1)
Suppose that Rosa is considering migration to another country. To move, she will have to
spend $5000 on transportation and $4000 in application and other processing fees. Rosa’s
stream of future earnings in her home country is $500,000. She expects to earn a stream of
future earnings of $800,000 in another country. Based on this information, Rosa’s implicit
cost of migrating is:
A.$9,000
B.$500,000
C.$509,000
D.$5,000
2) As the baby boomers in America grow old, the demand for health-care workers
increases. This would be an example of which determinant of labor demand?
A.An increase in labor productivity
B.An increase in product demand
C.A decrease in the price of another resource
D.An increase in the price of another resource
3) In the context of analyzing economic efficiency, we can interpret the market demand
curve to be showing:
A.The average cost of producing the product at each output level
B.The marginal revenue from extra each unit of the product
C.The marginal benefit that consumers place on each unit of the product
D.The average variable cost of producing the product
4) The two alternative ways of promoting better outcomes when a natural monopoly
exists are:
A.Subsidy and taxation
B.Public ownership and regulation
C.Pricing and incorporation
D.Breaking and merging
5) Which statement best illustrates the law of diminishing returns?
A.The average total cost of the last unit of output produced is less than the average total
cost of the preceding unit of output
B.The marginal product of the last unit of a resource used is less than the marginal
product of the preceding unit of resource
C.The average product of the last unit of a resource used is less than the average
product of the preceding unit of resource
D.The marginal cost of the last unit of output produced is less than the marginal cost of
the preceding unit of output
6) Which of the following is characteristic of a labor market that is a monopsony?
A.The type of labor available is relatively mobile from one industry to another
B.The supply curve for labor lies above the marginal resource cost curve of the firm
C.The wage rate the firm must pay varies directly with the number of workers it
employs
D.The firm’s employment is a small portion of the total employment of that type of
labor
7) What is the immigration problem for DVCs?
A.Too many people are allowed to move from DVCs to IACs, and IAC policies tend to
favor the movement of the most productive DVC workers
B.Too many people are allowed to move from DVCs to IACs, and IAC policies tend to
favor the movement of the least productive DVC workers
C.Too few people are allowed to move from DVCs to IACs, and IAC policies tend to
favor the movement of the most productive DVC workers
D.Too few people are allowed to move from DVCs to IACs, and IAC policies tend to
favor the movement of the least productive DVC workers
8) Answer the question on the basis of the following table, which indicates the dollar
price of libras, the currency used in the hypothetical nation of Libra. Assume that a
system of freely floating exchange rates is in place.
Refer to the table. Suppose that Libra decided to import more U.S. products. We would
expect the quantity of libras:
A.demanded at each dollar price to rise and the dollar to depreciate relative to the libra.
B.demanded at each dollar price to fall and the dollar to appreciate relative to the libra.
C.supplied at each dollar price to rise and the dollar to appreciate relative to the libra.
D.supplied at each dollar price to fall and the dollar to depreciate relative to the libra.
9) The exchange rate for the Mexican peso changes from $1 = 5 pesos to $1 = 6 pesos.
This change will lead to:
A.U.S. goods becoming less expensive for Mexicans
B.Mexican goods becoming more expensive for Americans
C.An increase in U.S. exports to Mexico
D.A decrease in U.S. exports to Mexico
10) The process by which economists test hypotheses against facts to develop theories,
principles, and models is called:
A.the economic perspective.
B.the scientific method.
C.policy economics.
D.microeconomics.
11) Specialization and trade between individuals or between nations leads to:
A.Greater self-sufficiency
B.Higher product prices
C.Higher utilization of resources
D.Higher total output
12) If each taxpayer paid the same lump-sum amount regardless of income level, the tax
system would be:
A.disproportionate.
B.progressive.
C.proportional.
D.regressive.
13)
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. With a PcPt per-unit tariff, the
quantities sold by foreign and domestic producers respectively will be:
A.xz and x.
B.xv and xz.
C.x and xz.
D.wy and w.
14)
A decrease in wage rates in the United States will:
A.Decrease total wage income if labor demand is elastic
B.Increase total wage income if labor demand is inelastic
C.Increase total wage income if labor demand is elastic
D.Decrease total wage income regardless of the elasticity of labor demand
15) The following are hypothetical exchange rates: 2 euros = 1 pound; $1 = 2 pounds.
We can conclude that:
A.$1 = 4 euros.
B.$1 = .5 euro.
C.1 euro = $.50.
D.1 euro = $2.