1) Informal collusion to restrict output and increase prices is sometimes referred to as a:
A.Merger
B.Cartel
C.Tacit understanding
D.Kinked-demand oligopoly
2) An implication of the taste-for-discrimination model is that:
A.discrimination can lower a firm’s production costs.
B.discrimination will move a firm along its declining average total cost curve.
C.other things equal, nondiscriminating firms will have lower production costs than
discriminating firms.
D.other things equal, discriminating firms will have lower production costs than
nondiscriminating firms.
3) Answer the question on the basis of the following table showing market shares of
firms in hypothetical industries. Assume these are distinct industries with no
buyer-seller relationships or competition among them.
Refer to the table. The government would likely challenge a merger between:
A.Firm 1 in Alpha and Firm 6 in Delta.
B.Firms 3 and 4 in Beta.
C.Firms 1 and 2 in Cappa.
D.Firm 4 in Alpha and Firm 3 in Cappa.
4) The table below shows the rate of return and R&D spending for a hypothetical firm.
Refer to the above table. Assume the interest-rate cost of funds is 8 percent. What is the
optimal amount of R&D expenditures?
A.$24 billion
B.$30 billion
C.$36 billion
D.$42 billion
5) Which of the following statements is correct?
A.Marginal utility is the cumulation or summation of total utility
B.Total utility is the cumulation or summation of marginal utility
C.Total utility is the product of multiplying price times marginal utility
D.Total utility is the change in marginal utility as quantity consumed increases
6) A price floor means that:
A.inflation is severe in this particular market.
B.sellers are artificially restricting supply to raise price.
C.government is imposing a maximum legal price that is typically below the
equilibrium price.
D.government is imposing a minimum legal price that is typically above the
equilibrium price.
7) If the price of a good increases, the substitution effect will:
A.Always tend to make the quantity decrease, while the income effect could go either
way
B.Always tend to make the quantity increase, while the income effect could go either
way
C.Go either way, but the income effect will always make the quantity increase
D.Go either way, but the income effect will always make the quantity decrease
8) If the price of product L increases, the demand curve for close-substitute product J
will:
A.shift downward toward the horizontal axis.
B.shift to the left.
C.shift to the right.
D.remain unchanged.
9) In the short run equilibrium, a monopolist’s profits:
A.May be positive, negative, or zero
B.Are positive because of the monopolist’s market power
C.Are positive if the product’s elasticity of demand is less than 1
D.Are positive if the product’s elasticity of demand is greater than 1
10) The U.S. income-maintenance program consists of two kinds of programs. They
are:
A.the minimum wage law and Social Security.
B.antidiscrimination law and education and training programs.
C.social insurance and public assistance, or “welfare.”
D.progressive income taxes and transfer payments.
11)
Refer to the given diagram in which line AB is the U.S. production possibilities curve
and AC is its trading possibilities curve. The international exchange ratio between beef
and cheese (terms of trade):
A.is the absolute value of the slope of line AB.
B.is the absolute value of the slope of line AC.
C.could lie anywhere between the absolute value of the slopes of lines AB and AC.
D.cannot be determined on the basis of this information.
12) Fixed costs are those costs which are:
A.Zero if the firm produces no output in the short run
B.Unchanging through time
C.Independent of the rate of output
D.Implicit to a competitive firm
13) When people base their estimates of the likelihood of an event on how often they’ve
heard of such an event, they illustrate the:
A.Confirmation bias
B.Framing effect
C.Hindsight bias
D.Availability heuristic
14) If the per capita incomes of DVCs (developing countries) grew at the same annual
rate as those of IACs (industrially advanced countries), then the absolute income gap
between rich and poor nations over the years will:
A.Narrow
B.Widen
C.Stay the same
D.Reverse