1) The largest source of tax revenue for state governments is the property tax.
2) A decrease in supply of X increases the equilibrium price of X, which reduces the
demand for X and automatically returns the price of X to its initial level.
3) An example of an adverse selection problem is in insurance, where the people most
likely to claim insurance payouts are the people who will seek to buy the most generous
policies.
4) The demand curve of a monopolistically competitive firm is more elastic than that of
a pure monopolist.
5) The appeal to government for special benefits at taxpayers’ or someone else’s
expense is the paradox of voting.
6) The collective action problem makes it hard for voters to counter the influence of
special-interest groups.
7) Government loan guarantees tend to socialize gains and privatize losses.
8) The corruption and poor administration that are common to the public sectors of
many DVCs suggest that government may not be very effective in promoting economic
growth.
9) The U.S. poverty rate for the elderly (65 and over) is higher than for the general
population.
10) The Gini coefficient or ratio is a summary measure of income inequality derived
from the Lorenz curve.
11) The following table gives data for the market for a product.
Refer to the table above. If an excise tax of $3 per unit is imposed on this product, the
new equilibrium price with tax will be:
A.$6
B.$5
C.$4
D.$2
12) Deregulation can solve the problem of regulatory capture and increase economic
efficiency:
A.If the deregulated industry quickly evolves into a monopoly
B.If the deregulated industry becomes more competitive
C.When the regulations covering the industry are tightened
D.When the industry ends up generating substantial external costs
13) About ____ percent of business R&D spending is for basic research.
A.1
B.5
C.20
D.75
14) Other things equal, biodiesel becomes economically viable (as or less costly than
using oil) when oil prices reach _____ or more per barrel.
A.$60
B.$80
C.$100
D.$120
15) Suppose that a pure monopolist can sell 20 units of output at $10 per unit and 21
units at $9.75 per unit. The marginal revenue of the 21st unit of output is:
A.$9.75.
B.$204.75.
C.$4.75.
D.$.25.
16) Economists who contend that oligopolists have a strong incentive to engage in
R&D say that:
A.the undistributed profits of oligopolists give them a source of readily available,
relatively low-cost funds for financing R&D.
B.entry barriers enable oligopolists to sustain the profit it gains from innovation.
C.the large size of oligopolists’ R&D departments allows them to use very specialized,
expensive R&D equipment and employ teams of specialized researchers.
D.all of these are true.
17)
Refer to data. Marginal utility becomes negative beginning with the:
A.first unit.
B.second unit.
C.third unit.
D.fourth unit.
18) The fixed cost of the firm is $500. The firm’s total variable cost is indicated in the
table.
Refer to the above table and information. The average variable cost of the firm when 5
units of output are produced is:
A.$100
B.$200
C.$300
D.$400
19)
Refer to the given data. The marginal revenue product of the second worker is:
A.$16.
B.$32.
C.$8.
D.$4.
20) For a monopsonist in the labor market, the marginal resource cost of labor is:
A.Higher than the wage rate or price of labor
B.Less than the wage rate or price of labor
C.Equal to the wage rate or price of labor
D.Inversely related to the wage rate or price of labor
21) Suppose that a new band, “Balin and the Wolf Riders,” tries to sell its music on the
internet. Economists would expect:
A.all of those enjoying the music to pay for downloads and compensate the band for its
costs.
B.some of those enjoying the music to “free ride” through illegal file sharing and digital
piracy.
C.government to tax those attempting to download the band’s music.
D.there to be no consumer surplus for those who download the band’s music.
22) Long-run real wages in the United States have:
A.risen because growth in the demand for labor has exceeded growth in the supply of
labor.
B.risen because the supply of labor has fallen over time.
C.fallen because growth in the supply of labor has exceeded growth in the demand for
labor.
D.fallen because the demand for labor has fallen over time.
23) From 1960 to 2012, government purchases as a percentage of U.S. output have:
A.Remained approximately constant at about 50 percent
B.Decreased from about 22 percent to about 20 percent
C.Increased from about 20 percent to about 40 percent
D.Decreased from about 50 percent to about 25 percent
24) A consumer has two basic choices: rent a DVD movie for $4.00 and spend 2 hours
watching it, or spend $13 for a miniature golf game that takes 1 hour. If the marginal
utilities of the movie and the miniature golf game are equal, and the consumer values
time at $12 an hour, the rational consumer will most likely:
A.Rent the movie instead of playing miniature golf
B.Play miniature golf instead of renting the movie
C.Be indifferent between the movie and the miniature golf game
D.Not have enough basis for making a utility-maximizing decision
25) A monopolistically competitive firm is producing at an output level in the short run
where average total cost is $4.50, price is $4.00, marginal revenue is $2.50, and
marginal cost is $2.50. This firm is operating:
A.With positive profits
B.With a loss
C.At the break-even point
D.At a non-optimal level of output
26)
Refer to the given data. If the market wage rate is $8 and the firm hires its
profit-maximizing number of workers, the firm’s total revenue will exceed its total wage
payment by:
A.$20.
B.$16.
C.$12.
D.$8.
27) Even in democratic governments, we tend to have a problem with accountability
due to the following reasons, except:
A.So many government activities are undertaken simultaneously
B.Civil-service protections apply to many bureaucrats
C.The electorate cannot monitor each and every action of the government
D.There is the markets’ self-correcting mechanism in government
28) A firm combines two resources, X and Y, to produce an output level Q in a purely
competitive market. The cost of a unit of X is $15 and the cost of a unit of Y is $8. The
marginal product of X is 30 units and the marginal product of Y is currently 24 units at
output level Q. What would you recommend that the firm do given this resource
combination?
29) Should all pollution be banned? Why might some level of pollution be
economically efficient?
30) What are the case against and the case for the minimum wage? What does the
evidence indicate?
31) What determines the economic rent for land? Explain from a supply and demand
perspective.
32) Do changes in relative inflation rates affect the value of a nations currency?
33) Is there a specific amount of time that distinguishes the long run from the short run?
Is the amount of time important? Explain.
34) Why study the economics of agriculture in the United States? Give five reasons.
35) Evaluate from an economic perspective the issue of whether chief executive officers
(CEOs) of corporations are overpaid.
36) (Consider This) Use a pizza pie analogy to discuss the tradeoff between income
equality and economic efficiency.