined by:
A.summing vertically the individual demand curves for the public good.
B.summing horizontally the individual demand curves for the public good.
C.combining the amounts of the public good that the individual members of society
demand at each price.
D.multiplying the per-unit cost of the public good by the quantity made available.
3)
Assumptions: (1) the labor force is comprised of 9 million men and 9 million women
workers; (2) the economy has 3 occupations, X, Y, and Z, each having identical demand
curves for labor; (3) men and women workers are homogeneous with respect to their
labor-market capabilities; (4) women are discriminated against by being excluded from
occupations X and Y and are confined to Z; and (5) aside from discrimination, the
economy is competitive, and workers seek to maximize their earnings.
Refer to the diagram and list of assumptions. If discrimination is ended:
A.men will leave occupations X and Y and enter occupation Z.
B.4 million women will leave occupation Z, with 2 million entering occupation X and 2
million entering occupation Y.
C.3 million women will leave occupation Z, with 1.5 million entering occupation X and
1.5 million entering occupation Y.
D.3 million women will leave occupation Z, all of whom will enter industry X.
4) According to behavioral economics, cognitive biases:
A.create errors in decision making, but these errors are random and follow no particular
pattern.
B.occur but are not prevalent enough to distort the behavioral predictions of
neoclassical economics.
C.are misunderstandings or misperceptions that cause systematic error.
D.are solely the result of faulty heuristics.
5)
Refer to the graph above showing the domestic demand and supply curves for a specific
product in a hypothetical nation called Econland. At what price will Econland be
neither importing nor exporting the product?
A.$1.00
B.$1.50
C.$2.00
D.$2.50
6)
Refer to the diagrams that show identical marginal utility from income curves for
Singer and Catalano. If a given income of $20,000 is initially distributed so that Singer
receives $15,000 and Catalano $5,000, the marginal utility:
A.of the last dollar of income will be greater for Catalano than for Singer.
B.derived from the last dollar will not be comparable between the two income
receivers.
C.of the last dollar of income will be the same for both Singer and Catalano.
D.of the last dollar of income will be greater for Singer than for Catalano.
7) Patents are most likely to infringe on innovation:
A.for products that incorporate many different technologies into a single product.
B.of simple, easy-to-copy products.
C.in the pharmaceutical industry.
D.when they cause creative destruction.
8) In deciding on an optimal amount and type of research and development, firms
should adhere to the rule: Expand R&D until:
A.expected rate of return is zero.
B.expected rate of return equals the interest rate.
C.expected rate of return exceeds the interest rate by the greatest amount.
D.the interest rate is constant.
9) A firm is producing 100 pencils per week. The production process requires labor and
capital as inputs. Labor costs $6 per labor hour and capital costs $12 per machine hour.
Currently, the marginal product of labor is 18 pencils and the marginal product of
capital is 36 pencils. To minimize the cost of producing this level of output the firm
should use:
A.More capital and less labor
B.More labor and less capital
C.Less labor and less capital
D.The current amounts of labor and capital
10) Answer the next three questions on the basis of the following production
possibilities data for Narnia and Somosa. All data are in 1000s.
(a)If trade occurs between Narnia and Somosa, which nation should export what
product? Why?
(b)What are the limits of the terms of trade between Narnia and Somosa?
(c)Assume that prior to specialization and trade, Narnia and Somosa chose production
possibility C. Now each specializes according to comparative advantage. What will be
the resulting gains from trade? Explain your answer.
11) Answer the question on the basis of the following cost data for a firm that is selling
in a purely competitive market.
Refer to the data. If the market price for this firm’s product is $68.10, it will produce:
A.8 units at an economic profit of zero.
B.6 units at a loss of $90.
C.9 units at an economic profit of $281.97.
D.8 units at an economic profit of $130.72.
12)
Refer to the diagram, where Sd and Dd are the domestic supply and demand for a
product and Pc is the world price of that product. Sd + Q is the product supply curve
after an import quota is imposed. Assuming there is no tariff, the import quota:
A.will increase U.S. Treasury revenue by areas G + H.
B.will increase U.S. Treasury revenue by areas E + F + G + H + J.
C.may either increase or decrease the total revenues of foreign producers, depending on
the elasticity of domestic demand.
D.will increase the revenues of foreign firms by area E.
13)
Refer to the above table. The total fixed cost of production is:
A.$10
B.$20
C.$98
D.$0
14)
Refer to the diagram and assume a single good. If the price of the good increased from
$5.70 to $6.30 along D1, the price elasticity of demand along this portion of the
demand curve would be:
A.0.8.
B.1.0.
C.1.2.
D.2.0.
15) According to age-earnings data,
A.lower-educated workers have similar earnings at age 65 as higher-educated workers.
B.investments in education result in higher earnings.
C.high earnings are due to motivation and innate ability, rather than education.
D.there is no clear relationship between education and worker productivity.
16) The ability of Intel to spread product development costs over a larger number of
units of output arises from:
A.Economies of scale
B.Diseconomies of scale
C.Minimum efficient scale
D.Constant returns to scale
17)
Refer to the diagram. If the budget line shifts from ab to ac, the:
A.price of K has increased.
B.consumer’s money income has fallen.
C.price of K has decreased.
D.price of J has increased.
18) What do the income effect, the substitution effect, and diminishing marginal utility
have in common?
A.All are required to explain the utility-maximizing position of a consumer.
B.They are all empirically measurable.
C.They all help explain the upsloping supply curve.
D.They all help explain the downsloping demand curve.