1) Health maintenance organizations (HMOs) are like health clubs that operate facilities
where people can exercise and get physical training.
2) In a well-functioning cap-and-trade system for pollution rights, the right to pollute
will go to those who are able to acquire the largest net benefit from using the scarce
resource “clean air”.
3) Inventions and innovations can both be patented.
4) Neoclassical economics and behavioral economics both recognize that people make
errors in their decision making.
5) A purely competitive firm that is earning positive profits in its short-run equilibrium
situation will continue to earn positive profits at the long-run equilibrium.
6) If the cost of resources decreases, then real domestic output will increase.
7) If DI is $275 billion and the APC is 0.8, we can conclude that saving is $55 billion.
8) Anchoring leads people to consider irrelevant information when making decisions.
9) Subprime mortgage loans are so named because the rates charged are below the
prime interest rate.
10) Some economists are now proposing that patents may be detrimental to
technological advance in industries with complicated multiple-component products.
11) The law of diminishing marginal utility suggests that the total utility that a
consumer derives from a product will increase slower and slower as more of the
product is consumed.
12) One reason why foreign aid is viewed as harmful is that it promotes dependency.
13) Use the following graph to answer question about the labor resource market faced
by producers of good X:
Refer to the above graph. What will shift D2 to D1?
A.A decrease in the price of a substitute input (if the output effect > substitution effect)
B.An increase in the price of a substitute input (if the substitution effect > output effect)
C.An increase in the price of a substitute input (if the output effect > substitution effect)
D.A decrease in the price of a complementary resource
14) Which of the following is considered to be an entrepreneur?
A.A self-employed person
B.An MBA graduate hired by a firm to be its CEO
C.A production-line worker
D.A customer of a firm
15)
At equilibrium, the profit-maximizing monopolist facing the situation shown in the
graph will face a negative:
A.Average revenue
B.Total revenue
C.Marginal revenue
D.Profit
16) The Great Recession of 2007-2009 altered the prior behavior of consumers in the
economy by:
A.Shifting the consumption schedule up
B.Shifting the consumption schedule down
C.Shifting the saving schedule down
D.Moving the economy down along a stable consumption schedule
17) Mainstream economics views monetary policy as a:
A.Source of instability, similar to the view of monetarism
B.Stabilizing factor, similar to the view of monetarism
C.Source of instability, while monetarism views it as a stabilizing factor
D.Stabilizing factor, while monetarism views it as a source of instability
18) One major consequence of the overconfidence effect is that:
A.Some people cannot correct a personal trait that might be causing them to fail in
many ventures
B.Someone could persist in pursuing a failed policy despite overwhelming evidence of
the failure
C.Bad decisions can be made because people will act without pausing to see whether
their intuition is correct or not
D.Some people may wrongly believe in their forecasting ability to predict future
outcomes of risky investments
19) The most important determinant of consumption and saving is the:
A.level of bank credit.
B.level of income.
C.interest rate.
D.price level.
20) When universities announce a large tuition increase and follow it with an
announcement that more financial aid will be available, they are assuming that students
who pay full tuition:
A.Have elastic demand and students who use financial aid have inelastic demand
B.Have inelastic demand and students who use financial aid have elastic demand
C.View a college education as an inferior good and students who use financial aid view
it as a normal good
D.View a college education as a normal good and students who use financial aid view it
as an inferior good
21) The table shows the total costs for a purely competitive firm.
Refer to the above table. If the product sells for $1,200 a unit, the firm’s
profit-maximizing output is:
A.2
B.3
C.4
D.5
22) The worldwide duration of patents that begins at the time of application is:
A.10 years
B.1 year
C.20 years
D.50 years
23) What are the relationships among consumption, saving, and disposable income?
24)
25) How do economists with monetarist leaning explain the cause of the financial crisis
that led to the severe recession of 2007-2008?
26) What is the major difference between the long run and the short run in pure
competition? Explain in terms of the number of firms and the flexibility of firms.
27) B.
C.zero.
D.infinitely large.
28) Explain the differences in economic systems between North and South Korea and
the economic outcomes of the two systems.
29) Using the demand data given, complete the following table by computing total
revenue at each of the prices. Indicate whether demand is elastic, inelastic, or unitary
between each set of prices.
