1) If the price of hand calculators falls from $10 to $9 and, as a result, the quantity
demanded increases from 100 to 125, then:
A.demand is elastic.
B.demand is inelastic.
C.demand is of unit elasticity.
D.not enough information is given to make a statement about elasticity.
2) Suppose that you could either prepare your own tax return in 15 hours, or hire a tax
specialist to prepare it for you in 2 hours. You value your time at $100 an hour; the tax
specialist will charge you $55 an hour. The opportunity cost of preparing your own tax
return is:
A.$40
B.$55
C.$110
D.$165
3)
Refer to the diagram. The vertical distance between ATC and AVC reflects:
A.the law of diminishing returns.
B.the average fixed cost at each level of output.
C.marginal cost at each level of output.
D.the presence of economies of scale.
4)
Refer to the demand and supply diagram that relates to the health care market. If
suppliers provide whatever quantity of health care is demanded, health care insurance
causes:
A.resources to be underallocated to the health care industry.
B.resources to be overallocated to the health care industry.
C.health care to be underconsumed.
D.the price of health care to the insured to be higher than the market price.
5)
Refer to the above graph. It shows the cost curves for a competitive firm. If the market
price falls to $0.55, the optimal output rate is:
A.0
B.15
C.20
D.More than 20, but less than 35
6) A suggested policy for industrially advanced countries to adopt to encourage
economic growth in developing countries would be:
A.Cutting debt relief for DVCs
B.Directing foreign aid to the more affluent DVCs
C.Restricting immigration of low-skilled workers from DVCs
D.Reducing tariffs and import quotas on labor-intensive products
7) The marginal productivity theory of income distribution has been criticized because:
A.the resulting distribution of income is likely to be too equal to maintain production
incentives.
B.income from inherited property is inconsistent with the theory.
C.purely competitive conditions characterize most resource markets.
D.it fails to recognize that resource demand is derived from product demand.
8) If the supply of a product is perfectly elastic and demand is downsloping, an excise
tax of $2 per unit will increase price by:
A.more than $2.
B.less than $2.
C.$2 and increase equilibrium output.
D.$2 and reduce equilibrium output.
9)
Which point or output-combination in the above graph could the nation produce only if
it experienced economic growth?
A.Combination F
B.Combination G
C.Combination C
D.Combination E
10) A major criticism of foreign aid to developing nations is that it:
A.Is capital saving rather than capital intensive
B.Provides incentives for a brain drain
C.Encourages corruption and misuse of funds
D.Gives too much power and control to the International Monetary Fund
11) The marginal revenue product of a resource depends on the following factors,
except:
A.The price of the resource
B.The price of the product
C.The quantity of the resource employed
D.The marginal product of the resource
12) In the United States, exports of goods and services accounted for about what
percentage of GDP (total output) in 2011?
A.6 percent
B.14 percent
C.24 percent
D.42 percent
13) Answer the question on the basis of the following demand schedule:
Refer to the data. If this demand schedule were graphed, we would find that:
A.its slope diminishes as we move southeast down the curve.
B.its slope diminishes as we move northwest up the curve.
C.its slope is constant throughout.
D.the data are inconsistent with the law of demand.