1) A firm pays the market equilibrium wage of $15.00 an hour, and the workers produce
25 units of output an hour. If the firm adopts an efficiency-wage policy, then the wage
rate for these workers would be expected to:
A.Increase and productivity to decrease
B.Decrease and productivity to increase
C.Increase and productivity to increase
D.Decrease and productivity to decrease
2) The MR = MC rule applies:
A.to firms in all types of industries.
B.only when the firm is a “price taker.”
C.only to monopolies.
D.only to purely competitive firms.
3) The crowding of women, African-Americans, and certain ethnic groups into less
desirable, lower-paying occupations is:
A.Employment discrimination
B.Human capital discrimination
C.Statistical discrimination
D.Occupational segregation
4) Excess capacity implies:
A.Productive inefficiency
B.Allocative inefficiency
C.Productive efficiency
D.Allocative efficiency
5) Answer the next four questions on the basis of the following table, which shows the
rankings of the public goods by three voters: A, B, and C.
(a)What will be the choice between a new park and a new bridge?
(b)What will be the choice between a new school and a new park?
(c)What will be the choice between a new bridge and a new school?
(d)What do the rankings in the table indicate about choices made under majority rule?
6) Answer the question based on the following payoff matrix for a duopoly in which the
numbers indicate the profit in millions of dollars for each firm:
Refer to the payoff matrix above. If Firm A adopts the low-price strategy, then Firm B
would adopt the:
A.High-price strategy and earn $250
B.High-price strategy and earn $200
C.Low-price strategy and earn $325
D.Low-price strategy and earn $175
7) Developing countries (DVCs) can be subdivided into the following groups, except:
A.Low-income economies
B.High-income economies
C.Lower-middle-income economies
D.Upper-middle-income economies
8) Answer the question on the basis of the accompanying table that shows average total
costs (ATC) for a manufacturing firm whose total fixed costs are $10:
Refer to the data. The marginal cost of the fourth unit of output is:
A.$2.
B.$12.
C.$37.
D.$16.
9) For which product is the income elasticity of demand most likely to be negative?
A.Computer software
B.Used clothing
C.Apps for iPads
D.Bread
10) Which of the following is a valid counterargument against using tariffs to protect
high wages from cheap foreign labor?
A.The benefits of such tariff policy will go to consumers, not workers
B.The benefits of such tariff policy will go to businesses, not workers
C.Wage rates in a nation are largely determined by productivity, not trade tariffs
D.The economy may become overheated, thus increasing inflation
11) The state legislature has cut Gigantic State University’s appropriations. GSU’s
Board of Regents decides to increase tuition and fees to compensate for the loss of
revenue. The board is assuming that the:
A.demand for education at GSU is elastic.
B.demand for education at GSU is inelastic.
C.coefficient of price elasticity of demand for education at GSU is unity.
D.coefficient of price elasticity of demand for education at GSU is greater than unity.
12)
Refer to the long-run cost curve for a firm. If the firm produces output Q1 at an average
total cost of ATC1, then the firm is:
A.producing the profit-maximizing output but is failing to minimize production costs.
B.incurring X-inefficiency but is realizing all existing economies of scale.
C.incurring X-inefficiency and is failing to realize all existing economies of scale.
D.producing that output with the most efficient combination of inputs and is realizing
all economies of scale.
13) Some insurance companies have teamed with hospitals and doctors to provide
discounts for their services. The lists of cooperating doctors and hospitals are known as:
A.Health maintenance organizations
B.Preferred provider organizations
C.Diagnosis-related-groups
D.Health alliances
14) According to behavioral economics, the difficulty among many people to stick to a
diet or an exercise plan is partly explained by:
A.Myopia
B.Mental accounting
C.Anchoring
D.Framing
15) If the total utility from consuming five units of a product is 245, and the marginal
utility of a sixth unit is 5, then the total utility from consuming six units would be:
A.240
B.250
C.49
D.1225
16) Congressional representatives have called for extensive ergonomics regulations to
reduce strains and injuries from repetitive activities by workers. Such regulation, if
passed, would be a good example of:
A.industrial regulation.
B.the principal-agent problem.
C.the free-rider problem.
D.social regulation.
17) The price elasticity of demand for food tends to be:
A.Higher in richer nations
B.Lower in richer nations
C.The same in rich and poor nations
D.Unrelated to per capita wealth
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 supply may
have been caused by:
A.an increase in the wages paid to workers producing this good.
B.the development of more efficient machinery for producing this commodity.
C.this product becoming less fashionable.
D.an increase in consumer incomes.
19) Most of the DVCs find it difficult to accumulate capital goods because:
A.the terms of trade prohibit the inflow of private capital from the advanced nations.
B.it is very difficult to restrict consumption and thus to free resources for capital goods
production.
C.domestic monetary policies designed to achieve price stability result in low interest
rates, thereby discouraging investment.
D.investment is interest inelastic in DVCs.