1) In which of the following industry structures is the entry of new firms the most
difficult?
A.Pure monopoly.
B.Oligopoly.
C.Monopolistic competition.
D.Pure competition.
2) The individual firm in a purely competitive labor market faces:
A.a perfectly elastic labor supply curve and a downsloping labor demand curve.
B.a perfectly elastic labor demand curve and an upsloping labor supply curve.
C.labor demand and labor supply curves both of which are perfectly elastic.
D.a downsloping labor demand curve and an upsloping labor supply curve.
3) If predictions that the world will run out of oil or petroleum in the next century
become true, then:
A.The world would run out of energy
B.Alternative sources would become viable
C.Economies would grind to a halt
D.Population will decline due to starvation
4) For most producing firms:
A.marginal cost rises as output is carried to a certain level, and then begins to decline.
B.total costs rise as output is carried to a certain level, and then begin to decline.
C.average total costs decline as output is carried to a certain level, and then begin to
rise.
D.average total costs rise as output is carried to a certain level, and then begin to
decline.
5) The poverty rate for African Americans is:
A.greater than for any other racial or ethnic group.
B.below that for whites.
C.considerably lower than that for Hispanics.
D.below that for persons 65 years of age or older.
6) Answer the question on the basis of the following information. The demand for
commodity X is represented by the equation P = 10 – 0.2Q and supply by the equation P
= 2 + 0.2Q.
Refer to the given information. If demand changed from P = 10 – .2Q to P = 7 – .3Q, the
new equilibrium quantity is:
A.10
B.20
C.15
D.30
7) A nation’s export supply curve for a specific product:
A.is upsloping.
B.shows the amount of the product it will export at prices below its domestic price.
C.lies below its import demand curve for the product.
D.depends on domestic supply of the product, but not on domestic demand.
8)
Which of the following “magnet countries” has the largest share of immigrants as a percent
of its labor force?
A.Australia
B.United States
C.Canada
D.United Kingdom
9) Answer the question based on the following payoff matrix for a duopoly in which the
numbers indicate the profit in millions of dollars for each firm:
Refer to the above payoff matrix. If the two firms collude to maximize joint profits:
A.There will be an incentive for Firm A to cheat and earn more if Firm B does not
switch strategies
B.There will be an incentive for Firm B to cheat and earn more if Firm A does not
switch strategies
C.There will be no incentive for either Firm A or Firm B to cheat
D.There will be incentives for both Firm A and Firm B to cheat
10) Under what circumstances will immigration be most likely to equalize wage rates
across countries?
A.Immigration laws are strict.
B.Immigration is costless and unimpeded.
C.Information about job opportunities is limited.
D.Skill transferability is low.
11) Monopolistic competitive firms are productively inefficient because production
occurs where:
A.Price is greater than marginal revenue
B.Marginal cost is less than price
C.Marginal cost is not at its lowest
D.Average total cost is not at its lowest
12) The more time consumers have to adjust to a change in price:
A.the smaller will be the price elasticity of demand.
B.the greater will be the price elasticity of demand.
C.the more likely the product is a normal good.
D.the more likely the product is an inferior good.
13) When the price of a product is increased 10 percent, the quantity demanded
decreases 15 percent. The price-elasticity of demand coefficient for this product is:
A.1.5
B.0.15
C.0.67
D.67
14) The amount of pizzas that consumers want to buy per week is reflected in the
equation P = 15 – .02Qd, where Qd is the amount of pizzas purchased per week and P is
the price of pizzas. On the basis of this information we can say that:
A.if pizzas were free, people would consume 800 per week.
B.more pizzas will be purchased at a high price than at a low price.
C.if the price of pizzas is $6, then 150 will be purchased.
D.50 fewer pizzas will be purchased per week for every $1 increase in price.
15) Assume the market for ball bearings is purely competitive. Currently, each of the
firms in this market is earning negative economic profits. In the long run, we can expect
the market:
A.Supply to increase and firms’ profits to decrease
B.Demand to increase and firms’ profits to increase
C.Supply to decrease and firms’ profits to increase
D.Demand to decrease and firms’ profits to decrease
16) The basic difference between consumer goods and capital goods is that:
A.consumer goods are produced in the private sector and capital goods are produced in
the public sector.
B.an economy that commits a relatively large proportion of its resources to capital
goods must accept a lower growth rate.
C.the production of capital goods is not subject to the law of increasing opportunity
costs.
D.consumer goods satisfy wants directly while capital goods satisfy wants indirectly.
17) If a firm increases all of its inputs by 10 percent and its output increases by 10
percent, then:
A.it is encountering diseconomies of scale.
B.it is encountering economies of scale.
C.it is encountering constant returns to scale.
D.the marginal products of all inputs are falling.
18) Making ‘soft loans”loans which may not be self-liquidatingto the very poorest of the
developing countries on relatively liberal terms is the primary function of the:
A.United Nations
B.International Finance Corporation
C.New Global Compact
D.International Development Association