1) The principal beneficiaries of government agricultural aid have been the very
low-income farmers.
2) If a firm doubles its resource inputs and as a result output triples, then the long-run
average cost curve must be upward-sloping.
3) Encouraging conservation is especially difficult in the open ocean where it is
impossible to either define or enforce property rights over fish.
4) Political logrolling always produces economically inefficient outcomes.
5) Health insurance induces the consumers to adopt less prevention and
overconsumption of health care.
6) In the absence of enforceable property rights, there is little incentive to preserve
resources for future use.
7) Welfare reform in 1996 reversed the trend of growing welfare payments to
immigrants.
8) Surpluses drive market prices up; shortages drive them down.
9) As viewed by society, economic rent is not a cost but rather a surplus payment.
10) Developing nations tend to have a large entrepreneurial class but not sufficient
capital investment.
11) Marginal resource (labor) cost will exceed the wage rate when there is imperfect
competition in the hire of labor.
12) When a nation is experiencing a balance-of-payments deficit, its treasury or central
bank will engage in a net sale of its official reserves.
13) Suppose the world economy is composed of just two countries: Italy and Greece.
Each can produce steel or chemicals, but at different levels of economic efficiency. The
production possibilities curves for the two countries are shown in the graphs below.
Refer to the graphs and information above. It can be deduced that:
A.Greece has a comparative advantage in chemicals
B.Greece has the absolute advantage in both products
C.Italy has a comparative advantage in chemicals
D.It is more costly in terms of resources to produce steel in Italy
14) High-end retailers spend a lot on architecture, displays, and packaging in order to
take advantage of the:
A.Hindsight bias
B.Confirmation bias
C.Availability heuristic
D.Framing effect
15) Blossom, Inc. sells 500 bottles of perfume a month when the price is $7. A huge
increase in resource costs forces Blossom to raise price to $9, and the firm only
manages to sell 460 bottles of perfume. The price elasticity of demand is:
A.0.33 and elastic
B.3.0 and elastic
C.0.33 and inelastic
D.3.0 and inelastic
16) Many demographers expect world population to:
A.increase exponentially into the foreseeable future.
B.decline from its current level in the next two decades.
C.peak at 9 billion or fewer, and then decline.
D.plateau at around 7.5 billion, and then continue to increase rapidly.
17)
Refer to the above graph showing a linear demand curve for a monopolist. Which of the
following statements is correct?
A.The area 0QVS is greater than the area 0RWT
B.The demand curve has unit price elasticity at W
C.The price elasticity of demand is less at U than at V
D.The price elasticity of demand is greater at W than at V
18) If a pure monopolist can price discriminate by separating buyers into two or more
groups:
A.the marginal revenue curve and the total revenue curve will now coincide.
B.the marginal revenue curve will now shift to a position above the demand curve.
C.the firm will face multiple marginal revenue curves.
D.marginal revenue will become less at each level of output than it would be without
price discrimination.
19) A decrease in saving that leads to an increase in the interest rate will:
A.Decrease the amount of investment spending
B.Only result in a surplus of loanable funds
C.Shift the demand for loanable funds to the right, increasing net investment
D.Shift the demand for loanable funds to the left, causing a decrease in investment
20) Use the graph provided below to answer the following questions.
(a) Draw the demand and supply curve for college football tickets at University XYZ.
(b) Suppose the football team has a significant winning streak, increasing fans
preference to watch the game at the stadium. Depict the change to the market.
Show/Discuss changes to the equilibrium price and quantity.
(c) Assume the University has decided to make a one-time expansion to the stadium,
adding 500 seats. On a new graph show how this will change the equilibrium price and
quantity.
21) Major criticism of the single-tax movement include the following, except:
A.It is impractical because most income payments are a mixture of interest, rent, wages,
and profits
B.It is inefficient because the land-rent tax will distort the use of land resources, thereby
preventing allocative efficiency
C.It is unfair because there are other “unearned” incomes besides land rent, such as
capital-gains income
D.It is inadequate because current levels of government spending are too big to be
sufficiently funded by rent tax alone
22) When economists speak of “demand” in a particular market, they refer to:
A.The whole demand curve or schedule
B.One point on the demand curve
C.One price-quantity combination on the demand schedule
D.How much of an item buyers want to buy at a given price
23) Laws and government actions designed to prevent monopoly and to promote
competition are the focus of:
A.Social regulation
B.Industrial regulation
C.Antitrust policy
D.Incomes policy
24) The Patient Protection and Affordable Care Act (PPACA) of 2010 is designed to
address a wide-ranging set of issues including the following, except:
A.The large portion of health spending supported by government insurance
B.The high and rising cost of health insurance and health-care spending
C.The fact that tens of millions of Americans do not have health insurance
D.The inability of many people with preexisting conditions to obtain health insurance
25) It has been proposed that a government agency be charged with the task of
determining the amount of pollution that the atmosphere (or a body of water) can safely
absorb, establish “rights” to this limited amount of pollution, and sell those limited
amount of rights to firms. The firms can then buy and sell these rights among
themselves later. This approach is known as the:
A.Taxes and subsidies system
B.Cap and trade system
C.Property rights system
D.Market and command system
26)
Refer to the above table. What is the marginal revenue product if the firm employs the
12th worker?
A.$19.50
B.$26.50
C.$42.50
D.$47.50
27) For a purely competitive seller, price equals:
A.average revenue.
B.marginal revenue.
C.total revenue divided by output.
D.all of these.
28) Unintended consequences leading to inefficient outcomes are more likely with
government programs than in the private sector because:
A.in the private sector the invisible hand guides resources to their best uses when
people strive for efficiency.
B.government employees are systematically less competent than those in the private
sector.
C.government has no real motive in allocating resources efficiently.
D.laws restrict government officials from considering effects of a policy outside the
main objectives of the policy.
29) Explain why there is an incentive to cheat in collusive oligopoly. How does such
behavior threaten collusive oligopoly over time?
30) What are the four major complaints behavioral economists have with the
neoclassical assumptions?
31) Discuss the problems that can arise when a government experiences a chronic
budget deficit.
32) Discuss the arguments for and against state lotteries.
33) What is the Herfindahl index and how is it calculated?
34) What is the sociopolitical significance of income shares; that is, what might income
shares tell us about the overall character of our society? What implications might
income shares have for economic stability? For economic growth?
35) If the political system follows the median-voter model, why will many people likely
still be dissatisfied by the extent of government involvement? What do some people do
to remedy this?
36) What is meant by beaten path? How does it influence immigration decisions?