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1) The parity concept of agricultural policy suggests that farmers should obtain a
constant ratio of the prices they receive for their farm products and the prices they pay
for goods and services in general.
2) Industrial unions are more likely to increase wage rates by restricting the supply of
labor than are craft unions.
3) The real opportunity cost of producing product X is the amounts of products Y, Z,
and so forth, that might have been produced if resources had not been used to produce
X.
4) The special interest effect in government is the reason why firms in some industries
are willing to pay huge amounts of money to lobbyists.
5) The Celler-Kefauver Act made vertical mergers legal, provided each firm does not
have more than 30 percent of its relevant market.
6) Noncompeting groups of workers are the result of geographic immobilities.
7) In 2011, the United States was the largest exporter in the world.
8) Technological progress in the health care industry has typically reduced costs and
increased supply.
9) The economic profits earned by monopolistically competitive sellers are zero in the
long run.
10) When diminishing marginal returns starts occurring, the addition of successive units
of a variable resource to a fixed resource will cause the firm's production to diminish.
11)
In 2011, refugees comprised a bigger portion of total legal immigration into the U.S. than
employment-based immigrants.
12) From the viewpoint of potential criminals, the probability of being fined or
imprisoned:
A.Raises the marginal utility of criminal behavior
B.Lowers the marginal utility of criminal behavior
C.Raises the marginal cost or "price" of criminal behavior
D.Lowers the marginal cost or "price" of criminal behavior
13) Use graphs to explain the scenarios below.
(a)The wage differential between labor markets with different labor demand. (Labor
supply is the same for both markets.)
(b)The wage differential between labor markets with different labor supply. (Labor
demand is the same for both markets.)
14) Prospect theory would suggest that:
A.Buyers would feel the "loss" due to an increase in the price of something they buy
more than the "gain" they'd feel if the price fell by an equal amount
B.Buyers would feel the "loss" due to an increase in the price of something they buy
less than the "gain" they'd feel if the price fell by an equal amount
C.Buyers are more conscious about changes in the size of a chocolate bar than about
changes in its price
D.Buyers are not fooled by sellers who keep their prices constant but shrink the size of
their products
15) Illegal immigration tends to:
A.increase average wages and employment where illegal workers are complements to
domestic-born workers.
B.increase average wages and employment where illegal workers are substitutes for
domestic-born workers.
C.increase average wages and employment whether illegal workers are complements to
or substitutes for domestic-born workers.
D.reduce average wages and employment whether illegal workers are complements to
or substitutes for domestic-born workers.
16) A merger between one firm and another firm that is its supplier is known as a:
A.Horizontal merger
B.Vertical merger
C.Conglomerate merger
D.Parallel merger
17) 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 because 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.
18)
Refer to the above table. The marginal revenue product of the third unit of resource is:
A.$4
B.$8
C.$18
D.$72
19) A monopolistically competitive firm has a:
A.highly elastic demand curve.
B.highly inelastic demand curve.
C.perfectly inelastic demand curve.
D.perfectly elastic demand curve.
20) In terms of absolute dollar volume, the top 3 leaders in world exports are:
A.Japan, China, and the European Union.
B.the United States, England, and Canada.
C.Germany, England, and the United States.
D.China, Germany, and the United States.
21) T-Shirt Enterprises is selling in a purely competitive market. It is producing 3000
units, selling them for $2.00 each. At this level of output, the average total cost is 2.50
and the average variable cost is $2.20. Based on these data, the firm should:
A.Shut down in the short run
B.Decrease output to 2500 units
C.Continue to produce 3000 units
D.Increase output to 3500 units
22) An increase in the price of a product will reduce the amount of it purchased
because:
A.supply curves are upsloping.
B.the higher price means that real incomes have risen.
C.consumers will substitute other products for the one whose price has risen.
D.consumers substitute relatively high-priced for relatively low-priced products.
23) Answer the question on the basis of the following demand and supply data:
Refer to the data. The demand for this product is elastic in the $8-$7 price range.
24) In the United States, the lifetime distribution of income is more equal than the
annual distribution. This statement is:
A.true because the rich have gotten richer and the poor have gotten poorer.
B.true because there is considerable income mobility over time.
C.false because people tend to stay in the same income quintile over extended periods
of time.
D.false because the rich have gotten richer and the poor have gotten poorer.
25) "Pork-barrel" legislation that contains funding for hundreds of earmarks throughout
numerous states often reflects:
A.the paradox of voting.
B.logrolling.
C.the benefits-received principle.
D.adverse selection.
26) The Herfindahl index is a measure of:
A.Profitability in an industry
B.The price level in an industry
C.The costs in an industry
D.Market power in an industry
27) Answer the question on the basis of the following information for a pure
monopolist:
If the given profit-maximizing monopolist is able to price discriminate, charging each
customer the price associated with each given level of output, how many units will the
firm produce?
A.1
B.2
C.3
D.4
28) What conditions are necessary for economic competition to exist?
29) Give three examples of government failure in the news.
30) Use a supply and demand diagram to show how migration affects wages in a
high-wage country and a low-wage country.
31) Give the most important source of revenue for local governments and their most
important expenditure.
32) It is stated that the avenues of economic growth are essentially the same for both
industrially advanced and developing nations. What are the two basic avenues?
