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1) Assume that in year 1 your average tax rate is 20 percent on a taxable income of
$20,000. If the marginal tax rate on the next $10,000 of taxable income is 30 percent,
what will be the average tax rate if your taxable income rises to $30,000?
A.7 percent.
B.30 percent.
C.About 16 percent.
D.About 23 percent.
2) The kinked demand model of oligopoly assumes that:
A.Rivals will ignore price increases but will match price cuts
B.Rivals will ignore price cuts but will match price increases
C.The oligopolistic firms are colluding
D.A firm faces a more elastic demand curve if it cuts its price, and less elastic if it raises
price
3)
Refer to the above graph for the labor market. The government decides to impose a
wage tax as shown on the graph. If the number of workers hired after the imposition of
the tax is 1,000, then the total amount of the tax is:
A.$200
B.$300
C.$400
D.$500
4) The following table applies to a loan with interest rate of 5% per period:
Refer to the table above. What value goes on the cell labeled X?
A.$2,200
B.$2,315.25
C.$2,210
D.$2,205
5) Assume for a competitive firm that MC = AVC at $12, MC = ATC at $20, and MC =
MR at $16. This firm will:
A.realize a profit of $4 per unit of output.
B.maximize its profit by producing in the short run.
C.minimize its losses by producing in the short run.
D.shut down in the short run.
6) When a consumer shifts purchases from product X to product Y, the marginal utility
of:
A.X falls and the marginal utility of Y rises.
B.X rises and the marginal utility of Y falls.
C.both X and Y rises.
D.both X and Y falls.
7)
Refer to the above diagram for the milk market. There would be a shortage of milk
whenever the price is:
A.Higher than $1.50 per gallon
B.Higher than $2.00 per gallon
C.Lower than $1.50 per gallon
D.Lower than $2.00 per gallon
8) Answer the following questions based on the payoff matrix for a single-period,
two-firm game for firms, Six, Inc. and Seven Corp. The numbers in the matrix indicate
the profit in billions of dollars for a large and small advertising strategy. The profit
outcome cells are A, B, C, and D.
(a)Is the game a zero-sum game or a profit-sum game?
(b)Which strategies are the dominate ones for Six, Inc. and Seven Corp.?
(c)What is the Nash Equilibrium?
(d)What will be the total amount of profits for both firms if both firms decide their
strategy simultaneously?
9) The next three questions refer to the below supply and demand graph for a public
good.
(a)What does point c represent?
(b)What does the line segment ef at output Q3 represent?
(c)At what output level is there an underallocation of resources to the production of this
public good?
10)
Refer to the diagram. If this labor market is purely competitive, the wage rate and level
of employment respectively will be:
A.D and E
B.C and E
C.B and G
D.B and F
11)
Refer to the information and assume the stadium capacity is 5,000. If the Mudhens'
management wanted a full house for the game, it would:
A.set price so as to maximize its total revenue.
B.encourage scalpers to sell their tickets for more than $7
C.set ticket prices at $5.
D.set ticket prices at $9.
12) Creative destruction is illustrated by which of the following pairs of products:
A.Bicycles and helmets
B.Digital cameras and film
C.DVD players and DVDs
D.Netflix and iPads
13) The elasticity of supply for a product will be 2 if:
A.A 1 percent decrease in the price causes a 0.2 percent decrease in quantity supplied
B.A 2 percent decrease in price causes a 1 percent decrease in quantity supplied
C.A 1 percent decrease in price causes a 2 percent decrease in quantity supplied
D.A 2 percent decrease in price causes a 2 percent decrease in quantity supplied
14) An economic analysis of the relationship between proposed legislation affecting
major employers in each state and the voting patterns of senators and representatives in
Congress on that legislation would fit within the subcategory of economics called:
A.the economics of fiscal policy.
B.public choice theory.
C.behavioral economics.
D.monetarism.
