1)
Refer to the diagram, where Sd and Dd are the domestic supply and demand for a
product and Pc is the world price of that product. With a PcPt per-unit tariff, per-unit
revenue received by domestic and foreign producers respectively will be:
A.Pc and Pa.
B.Pa and Pc.
C.Pa and Pt.
D.Pt and Pc.
2) If the price of a product decreases, we would expect:
A.Demand to increase
B.Quantity supplied to decrease
C.Supply to decrease
D.Quantity supplied to increase
3) A public good:
A.can be profitably produced by private firms.
B.is characterized by rivalry and excludability.
C.produces no positive or negative externalities.
D.is available to all and cannot be denied to anyone.
4) If you pay $1,980 annually on an $18,000 loan and the rate of inflation is 3 percent,
then the:
A.Real rate of interest is 8 percent
B.Nominal rate of interest is 8 percent
C.Real rate of interest is 11 percent
D.Nominal rate of interest is 14 percent
5) In effect, tariffs on imports are:
A.special taxes on domestic producers.
B.subsidies to domestic consumers.
C.subsidies to foreign producers.
D.subsidies for domestic producers.
6) A consumer finds only three products, X, Y, and Z, are for sale. The amount of utility
which their consumption will yield is shown in the table below. Assume that the prices
of X, Y, and Z are $10, $2, and $8, respectively, and that the consumer has an income of
$74 to spend.
(a)Complete the table by computing the marginal utility per dollar for successive units
of X, Y, and Z to one or two decimal places.
(b)How many units of X, Y, and Z will the consumer buy when maximizing utility and
spending all income? Show this result using the utility maximization formula.
(c)Why would the consumer not be maximizing utility by purchasing 2 units of X, 4
units of Y, and 1 unit of Z?
7) An international agreement reached in 1994 by the world’s trading nations provides
for:
A.an increase in export subsidies on agricultural products.
B.an increase in agricultural price supports.
C.a reduction of tariffs on agricultural products.
D.an international research organization designed to discover nonfood uses of
agricultural output.
8) Under pure competition in the long run:
A.neither allocative efficiency nor productive efficiency is achieved.
B.both allocative efficiency and productive efficiency are achieved.
C.productive efficiency is achieved, but allocative efficiency is not.
D.allocative efficiency is achieved, but productive efficiency is not.
9)
Refer to the diagram. Starting at point E, the production of successive units of bread
will cost:
A.a constant 8 units of tractors.
B.a constant 6 units of tractors.
C.1/8, 1/6, 1/4, and 1/2 units of tractors.
D.1/2, 1/4, 1/6, and 1/8 units of tractors.
10) The “Inverted-U theory” of R&D shows the relationship between:
A.Marginal benefit and marginal cost of R&D
B.Number of R&D projects and the sources of R&D funds
C.R&D expenditures and expected return
D.Market concentration ratio and R&D expenditures
11) Whole Foods Market’s personal wellness accounts for employees:
A.create significant moral hazard in the purchase of health care services.
B.provide bonus payments for employees meeting certain health criteria and
participating in company wellness activities.
C.encourage employees to consider the opportunity costs of their medical spending.
D.encourage employees to overspend for health care as they view it as “free money.”
12) Price floors and ceiling prices:
A.both cause shortages.
B.both cause surpluses.
C.cause the supply and demand curves to shift until equilibrium is established.
13) If MUa/Pa = 100/$35 = MUb/Pb = 300/? = MUc/Pc = 400/?, the prices of products
B and C in consumer equilibrium:
A.cannot be determined from the information given.
B.are $105 and $140 respectively.
C.are $105 and $175 respectively.
D.are $100 and $200 respectively.
14) The price of medical care in the United States has:
A.remained relatively unchanged in recent years.
B.risen slower than the overall price level.
C.risen at the same pace as the overall price level.
D.risen faster than the overall price level.