1) If a technological advance increases a firm’s labor productivity, we would expect its:
A.average total cost curve to rise.
B.average total cost curve to fall.
C.total cost curve to rise.
D.average total cost curve to be unaffected.
2) Suppose the only three existing manufacturers of video game players signed a
written contract by which each agreed to charge the same price for products and to
distribute their products only in the geographical area assigned them in the contract.
This best describes:
A.cost-plus pricing.
B.multiproduct pricing.
C.a cartel.
D.price leadership.
3) Answer the question on the basis of the following information: Suppose 30 units of
product A can be produced by employing just labor and capital in the four ways shown
below. Assume the prices of labor and capital are $2 and $3 respectively.
Refer to the information. Which technique is economically most efficient in producing
A?
A.I.
B.II.
C.III.
D.IV.
4) Madison, the CPA, is faster than Mason, the house painter, at both accounting
services and painting. This means that:
A.there is no reason for them to trade services.
B.Madison should trade her accounting services for Mason’s painting services, so long
as Madison is relatively more efficient at accounting services.
C.Madison should trade her accounting services for Mason’s painting services, so long
as Madison is relatively more efficient at painting.
D.Madison has the comparative advantage in both services.
5) Answer the question on the basis of the following five data sets wherein it is assumed
that the variable shown on the left is the independent variable and the one on the right is
the dependent variable. Assume in graphing these data that the independent variable is
shown on the horizontal axis and the dependent variable on the vertical axis.
Refer to the data sets. The vertical intercept is negative for:
A.none of the data sets.
B.data sets 1 and 3 only.
C.data sets 2 and 4 only.
D.data sets 1 and 5 only.
6) The reason for the long-run decline of the agricultural industry is that the:
A.Increases in the demand for farm products have been greater than the increases in the
supply of farm products
B.Increases in the demand for farm products have been less than the increases in the
supply of farm products
C.Decreases in the demand for farm products have been less than the increases in the
supply of farm products
D.Increases in the demand for farm products have been greater than the decreases in the
supply of farm products
7) A firm’s supply curve is upsloping because:
A.the expansion of production necessitates the use of qualitatively inferior inputs.
B.mass production economies are associated with larger levels of output.
C.consumers envision a positive relationship between price and quality.
D.beyond some point the production costs of additional units of output will rise.
8) If price supports are established, and producers are producing more than consumers
want to buy at that price, to maintain producers’ income the government will have to:
A.Reduce price supports
B.Increase price supports
C.Buy the surplus
D.Restrict output
9) A person will be more likely to migrate the:
A.greater the distance they will have to travel from their country of origin.
B.greater the wages in their prospective new country relative to wages in their home
country.
C.fewer the number of “beaten paths” that exist to their prospective new country.
D.greater the number of children they have.
10) The slope of the typical production possibilities curve:
A.is positive.
B.increases as one moves southeast along the curve.
C.is constant as one moves down the curve.
D.decreases as one moves southeast along the curve.
11) A union might increase the demand for the labor services of its members by:
A.decreasing the demand for the product it is producing.
B.decreasing the prices of complementary inputs.
C.decreasing the prices of substitute inputs.
D.increasing the prices of complementary inputs.
12) In the circular flow model of the market system, business firms:
A.Buy products and resources
B.Sell products and resources
C.Buy products and sell resources
D.Sell products and buy resources
13) Answer the question on the basis of the following information. The demand for
commodity X is represented by the equation P = 10 – 0.2Q and supply by the equation P
= 2 + 0.2Q.
Refer to the given information. If demand changed from P = 10 – .2Q to P = 7 – .3Q, the
new equilibrium price is:
A.$2
B.$4
C.$6
D.$7
14)
Assumptions: (1) The demand for labor in Alphania and Betania are as shown by DA
and DB, respectively; (2) Alphania’s native labor force is F and that of Betania is g; (3)
wage L in Alphania is equal to wage m in Betania; and (4) full employment exists in
both countries.
Refer to the given diagram and assumptions. If migration is costless and unimpeded,
business income will:
A.decrease in Betania but increase in Alphania.
B.increase in Betania but decrease in Alphania.
C.decrease in both Alphania and Betania.
D.increase in both Alphania and Betania.
15) Suppose the transportation industry has been regulated for many years. Government
now proposes to deregulate the industry, only to find that firms in the industry oppose
this action. This is consistent with the:
A.public interest theory of regulation.
B.theory of natural monopolies.
C.legal cartel theory of regulation.
D.Alcoa and U.S. Steel court decisions.
16) The so-called 90-10 ratio (the hourly wage at the 90th percentile compared to that at
the 10th percentile) was roughly how much in 2007?
A.2.5
B.4.5
C.8.0
D.10.5
17) A firm that is hiring labor in a purely competitive labor market and selling its
product in a purely competitive product market will maximize its profit by hiring labor
until:
A.marginal revenue product is zero.
B.marginal revenue product exceeds marginal resource (labor) cost by the greatest
amount.
C.marginal resource cost is zero.
D.marginal revenue product equals marginal resource (labor) cost.
18) Other things equal, if the fixed costs of a firm were to increase by $100,000 per
year, which of the following would happen?
A.Marginal costs and average variable costs would both rise.
B.Average fixed costs and average variable costs would rise.
C.Average fixed costs and average total costs would rise.
D.Average fixed costs would rise, but marginal costs would fall.
19)
The industry represented by the graph above must be one where:
A.Resource prices rise when the industry contracts
B.Resource prices fall when the industry expands
C.Resource prices fall when the industry contracts
D.Resource prices are unaffected by the industry’s expansion