1) A conglomerate merger:
A.can extend the line of products sold, extend the territories in which products are sold,
or combine totally unrelated products.
B.is defined as a merger involving two firms that previously had a buyer-seller
relationship.
C.is defined as a merger involving two firms producing the same or similar products
and selling them in the same geographical market.
D.is illegal, per se.
2) The following data represent a personal income tax schedule. Answer the question on
the basis of this information.
Refer to the table. This tax is such that the after-tax distribution of income will be:
A.more equal than the before-tax distribution.
B.less equal than the before-tax distribution.
C.distributed in precisely the same way as the before-tax distribution.
D.less than the before-tax distribution by the same percentage at each income level.
3) In contrast to American firms, Japanese firms frequently make lifetime employment
commitments to their workers and agree not to lay them off when product demand is
weak. Other things being equal, we would expect Japanese firms to:
A.face more elastic product demand curves than American firms.
B.have relatively greater variable costs than American firms.
C.discontinue production at higher product prices than would American firms.
D.continue to produce in the short run at lower prices than would American firms.
4)
Refer to the diagram. The marginal utility of the third unit of X is:
A.5
B.4
C.2
D.15
5) A profit-maximizing firm’s daily total revenue is $155 with 3 workers, $200 with 4
workers, and $230 with 5 workers. The cost of each worker is $40 per day. The firm
should:
A.Not hire a fourth worker
B.Hire four workers
C.Hire five workers
D.Hire more than five workers
6) The market for milk can be characterized as a purely competitive industry. How
might the following events affect the short-run cost curves and output for a firm in the
industry? Discuss how this will affect the profit of the individual firm.
(a)A reduction in the cost of corn that is sold to dairy farmers (the producers of milk).
(b)Property taxes for the land the cows graze on increases.
(c)The market price of milk increases.
7)
If government set a maximum price of $45 in the market:
A.a shortage of 21 units would arise.
B.a surplus of 21 units would arise.
C.a surplus of 40 units would arise.
D.it would create neither a shortage nor a surplus.
8) Which of the following supermarket strategies to increase sales would be most
consistent with a behavioral economics (versus neoclassical economics) approach?
A.Distributing online coupons.
B.Providing discounts for buying in bulk.
C.Positioning frequently purchased items at the back of the store.
D.Offering price matching with other stores.
9) Wall Street bosses who believed that the huge profits of their firms prior to the
financial crisis that started in 2007 was their personal accomplishment, and that the
financial crisis was due to overregulation by government illustrates the:
A.Confirmation bias
B.Framing effect
C.Hindsight bias
D.Self-serving bias
10) Behavioral economists suggest that the reason why many consumers tend to stick to
one brand in things that they often buy, like food items, is people’s tendency to have
the:
A.Anchoring effect
B.Mental accounting effect
C.Status quo bias
D.Confirmation bias
11) Diminishing marginal utility explains why:
A.the income effect exceeds the substitution effect.
B.the substitution effect exceeds the income effect.
C.supply curves are upsloping.
D.demand curves are downsloping.
12) When the U.S. dollar decreases in value relative to foreign currencies the:
A.Demand for U.S. exports will decrease
B.Supply of U.S. exports will decrease
C.Demand for U.S. exports will increase
D.Supply of U.S. exports will remain constant
13) Which of the following would be an example of government intervention to correct
a market failure caused by buyers having inadequate information about sellers?
A.Providing unemployment compensation insurance
B.Sponsoring legislation to reduce pollution
C.Licensing of medical doctors and surgeons
D.Requiring all car drivers to buy auto insurance
14) Which of the following statements is true about falling birthrates?
A.They tend to lag behind falling death rates, allowing population growth to continue
for at least one or two more generations.
B.They tend to precede declines in death rates, causing a temporary dip in population
before it stabilizes in a generation or two.
C.They tend to lag behind declining standards of living.
D.They always cause population to decline.
15)
Refer to the payoff matrix. Bob’s Burgers and Sam’s Sandwiches are competing
restaurants in a small town. Both are considering adding pizza to their line of products.
If this is a sequential game but we don’t know who moves first, what can we say about
the final outcome?
A.There is no Nash equilibrium attainable for this game.
B.Cell A represents the only Nash equilibrium possible for this game.
C.Cell D represents the only Nash equilibrium possible for this game.
D.Cells B and C both represent possible Nash equilibrium outcomes for this game.
16) It is sometimes difficult to transfer the advanced technologies of the industrialized
nations to the DVCs because:
A.the technologies of the IACs are frequently based on relatively expensive labor and
relatively cheap capital.
B.the resource endowments of the IACs and the DVCs are highly similar.
C.international patent laws prohibit such transfers.
D.the technologies of the IACs are frequently based on relatively cheap labor and
relatively expensive capital.