1) Unless people can benefit from conservation, there is a temptation to:
A.delay resource extraction as long as possible.
B.extract and use resources at a constant rate.
C.extract and use resources as quickly as possible.
D.ban the extraction of nonrenewable resources.
2) Answer the question below on the basis of the following demand and cost data for a
pure monopolist.
Refer to the above table. At equilibrium, the monopolist will realize a:
A.Profit of $10.00
B.Profit of $6.50
C.Profit of $4.50
D.Loss of $7.25
3) The average wage of workers increases in a purely competitive industry. This change
will result in a(n):
A.Increase in marginal cost for firms in the industry and an increase in the industry
supply curve
B.Decrease in marginal cost for firms in the industry and a decrease in the industry
supply curve
C.Decrease in marginal cost for firms in the industry and an increase in the industry
supply curve
D.Increase in marginal cost for firms in the industry and a decrease in the industry
supply curve
4) The law of diminishing returns indicates that:
A.as extra units of a variable resource are added to a fixed resource, marginal product
will decline beyond some point.
B.because of economies and diseconomies of scale, a competitive firm’s long-run
average total cost curve will be U-shaped.
C.the demand for goods produced by purely competitive industries is downsloping.
D.beyond some point, the extra utility derived from additional units of a product will
yield the consumer smaller and smaller extra amounts of satisfaction.
5) When the occupational choices of women or minorities are restricted, this results in:
A.Lower wages for these groups, but has no effect on the efficient allocation of labor
resources
B.Lower wages for these groups, but more efficient allocation of labor resources
C.Lower wages for these groups and less efficient allocation of labor resources
D.Higher wages for these groups and more efficient allocation of labor resources
6) An example of a nontariff barrier would be:
A.A minimum limit on the quantity of imports
B.Excessive licensing requirements
C.A tax on an imported product
D.Voluntary export restraints
7)
Refer to the above graph. Which of the following statements about combination G is
true?
A.The nation cannot produce combination G even if the nation gets additional resources
B.The nation can currently produce combination G if the nation specializes and trades
with another nation
C.The nation may not be able to produce combination G, but it can consume that
combination if it specializes and trades
D.The nation would much prefer to be at combination F than at combination G
8) Trade barriers that restrict imports from developing countries tend to be:
A.Highest in the capital goods and technology sectors of those economies
B.Lowest in the labor-intensive manufacturing sectors of those economies
C.Lowest for those products in which DVCs have a comparative advantage
D.Highest for those products in which DVCs have a comparative advantage
9) In order for mutually beneficial trade to occur between two otherwise isolated
nations:
A.each nation must be able to produce at least one good absolutely cheaper than the
other.
B.each nation must be able to produce at least one good relatively cheaper than the
other.
C.each nation must face constant costs in the production of the good it exports.
D.one nation’s production must be labor-intensive while the other nation’s production is
capital-intensive.
10)
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. Sd + Q is the product supply curve
after an import quota is imposed. A quota of wy will:
A.lower domestic price and increase domestic consumption.
B.increase the revenues of domestic producers by areas E + F + K.
C.increase the revenues of domestic producers by areas G + H.
D.increase the revenues of domestic producers by areas E + F + G + H + J.
11) Professional buyers of antiques often have more information about the value of
antique objects than do the sellers. This illustrates:
A.the principal-agent problem.
B.the moral hazard problem.
C.the free-rider problem.
D.asymmetric information.
12) Answer the question on the basis of the following information: The equations for
the demand and supply curves for a particular product are P = 10 – .4Q and P = 2 + .4Q,
where P is price and Q is quantity expressed in units of 100. After an excise tax is
imposed on the product, the supply equation is P = 3 + .4Q.
Refer to the given information. The equilibrium quantity before the excise tax is
imposed is:
A.800 units.
B.1,000 units.
C.1,200 units.
D.1,400 units.
13) In a two-nation, two-good world, which of the following statements is true?
A.One nation cannot possibly have an absolute advantage over the other nation in both
products
B.If one nation as the comparative advantage in one product, then the other nation
would have the comparative advantage in the other product
C.One nation will always have the comparative advantage over the other nation in one
of the products
D.If one nation has the absolute advantage in one product, then the other nation would
have the absolute advantage in the other product
14) A simultaneous game is said to exist when:
A.firms are playing pricing games in different markets at the same time.
B.firms choose their strategies at the same time as their rivals.
C.firms can set multiple prices for the same good at the same time.
D.strategies are set without regard to possible interactions in future time periods.
15) A patent on a new product benefits the firm securing it by:
A.limiting the direct imitation of the product by rivals for many years.
B.enabling the firm to retain “trade secrets” about the product.
C.reducing the firm’s legal expenses.
D.increasing the speed of diffusion of the new product.
16)
Assumptions: These two graphs show two sectors of the labor market for a particular
kind of labor. Relevant product markets are competitive. The two labor demand curves
are identical and initially the quantities of labor employed in the two sectors are L1 and
L’1 and the wage rate in each sector is Wn.
Refer to the diagram and assumptions. If a union is formed in sector 1 and the union
increases the wage rate from Wn to Wu, then employment will:
A.decrease, but we cannot determine by how much.
B.decrease by 0L2 in sector 1
C.decrease by L1L2 in sector 1
D.increase by L1L2 in sector 1
17) Occupational licensing:
A.functions essentially the same as inclusive unionism.
B.attracts large numbers of workers and therefore depresses wages.
C.often restricts occupational entry and raises the incomes of license holders.
D.has been declared illegal in the majority of states.
18)
Refer to the above graph for a monopolist in short-run equilibrium. This monopolist:
A.Has a loss per unit equal to DE
B.Has total fixed costs equal to area BEFC
C.Earns positive economic profit equal to the area of ABED
D.Will cease production since its economic profits are negative
19) The idea that competition is in some circumstances insufficient to achieve allocative
efficiency ensure fairness to consumers and competing firms, is most closely associated
with which anti-trust perspective?
A.Laissez-faire
B.Herfindahl
C.Passive
D.Active