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1)
Refer to the diagram for a natural monopolist. If a regulatory commission set a
maximum price of P1, the monopolist would produce output:
A.Q2 and realize a normal profit.
B.Q4 and realize a normal profit.
C.Q3 and realize an economic profit.
D.Q4 and realize a loss.
2) In terms of the circular flow diagram, businesses obtain revenue through the _____
market and make expenditures in the _____ market.
A.product; financial
B.resource; product
C.product; resource
D.capital; product
3) The major economic problem with recent farm policies is that they provide price and
income subsidies that:
A.Are insufficient to keep farmers producing
B.Increase the demand for farm products
C.Slow the exodus of resources from agriculture
D.Limit production to the most profitable products
4) In the past, Canada has agreed to set an upper limit on the total amount of softwood
lumber sold to the United States. This is an example of a(n):
A.import quota.
B.export subsidy.
C.voluntary export restriction.
D.protective tariff.
5) Which is the most important source of tax revenue for local governments?
A.Property taxes
B.Corporate income taxes
C.Sales and excise taxes
D.Personal income taxes
6) Which of the following is an exhaustive governmental outlay?
A.A federal $5,000 subsidy check to an Illinois farmer.
B.A Temporary Assistance to Needy Families payment made by the state of New York.
C.A NASA payment to Boeing Corporation for space hardware.
D.A federal old age insurance payment to a retired coal miner.
7)
Refer to the diagram. Line (2) reflects a situation where resource prices:
A.decline as industry output expands.
B.increase as industry output expands.
C.rise and then decline as industry output expands.
D.remain constant as industry output expands.
8) Which of the following statements is an explanation for the law of increasing
opportunity costs?
A.Many economic resources are better at producing one product rather than another
B.The economy is employing all of its available resources
C.In any economy, the state of technology is changing and resources are variable
D.The economy is achieving productive efficiency by producing goods at the least cost
9) In a television advertisement for AFLAC supplemental health insurance, an ice
skater says to his skating partner, "Do you want to try a triple jump?" She responds,
"Why not, I have AFLAC." This response illustrates the:
A.principal-agent problem.
B.adverse selection problem.
C.moral hazard problem.
D.free-rider problem.
10) Which of the following is not a determinant of demand for laptop computers?
A.Income of buyers of laptop computers
B.The cost of inputs for producing laptop computers
C.The prices of related goods such as software and iPads
D.Expectations about the future price of laptop computers
11)
Refer to the above graph. If the output level is Q1, then there are efficiency losses
indicated by the area:
A.0abe
B.bce
C.0eQ1
D.ecf
12)
Refer to the above graph. At the profit-maximizing level of output, the firm earns
profits given by the area:
A.0AHE
B.ACFH
C.BCFG
D.ABGH
13) A caller to a radio talk show states that oil companies are "greedy price gougers."
This is an example of:
A.loaded terminology.
B.the "after this, therefore because of this fallacy."
C.the fallacy of composition.
D.the economic perspective.
