1) The domestic opportunity cost of producing 100 barrels of chemicals in Germany is
one ton of steel. In France, the domestic opportunity cost of producing 100 barrels of
chemicals is two tons of steel. In this case:
A.France has a comparative advantage in the production of chemicals
B.Germany has a comparative advantage in the production of chemicals
C.France has an absolute advantage in the production of chemicals
D.Germany has an absolute advantage in the production of chemicals
2) Which idea is inconsistent with pure competition?
A.Price-taking behavior
B.Product differentiation
C.Freedom of entry or exit for firms
D.A large number of buyers and sellers
3) Total allowable catch policies and individual transferable quotas both:
A.limit catch sizes and promote efficiency.
B.limit catch sizes, but TACs promote inefficiency.
C.promote efficiency, but only TACs limit catch sizes.
D.promote efficiency, but only ITQs limit catch sizes.
4) Over a period of time, the equilibrium price of a good increases and the quantity
decreases. All of the following could account for this situation, except:
A.An increase in the costs of production
B.The removal of a subsidy on the good or service
C.The imposition of a sales tax on the good or service
D.A decrease in the price of an alternative good or service that producers could also
produce
5) Assume that the only variable resource used to produce output is labor.
Refer to the above table. With diminishing marginal returns, if the firm hires seven units
of labor, which of the following numbers would most probably be the total product?
A.40
B.39
C.38
D.37
6)
Refer to the above graph, which shows the market for beef where demand shifted from
D1 and D2. The change in equilibrium from E1 to E2cannot be a result of:
A.Buyers expectations of lower prices for beef in the very near future
B.An increase in the subsidy given to cattle farms
C.A widespread concern about mad-cow disease
D.A decrease in the productivity of cattle farms
7) Which question is an illustration of a microeconomic question?
A.Is the volume of wine produced in one year dependent upon the price of wine?
B.Does government spending influence interest rates in the economy?
C.Is the purchasing power of the dollar higher or lower today than it was in 2008?
D.Which economic system is better for consumers and firms?
8) As nations become richer they tend to pollute:
A.Less, and offer better protection for sensitive ecosystems
B.Less, but offer worse protection for sensitive ecosystems
C.More, and offer worse protection for sensitive ecosystems
D.More, but offer better protection for sensitive ecosystems
9)
Refer to the diagram for a natural monopolist. If a regulatory commission set a
maximum price of P2, the monopolist would:
A.produce output Q1 and realize an economic profit.
B.produce output Q3 and realize an economic profit.
C.close down in the short run.
D.produce output Q3 and realize a normal profit.
10) If two nations have straight-line production possibilities curves:
A.then their trading possibilities curves must lie inside the production possibilities
curves.
B.there will be no basis for mutually advantageous trade.
C.there will be a basis for mutually advantageous trade whether the slopes are equal or
not.
D.there will be a basis for mutually advantageous trade provided the slopes differ.
11)
Refer to the above graphs. (Assume that the pre-migration labor force in Country A is 100
and that it is 150 in country B.) Domestic output in country B will, after immigration:
A.Increase by $50M
B.Increase by $250M
C.Decrease by $50M
D.Decrease by $250M
12) If a price ceiling is set below the equilibrium price in a market:
A.Rationing will be unnecessary
B.Surpluses of the commodity will develop
C.The quantity demanded will exceed the quantity supplied
D.The quantity supplied will exceed the quantity demanded
13) The general rule for hiring any input (say, labor) in the profit-maximizing amount is
MRC = MRP. This rule takes the special form W = MRP (where W is the wage rate)
when the:
A.labor supply curve is upsloping.
B.supply of labor is inelastic.
C.firm is hiring labor under purely competitive conditions.
D.firm is hiring labor under imperfectly competitive conditions.
14) Why do people tend to eat more at all-you-can-eat buffet restaurants than at
restaurants where each item is purchased separately?
A.Once the all-you-can-eat meal is purchased, consumers view additional trips back to
the buffet as having a price of zero.
B.MU/P is consistently greater at all-you-can-eat restaurants.
C.People who eat at all-you-can-eat restaurants do not experience diminishing marginal
utility.
D.Food at all-you-can-eat restaurants tends to have fewer calories, so consumers feel
the need to consume a greater volume of food.
15)
Refer to the above graph, which shows the market for bicycles. S1 and D1 are the
original supply and demand curves. D2 and D3 and S2 and S3 are possible new demand
and supply curves. Starting from the initial equilibrium (point 1), what point on the
graph is most likely to be the new equilibrium after a sharp increase in traffic accidents
involving cyclists, and the payment of subsidies to bicycle producers?
A.3
B.4
C.5
D.6
16) Unimpeded immigration between two nations tends to:
A.increase business income in both nations.
B.increase business income in the nation receiving immigrants but reduce it in the
nation experiencing emigration.
C.reduce business income in the nation receiving immigrants but increase it in the
nation experiencing emigration.
D.reduce business income in both nations.
17) Rapid population growth can be an obstacle to economic development:
A.because it can translate a relatively large increase in real output into a small increase
in real output per capita.
B.because more investment will be required to simply maintain the quantity of capital
goods per person.
C.because it may lead to the overutilization and therefore ecological degradation of
farmland.
18) Suppose that Joe sells pork in a purely competitive market. The market price of
pork is $3 per pound. Joe’s marginal revenue from selling the twelfth pound would be:
A.$36
B.$3
C.12 lbs.
D.1 lb.
19) An import-licensing requirement, or import restrictions pertaining to the product
quality and safety, are examples of:
A.Protective tariffs
B.Nontariff barriers
C.Voluntary export restrictions
D.Quotas on imported products
20) People enjoy outdoor holiday lighting displays and would be willing to pay to see
these displays but can’t be made to pay. Because those who put up lights are unable to
charge others to view them, they don’t put up as many lights as people would like. This
is an example of a:
A.negative externality.
B.supply-side market failure.
C.demand-side market failure.
D.government failure.