1) The United States produces more than twice as much output per million BTUs of
energy consumed than it did in 1950.
2) Only politicians, not the voters, are to blame for the problem of chronic budget
deficits that many nations face.
3) The standard data on income distribution do not include the value of noncash
transfers as income.
4) The optimal quantity of a public good is where the total benefits from it are equal to
the total costs of producing it.
5) A labor union may engage in a lockout if the collective bargaining process breaks
down.
6) The largest source of local government’s revenue is the sales tax.
7) Union membership among workers in America has been declining since the 1950’s.
8) The U.S. has a sizable trade surplus in services.
9) Isolating transactions from the overall set of consumption options is known as
anchoring.
10) The choice of the most efficient production technique is not affected by how much
buyers want to buy the product.
11) As technologies improve, the costs of producing alternatives will likely fall,
reducing the cost of replacing oil.
12) The invisible hand refers to the many indirect controls that the federal government
imposes in a market system.
13) If an economic expansion in the economy caused an increase in the demand for
loanable funds, what would be the effect on the interest rate and the quantity of funds
loaned in the credit market?
A.Interest rates would increase and the quantity of funds loaned would decrease
B.Interest rates would decrease and the quantity of funds loaned would increase
C.Interest rates and the quantity of funds loaned would decrease
D.Interest rates and the quantity of funds loaned would increase
14)
Refer to the above graph. Assume the market for this product is initially in equilibrium
at the intersection of D2 and S1. The shift in supply from S1 to S2 is due to an excise
tax imposed on the product. The excise tax revenue collected by the government will
be:
A.$60
B.$36
C.$32
D.$24
15) Suppose the balance on the financial account is -$300 billion and the balance on the
capital account is +$5 billion. The size of the current account is:
A.+$295 billion.
B.-$295 billion.
C.+$305 billion.
D.+$5 billion.
16) If an economy is operating inside its production possibilities curve for consumer
goods and capital goods, it:
A.can only produce more consumer goods by producing fewer capital goods.
B.can only produce more capital goods by producing fewer consumer goods.
C.can produce more of both consumer goods and capital goods by using resources that
are currently idle.
D.must improve its technology to produce more output.
17) One can say with certainty that equilibrium price will decline when supply:
A.and demand both decrease.
B.increases and demand decreases.
C.decreases and demand increases.
D.and demand both increase.
18) Which of the following goods (with their respective income elasticity coefficients in
parentheses) will most likely suffer a decline in demand during a recession?
A.Dinner at a nice restaurant (+1.8)
B.Chicken purchased at the grocery store for preparation at home (+0.25)
C.Facial tissue (+0.6)
D.Plasma screen and LCD TVs (+4.2)
19) When people react to (or perceive) identical situations differently in different
contexts, we call that the:
A.Planning fallacy
B.Framing effect
C.Confirmation bias
D.Availability heuristic
20) When a purely competitive firm is in long-run equilibrium:
A.marginal revenue exceeds marginal cost.
B.price equals marginal cost.
C.total revenue exceeds total cost.
D.minimum average total cost is less than the product price.
21) Answer the question based on the demand and cost schedules for a monopolistically
competitive firm given in the table below.
Refer to the above table. At the profit-maximizing level of output, marginal revenue is:
A.$0
B.$4
C.$5
D.$8
22) In fisheries management, a fishery is defined as:
A.an operation that breeds and releases fish and other marine animals into the wild.
B.a stock of fish or other marine animals that can be thought of as a logically distinct
group.
C.a company that harvests fish or other marine animals.
D.a government organization that regulates the harvesting of fish and other marine
animals.
23) Which of the following is the largest expenditure item of local governments?
A.Highways
B.Welfare
C.Education
D.Public safety
24) Which of the following is an example of market failure?
A.Negative externalities.
B.Positive externalities.
C.Public goods.
D.All of these.
25) How does the use of money differ from the use of barter in the exchange of goods
and services?
26) How would you describe the demand curve for the purely competitive firm? For the
industry?
27) Why would illegal immigration have an effect on the prices of goods and services
produced by illegal workers? Who benefits from these lower product and service
prices?
28) Discuss the fixed and variable costs of operating a farm. Which makes up a greater
percentage of the total costs?
29) What were the two basic means of control by government as substitute for, or to
supplements to, market forces in monopolized industries?
30) What is the relationship between rent-seeking expenditures and monopoly?
31) Explain the difference between cardinal and ordinal utility. Which is better to use
when modeling consumer behavior and why?