1) if products c and d are close substitutes, an increase in the price of c will:
a.tend to cause the price of d to fall.
b.shift the demand curve of c to the left and the demand curve of d to the right.
c.shift the demand curve of d to the right.
d.shift the demand curves of both products to the right.
2)
symbols: q = number of workers demanded; w = wage rate; and vtp = value of the
cumulative total product (output) of the particular number of workers.
assumptions: (1) the current wage in zinnia is $20 and the current wage in marigold is
$12; (2) full employment exists in both countries.
refer to the above data, symbols, and assumptions. if migration is costless and
unimpeded, the wage in both countries will equalize at:
a.$16.
b.$18.
c.$20.
d.$14.
3)
Refer to the above data. If the firm is hiring workers under purely competitive
conditions at a wage rate of $10, it will employ:
A.2 workers.
B.3 workers.
C.4 workers.
D.5 workers.
4) The following information for a hypothetical economy. All values are in nominal
terms.
M = $100
V = 2
Ca = $160
Xn = $10
G = $10
Refer to the above information. If the price level P is 4, Q is:
A.50.
B.100.
C.200.
D.500.
5) trade adjustment assistance:
a.helps worker dislocated by international trade without erecting barriers that impede
foreign trade.
b.subsidizes new firms trying to compete in international markets.
c.protects domestic jobs by reducing imports.
d.establishes a series of gradually loosened import quotas so that domestic firms have
time to improve their international competitiveness or transition to new markets.
6) if an industry creates externalities so that resources are overallocated to the industry:
a.a principal-agent problem must be present.
b.the industry is producing a public good.
c.external costs are involved.
d.external benefits are involved.
7) when a purely competitive firm is in long-run equilibrium:
a.marginal revenue exceeds marginal cost.
b.price equals marginal cost.
c.total revenue exceeds total cost.
d.minimum average total cost is less than the product price.
8) if the secular trend of labor productivity rises from 2 percent per year to 4 percent,
the number of years that it will take for the standard of living to double will decline by
about:
a.5 years.
b.10 years.
c.17 years.
d.23 years.
9) (Last Word) Yale University’s “EPI” stands for:
A.Environmental Protection Index.
B.Ecological Protection Index.
C.Environmental Performance Index.
D.Ecological Performance Index.
10) suppose that lenders want to receive a real rate of interest of 5 percent, and that they
expect inflation to remain steady at 2 percent in the coming years. based on this, lenders
should charge a nominal interest rate of:
a.2 percent.
b.3 percent.
c.5 percent.
d.7 percent.
11) According to climate change scientists, over the next 50 years the earth’s average
temperature is expected to:
A.rise anywhere from 2.2 to 10 degrees Fahrenheit.
B.rise anywhere from 1 to 4.5 degrees Fahrenheit.
C.fall anywhere from 2.2 to 4.5 degrees Fahrenheit.
D.remain constant overall, but with dramatic increases and decreases in certain regions.
12) Which of the following supports the contention that pure competitors have a strong
incentive to engage in R&D?
A.Entry to purely competitive industries is easy and thus profit from innovation is
quickly competed away.
B.Pure competitors cannot risk being complacent about innovation, since a new
product, production technique, or distribution method could undermine their normal
profit and drive them out of the market.
C.Most purely competitive industries are increasing-cost industries.
D.Pure competitors are happy to earn only a normal profit.