1) Some employers have reacted to rising health care costs by hiring more part-time and
temporary workers.
2) Income elasticity measures the effect of a change in income on the purchases of
some good or service.
3) If a nation’s labor can produce more of a good compared to labor in another nation,
then we say that the first nation has a comparative advantage in producing that good.
4) As a nation’s average household income rises, the percentage of household income
that goes to food expenditures also increases.
5) The “pork” in pork-barrel politics refers to government projects that politicians try to
secure in favor of the common good for the whole nation.
6)
Economic analysis suggests that immigration can either benefit or harm a nation,
depending on the number of immigrants, their education, skills, work ethic and the rate at
which they are absorbed into the economy.
7) A British thermal unit is the amount of energy required to raise the temperature of
one liter of water by one degree Celsius.
8) In game theory, credible threats can be used to maintain collusive agreements
between firms.
9) An example of direct foreign investment would be the building of a motorcycle
factory in China by Honda Motors.
10) Marginal product is highest where marginal cost is lowest.
11) The greater the elasticity of demand and supply, the greater is the efficiency loss of
a tax.
12) Critics of the minimum wage contend that higher minimums cause employers to
move up their labor demand curves, reducing employment of low-wage workers.
13)
Refer to the above graph of the market for low-skilled labor. Sd is the supply of domestic
resident workers, and St is the total supply of labor including undocumented workers.
What is the equilibrium wage rate and equilibrium employment if there is illegal
immigration?
A.$14 and 142M, respectively
B.$13 and 135M, respectively
C.$14 and 120M, respectively
D.$17 and 135M, respectively
14) Assume that voters are asked to vote for either more police protection or more
schools in a community. More schools are likely to win if:
A.There is a paradox of voting
B.Median voters prefer that choice
C.Voters are ill-informed about the choice
D.There is revealed preference through voting
15) The “vicious circle of poverty” for developing nations can best be described by:
A.Low levels of international trade that reduce exports and increase the dependence on
imports
B.Low incomes that inhibit saving and the accumulation of real and human capital,
making it difficult to increase productivity and income
C.A large government sector which reduces the availability of private investment
spending but which increases macroeconomic stability
D.A lack of entrepreneurial talent that limits the formation of businesses and the
development of private businesses
16) In the United States cartels are:
A.quite common in industries that produce nondurable goods.
B.in violation of the antitrust laws.
C.concentrated in monopolistically competitive industries.
D.encouraged by government policy so firms can achieve economies of scale.
17) The table below summarizes the marginal product and marginal revenue product
information for labor and capital. Assume the other quantities used by the firm remain
constant. The price for labor is $6 and the price for capital is $4. Use the table to answer
the following questions.
(a)What would be the least-cost combination of labor and capital that would enable the
firm to produce 285 units?
(b)What is the profit-maximizing combination of A and B?
(c)Suppose the price of capital decreases to $3. Now, what is the least-cost combination
of labor and capital? How many units of output would it allow the firm to produce?
(d)Given the price change, now what is the profit-maximizing combination of labor and
capital? How has output changed?
18) Measured in terms of farm employment and the number of farms, agriculture has
been:
A.a declining industry.
B.an expanding industry.
C.a stable industry.
D.a volatile industry.
19) In which of the following U.S. industries is the rate of unionization the lowest?
A.Transportation.
B.Mining.
C.Manufacturing.
D.Finance.
20) Which of the following statements is correct?
A.There is clear evidence that unions have increased the average level of real wage
rates for all workers.
B.When fringe benefits are taken into account, the overall compensation of union and
nonunion workers is equal.
C.Approximately 10 percent of all work time is lost annually because of strikes.
D.There were 19 major work stoppages in the United States in 2011
21)
From 2000 to 2009, the net annual inflow of illegal immigrants has averaged about:
A.250,000 per year
B.500,000 per year
C.750,000 per year
D.1 million per year
22) If the demand for bacon is relatively elastic, a 10 percent decline in the price of
bacon will:
A.decrease the amount demanded by more than 10 percent.
B.increase the amount demanded by more than 10 percent.
C.decrease the amount demanded by less than 10 percent.
D.increase the amount demanded by less than 10 percent.
23) In the following table are demand and cost data for a pure monopolist. Complete
the table by filling in the columns for total revenue, marginal revenue, and marginal
cost. Answer these three questions: (a) What output will the monopolist produce? (b)
What price will the monopolist charge? (c) What total profit will the monopolist receive
at the profit-maximizing level of output?
24) Which of the following is considered a nonrenewable natural resource?
A.Solar power.
B.Coal.
C.Oceans.
D.Aquifers.
25) Average revenue is conceptually equivalent to the:
A.Unit price of the product
B.Average cost of the product
C.Marginal cost of the product
D.Marginal revenue of the product
26) Give an example of the use of the time value of money in the study of natural
resource economics.
27) Explain the difference between total product, marginal product and average product.
28) Economist Jones defines an increase in supply as a decrease in the prices needed to
ensure various amounts of a good being offered for sale. Economist Brown defines an
increase in supply as an increase in the amounts that producers will offer at various
possible prices. Economist Cole defines an increase in supply as an increase in the
amount firms will offer in the market which is caused by an increase in the price of the
product. Which, if any, of these is defining an increase in supply correctly? Explain.
29) What effects do immigrants have on tax revenues and government spending in the
United States?
30) In what ways does the United States have the best health care system in the world?
31) The president of the Micro Brewing Corporation asks you, as the company
economist, to forecast changes in consumer beer purchases associated with a proposed
price change. You conduct a survey and find that if the price of a six-pack increases
from $5.50 to $7.50, the quantity demanded will decrease from 2200 units to 1800 units
a month. Should the Micro Brewing Corporation raise its price? Explain the economic
basis for this recommendation to the president.