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1) The concept of price elasticity of demand measures:
A.the slope of the demand curve.
B.the number of buyers in a market.
C.the extent to which the demand curve shifts as the result of a price decline.
D.the sensitivity of consumer purchases to price changes.
2) About what price per barrel of oil is necessary for biodiesel to become economically
viable as an alternative energy source?
A.$30 per barrel
B.$50 per barrel
C.$100 per barrel
D.$80 per barrel
3) The Great Recession of 2007-2009 caused U.S. family wealth to shrink, mostly due
to the sharp decline in:
A.Family incomes
B.Consumer spending
C.Average house prices
D.Employment and wages
4) If a nation is initially on its production possibilities curve, then it can increase its
production of one good only by:
A.Decreasing the production of the other good
B.Increasing the production of the other good
C.Holding constant the production of the other good
D.Decreasing the price of the other good
5) Which act sharpened and clarified the provisions of the Sherman Act, and sought to
outlaw the techniques that firms might use to gain monopoly power?
A.Clayton Act
B.Wheeler-Lea Act
C.Celler-Kefauver Act
D.Federal Trade Commission Act
6) In the tables below are the demands for labor and the levels of domestic output that
can be produced at each level of employment in two countries.
(a)What would the wage rates be if employment was 200 in country X and 140 in
country Y?
(b)What would total wages paid and business incomes be in each country given
employment conditions in (a)?
(c)If 20 workers migrate from country Y to country X, what will happen to wage rates,
output, business incomes, and total wages?
7) Suppose that the labor cost-total cost ratio in industry A is 82 percent while in
industry B it is 21 percent. Other things equal, labor demand will be:
A.more elastic in industry A than in B.
B.relatively inelastic in both industries A and B.
C.more elastic in industry B than in A.
D.relatively elastic in both industries A and B.
8) Marginal cost is the:
A.rate of change in total fixed cost that results from producing one more unit of output.
B.change in total cost that results from producing one more unit of output.
C.change in average variable cost that results from producing one more unit of output.
D.change in average total cost that results from producing one more unit of output.
9) A tax structure is called progressive when:
A.The average tax rate decreases if income decreases
B.High-income groups pay more taxes absolutely than do low-income groups
C.The average tax rate on low-income groups exceeds the tax rate of high-income
groups
D.The average tax rate is constant, but the absolute amount of taxes paid increases with
income increases
10) "International trade" refers to:
A.purchasing or selling currently produced goods or services across an international
border.
B.any transaction across an international border.
C.any financial transaction across an international border.
D.buying or selling of preexisting assets across an international border.
11) Private ownership and property rights in a market system have the following
implications, except:
A.Individuals are free to take on the financial risks involved in a business
B.Trades that take place in the economy are mutually-agreeable transactions among
individuals
C.Economic agents are allowed to act in their own self-interest
D.Large firms are allowed to coerce other firms and individuals
