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1) Saving is a larger percentage of domestic output in DVCs than in IACs, but the
saving is put to poor use.
2) The vast majority of the labor forces of the low-income DVCs are engaged in
agriculture.
3) Positive statements are expressions of value judgments.
4) A competitive firm will produce in the short run so long as its price exceeds its
average fixed cost.
5) Prices in oligopolistic industries are predicted to fluctuate widely and frequently
compared to other market structures.
6) Farmers typically sell their products in highly competitive markets and buy in
imperfectly competitive markets.
7) The larger the number of firms and the less the degree of product differentiation, the
greater will be the elasticity of a monopolistically competitive seller's demand curve.
8) One effect of a usury law is that it will:
A.Benefit lenders
B.Penalize borrowers
C.Increase the efficiency of investment
D.Subsidize borrowers with high incomes
9) Industry Y is dominated by five large firms that hold market shares of 20, 25, 15, 10,
and 25 percent. The four-firm concentration ratio for this industry is:
A.70 percent
B.80 percent
C.85 percent
D.90 percent
10) Answer the question on the basis of the following demand schedule:
Refer to the data. Which of the following is correct?
A.Although the slope of the demand curve is constant, price elasticity declines as we
move from high to low price ranges.
B.Although the slope of the demand curve is constant, price elasticity increases as we
move from high to low price ranges.
C.Although the demand curve is convex to the origin, price elasticity of demand is
constant throughout.
D.A steep slope means demand is inelastic; a flat slope means demand is elastic.
11) Determine whether each of the following characteristics is most likely an attribute
of a flexible, fixed, or managed exchange rate system.
(a)Consumer choice of imported goods may be restricted.
(b)Instability of the economy due to wide fluctuations.
(c)This system is considered a nonsytem.
(d)Occasional interventions are used to stabilize the economy.
(e)The purchasing power parity moves the system to equilibrium.
(f)Payment deficits tend to persist.
12)
Refer to the above graph for a purely competitive firm in the short run. If the firm
increases its output level from B to C, then its total profits will be:
A.Negative and decreasing
B.Negative and increasing
C.Positive and increasing
D.Positive and decreasing
13) Which of the following statements is correct?
A.Purely competitive firms, monopolistically competitive firms, and pure monopolies
all earn zero economic profits in the long run.
B.Purely competitive firms, monopolistically competitive firms, and pure monopolies
all earn positive economic profits in the long run.
C.In the long run, purely competitive firms and monopolistically competitive firms earn
zero economic profits, while pure monopolies may or may not earn economic profits.
D.Monopolistically competitive firms earn zero economic profits in both the short run
and the long run.
14) North Korea's command economy:
A.is one of the few remaining command economies.
B.has grown much faster than South Korea's economy since the two countries were
divided after World War II.
C.produces a per capita GDP of nearly $25,000.
D.has undergone significant market reforms and is now one of the fastest-growing
economies.
15) Major achievements of the European Union (EU) include the following, except:
A.Abolished tariffs and quotas among its member nations
B.Liberalized the movement of capital and labor among its member nations
C.Created common policies in agriculture, transportation, and business practices among
its members
D.Established a common fiscal policy among its member nations
16) Consider the following situations. Explain how each will affect the earning ability
of those discussed.
(a)Lucy has always been more goal-oriented than her brother Frank. For example,
during high school Lucy wouldnt hesitate to pull an all-nighter to make sure she was
prepared for a test, while Frank would only study until he got bored and decided to go
out with his friends.
(b)Roger works as a dentist, while his friend Hugh is a policeman.
(c)Sarah and Jackie are roommates together in college and both are hoping to get into
law school after graduation. Sarahs dad is a businessman and Jackies dad is a prominent
lawyer.
17) Framing effects in prospect theory indicate that a given result, such as "an
investment return of 10%":
A.Will be definitely viewed as a gain, because a loss would be a negative return
B.Can be viewed as either a gain or a loss, depending on the context
C.Will always increase the happiness of the investor
D.Will change satisfaction to an equal but opposite degree as a negative 10% return
18)
Refer to the diagram, in which S1 and D1 represent the original supply and demand
curves and S2 and D2 the new curves. In this market the indicated shift in demand may
have been caused by:
A.a decline in the number of buyers in the market.
B.a decline in the price of a substitute good.
C.an increase in incomes if the product is a normal good.
D.an increase in incomes if the product is an inferior good.
19) In 2011, the greatest number of legal immigrants arriving in the United States came
from:
A.India and North Korea.
B.the Dominican Republic and Cuba.
C.China and Vietnam.
D.Mexico and China.
20) Describe the idea behind the cap-and-trade program for improving environmental
quality. Explain how supply and demand determine the price for pollution rights in this
case.
21) What is the purpose of the World Trade Organization and its current activity?
22) Is there a union wage advantage?
23) A computer company is considering lowering the price of its laptop computer to
promote sales. However, it worries that this will reduce desktop computer sales. It finds
the cross product of demand to be 1.5. Are its concerns legitimate? Explain.
24) What is a price ceiling and what are its economic effects?
25) Assume a firm has fixed costs of $80 and variable costs as indicated in the table
below. Complete the cost table.
26) Federal and state governments often seek to raise tax revenue by levying excise or
sales taxes on specific products. What economic factors should be considered in
determining the products that will raise the most tax revenue? Give examples of
products in your answer.
27) Is a Nash equilibrium stable? Explain.
28) Can ticket scalping be justified? Explain using economic analysis.
29) Describe the changes in population and living standards since 1800. What
implications do these changes raise about standards of living today?
