1) Assuming competitive markets with typical supply and demand curves, which of the
following statements is correct?
A.An increase in supply with a decrease in demand will result in an increase in price.
B.An increase in supply with no change in demand will result in an increase in price.
C.An increase in supply with no change in demand will result in a decline in sales.
D.An increase in demand with no change in supply will result in an increase in sales.
2) In which of the cases given below will the elasticity of demand for workers who
produce yo-yos be most inelastic? The price elasticity of demand for yo-yos is:
A.5, and labor’s share of total costs is 20 percent
B.5, and labor’s share of total costs is 75 percent
C..1, and labor’s share of total costs is 20 percent
D..1, and labor’s share of total costs is 75 percent
3) What is the net effect of illegal immigration on total employment in the United
States?
A.The net effect is zero, as illegal immigrant workers displace domestic-born workers
on a one-for-one basis.
B.Total employment increases, but with some substitution of illegal immigrants for
domestic-born workers.
C.Total employment decreases.
D.Total employment increases, with no displacement of or substitution for
domestic-born workers.
4) The following data represent a personal income tax schedule. Answer the question on
the basis of this information.
Refer to the above table. As income increases, the marginal tax rate:
A.Increases
B.Decreases
C.Remains constant
D.Has no definite pattern
5) The major factor contributing to lower prices for many farm products in 1998 and
1999 was:
A.A rise in the cost of farm equipment
B.A drop in the value of farmland prices
C.Greater demand for food and higher interest costs
D.Reduced export demand and strong crop production
6) Critics of the minimum wage argue that as an antipoverty device it is “poorly
targeted.” By this they mean that:
A.the minimum wage only applies to a small percentage of the labor force.
B.many who benefit from the minimum wage are teenagers or not poor.
C.the government has been unable to enforce the minimum wage.
D.the average level of wages in the economy is considerably higher than the minimum
wage.
7) What development in the 1970s and 1980s is considered one of the most extensive
experiments in industrial policy in the last half-century?
A.Extensive antitrust enforcement
B.Increased breakups of monopolies
C.Deregulation of industries
D.Fostering natural monopolies
8) All of the following are assumed to be constant when the supply curve for a product
is drawn, except the:
A.Price of the product
B.State of technology
C.Number of producers
D.Price of inputs used to make the product
9) Compensating differences in wages:
A.compensate workers for differences in their human capital.
B.are wage differences that compensate for differences in the desirability of jobs.
C.describe the tendency for the wages of all occupations to adjust to the median level.
D.do not exist if jobs have different nonmonetary characteristics.
10) The U.S. Steel case of 1920 and the Alcoa case of 1945 dealt with which antitrust
issue?
A.To what extent should firms be limited in buying plant and equipment from other
firms?
B.Should an industry be judged by its behavior or by its structure?
C.Should the steel and aluminum industries be considered natural monopolies?
D.Should mergers be permitted between firms in closely related industries?
11) A person observes that consumer prices often fall when a nation experiences
economic growth. The person then concludes that falling consumer prices leads to
economic growth. This would be an example of:
A.The fallacy of composition
B.Biases
C.Confusing correlation and causation
D.The use of loaded terminology
12) Wage differentials occur for all the following reasons except:
A.Homogeneous workers
B.Labor market imperfections
C.Noncompeting groups of workers
D.Compensating differences to offset nonmonetary differences in jobs