1)
Refer to the data. At $20 million of R&D expenditures, the:
A.marginal cost of R&D exceeds the marginal benefit.
B.expected total return from R&D is at a maximum.
C.interest-rate cost of funds is negative.
D.marginal benefit of R&D exceeds the marginal cost.
2) Labor unions may attempt to raise wage rates by:
A.increasing the supply of labor.
B.forcing employers, under the threat of a strike, to pay above-equilibrium wage rates.
C.decreasing the demand for labor.
D.increasing the price of complementary resources.
3) Which of the following is a barrier to entry?
A.Patents and licenses
B.Buyers’ incomes
C.Close substitutes
D.Diminishing marginal returns
4) The purpose of the Freedom to Farm Act of 1996 was to:
A.immediately end U.S. farm subsidies.
B.end 60 years of U.S. price supports for American grain crops.
C.eliminate U.S. tariffs and quotas on imported farm goods.
D.stabilize short-run crop prices.
5) If an effective ceiling price is placed on hamburgers, then:
A.the quantity demanded will exceed the quantity supplied.
B.a black market for hamburgers may evolve.
C.consumers may want government to ration hamburgers.
D.All of these are likely outcomes.
6)
Refer to the figure that shows the market for U.S. health care. The problem of rapidly
rising medical care costs is best illustrated by the shifts of the demand and supply
curves from D1 to:
A.D2 and S1 to S2
B.D2 and S1 to S3
C.D3 and S1 to S2
D.D3 and S1 to S3
7) The economic term for a firm that is the sole buyer in a market is:
A.monopsonist.
B.monopolist.
C.bilateral competitor.
D.bilateral monopolist.
8) If product Y is an inferior good, a decrease in consumer incomes will:
A.Make buyers want to buy less of Product Y
B.Not affect the sales of product Y
C.Shift the demand curve for product Y to the left
D.Shift the demand curve for product Y to the right
9) All of the following are regulatory commissions dealing with industrial regulation (as
distinct from social regulation) except the:
A.Food and Drug Administration.
B.Federal Energy Regulatory Commission.
C.Federal Communications Commission.
D.50 state public utility commissions.
10) In which market model would there be a unique product for which there are no
close substitutes?
A.Monopolistic competition
B.Pure competition
C.Pure monopoly
D.Oligopoly
11) In a command economy like the old Soviet Union, one is able to improve one’s lot
and get ahead in society largely through:
A.Entrepreneurship and risk-taking
B.Innovation and profits
C.Participating in the political hierarchy
D.Getting high prices for one’s products and resources
12) In the following question you are asked to determine, other things equal, the effects
of a given change in a determinant of demand or supply for product X upon (1) the
demand (D) for, or supply (S) of, X; (2) the equilibrium price (P) of X; and (3) the
equilibrium quantity (Q) of X.
Refer to the given information. An improvement in the technology used to produce X
will:
A.decrease S, increase P, and decrease Q.
B.decrease S, increase P, and increase Q.
C.increase S, decrease P, and increase Q.
D.decrease D, decrease P, and decrease Q.
13) The labor demand curve of an imperfectly competitive seller is downsloping:
A.solely because of diminishing marginal utility.
B.because of both diminishing returns and the necessity to lower price to sell more
output.
C.solely because product price must be reduced to sell more output.
D.solely because of diminishing returns.
14) Which one of the following would be considered to be a risk management technique
used by farmers?
A.Changing the parity ratio
B.Increasing product demand
C.Buying more arable farm land
D.Using crop revenue insurance
15) Which of the following best describes the invisible-hand concept?
A.The desires of resource suppliers and producers to further their own self-interest will
automatically further the public interest.
B.The nonsubstitutability of resources creates a conflict between private and public
interests and calls for government intervention.
C.The market system is the best system for overcoming the scarce resources-unlimited
wants problem.
D.Central direction by the government will improve resource allocation in a capitalistic
economy.
16) A computer manufacturer’s elasticity of demand for labor is not likely to be affected
by the:
A.Supply of computers
B.Price elasticity of demand for computers
C.Ratio of labor cost to other resource costs in the firm
D.Ease of substituting capital for labor in producing computers
17) A “winner-takes-all market” like that for entertainers exhibits huge differences
between the top talents and the next tier of artists in all of the following aspects, except:
A.Marginal revenue product
B.Talent
C.Earnings
D.Media hype
18)
Refer to the above supply and demand graph of Product X. What would happen if the
government decided to also start providing Product X in the market?
A.Demand would decrease
B.Demand would increase
C.Supply would decrease
D.Price would decrease
19) The heavy reliance on private health insurance in the U.S. began during World War
II, as a:
A.Legal requirement for employment
B.Patriotic duty of firms
C.Way of imitating European employment practices
D.Response by employers to the wage controls in effect then