1) As it relates to R&D, the expected-rate-of-return curve, r:
A.usually slopes upward.
B.shows the cost of financing various levels of R&D.
C.varies in location depending on the location of the interest-rate cost-of-funds curve, i.
D.represents the marginal benefit element in the MB = MC decision framework.
2) When there is overproduction of a good:
A.The marginal benefit of the good exceeds its marginal cost
B.The marginal cost of the good exceeds its marginal benefit
C.The net benefit of producing extra units if the good is positive
D.The allocative efficiency is enhanced
3) In the Alcoa case of 1945, the courts held that:
A.the mere possession of monopoly power is a violation of the antitrust laws.
B.only contracts and combinations that unreasonably restrain trade are in violation of
the Sherman Act.
C.retail and wholesale firms are exempt from antitrust legislation.
D.firms that sell more than one-half of their output overseas are exempt from antitrust.
4)
Refer to the diagram. A price of $20 in this market will result in a:
A.shortage of 50 units.
B.surplus of 50 units.
C.surplus of 100 units.
D.shortage of 100 units.
5) According to Dallas Federal Reserve economist W. Michael Cox, taken to its
extreme, the logic of “buying American” implies that:
A.we should buy everything from abroad.
B.people should only consume what they can produce themselves.
C.consumers should only buy goods from other states.
D.the best quality goods are found in the United States.
6) We know with certainty that a consumer will buy a newly introduced product rather
than an existing product when the:
A.MU/P of the new product exceeds the MU/P of the existing product.
B.price of the new product is less than the price of the existing product.
C.MU of the new product is more than the MU of the existing product.
D.law of diminishing marginal utility applies to the existing product.
7) Those who may file antitrust lawsuits against violators of the Sherman Act include
the following, except:
A.Injured private parties
B.State attorneys general
C.U.S. Department of Labor
D.U.S. Department of Justice
8) The lack of job information for workers would be an example of which explanation
for wage differentials among workers?
A.Noncompeting groups
B.Compensating differences
C.Market imperfections
D.Principal-agent problems
9) If the demand for a product is elastic, then:
A.A higher tax on the product will generate more tax revenue
B.A higher tax on the product will generate less tax revenue
C.Total revenue will decrease as price decreases
D.Total revenue will remain constant as price increases
10) Which of the following methods is commonly used by farmers to ‘smooth” income
over time?
A.Producing only one crop to benefit from specialization.
B.Renting land from other farmers to increase production.
C.Entering contracts with buyers of their farm output to assure themselves of a fixed
price.
D.All of these risk-management techniques are used to hedge against short-run price
and output fluctuations.
11) With fixed costs of $400, a firm has average total costs of $3 and average variable
costs of $2.50. Its output quantity must be:
A.200 units
B.400 units
C.800 units
D.1,600 units
12)
Refer to the diagram. A shortage of 160 units would be encountered if price was:
A.$1.10, that is, $1.60 minus $.50.
B.$1.60.
C.$1.00.
D.$0.50.
13) In general, the buyers will tend to pay a bigger share of a tax on a good when:
A.The price elasticities of supply and demand are low
B.The price elasticities of supply and demand are high
C.The price elasticity of supply is low and the price elasticity of demand is high
D.The price elasticity of supply is high and the price elasticity of demand is low
14) Marginal resource cost refers to the:
A.increase in total revenue resulting from the sale of the extra output of one more
worker.
B.price at which additional units of a resource can be hired in an imperfectly
competitive resource market.
C.increase in total cost resulting from the production of one more unit of output.
D.amount by which a firm’s total resource cost increases as the result of hiring one
more unit of the resource.
15) Which of the following is not correct?
A.Other things equal, a monopsonist will pay a lower wage rate than will a firm hiring
labor competitively.
B.A monopsonistic employer will pay workers a wage rate equal to their MRP.
C.A purely competitive seller will pay workers a wage rate equal to their MRP.
D.An imperfectly competitive seller will employ additional workers as long as the MRP
of additional workers exceeds their MRC.