1) The demand curve for a purely competitive industry is perfectly elastic, but the
demand curves faced by individual firms in such an industry are downsloping.
2)
The arguments that illegal immigrants do not take away jobs from legal residents, or that
illegal immigrants displace legal residents from jobs on a one-to-one basis are both false.
3) About two-thirds of all federal spending is for national defense.
4) The Social security tax is regressive because it applies only on income below a “cap”
income level.
5) Strict enforcement of antitrust laws will generally complement the economic
objective of encouraging new technologies that require large amounts of capital
investment.
6) The question is based on the following table that provides information on the
production of a product that requires one variable input.
Refer to the above table. Marginal product is largest for the:
A.Second unit of variable input
B.Third unit of variable input
C.Seventh unit of variable input
D.Ninth unit of variable input
7)
Refer to the diagram. This firm is selling in:
A.a market in which there are an extremely large number of other firms producing the
same product.
B.an imperfectly competitive market.
C.a market in which demand is elastic at all prices.
D.a purely competitive market.
8)
A legitimate concern about illegal immigration is that it:
A.Tends to lead to higher product prices
B.Has a negative fiscal impact on local and state governments
C.Causes a one-for-one reduction in employment for legal residents
D.Causes the average wage level in the U.S. to fall
9) Answer the question on the basis of the following production possibilities data for
Gamma and Sigma. All data are in tons.
Gamma’s production possibilities:
Sigma’s production possibilities:
Refer to the given data. Assume that before specialization and trade, Gamma and Sigma
both chose production possibility “C.” Now if each specializes according to
comparative advantage, the gains from specialization and trade will be:
A.40 tons of pots.
B.20 tons of tea and 20 tons of pots.
C.20 tons of tea.
D.40 tons of tea.
10) A country can achieve some combination of goods outside its production
possibilities curve by:
A.idling some of its resources.
B.specializing and engaging in international trade.
C.buying the debt (bonds and stocks) of foreign nations.
D.producing more capital goods and fewer consumer goods.
11)
In the diagram it is assumed that:
A.some costs are fixed and other costs are variable.
B.all costs are variable.
C.the law of diminishing returns determines the shape of the cost curve.
D.marginal product first falls, but ultimately rises as output is increased.
12)
The Immigration Reform and Control Act of 1986:
A.Increased fines on employers who hire illegal immigrants
B.Boosted funding for fencing, monitoring, and policing the U.S.-Mexican border
C.Created a guest worker program
D.Created an amnesty program for illegal immigrants
13) Which of the following cognitive biases refers to people’s tendency to attribute their
successes to personal ability and effort, and failures to forces outside their control?
A.Overconfidence effect.
B.Confirmation bias.
C.Self-serving bias.
D.Hindsight bias.
14) A major function of the National Labor Relations Board is to:
A.monitor potentially inflationary increases in wages.
B.provide compulsory arbitration so that strikes and lockouts do not occur.
C.set annual wage increases on an industry-by-industry basis.
D.investigate and rule on charges of unfair labor practices by either management or
unions.
15) Most economists contend that:
A.noncash gifts are more efficient than cash gifts.
B.noncash gifts are less efficient than cash gifts.
C.noncash and cash gifts are equally efficient.
D.government can assess consumer preferences better than can consumers themselves.
16) The Gini ratio is calculated by dividing the area between the Lorenz curve and the
diagonal by the:
A.Remaining area below the diagonal
B.Total area below the diagonal
C.Total area of the box or rectangle
D.Remaining area of the box or rectangle
17) Firms engaged in international trade can reduce exchange-rate risk by:
A.paying for foreign goods only when they are delivered.
B.buying on credit.
C.hedging in the futures market.
D.dealing only with highly reputable firms.
18) If an industrial union is formed to bargain with a monopsonistic employer, then in
this labor market:
A.the resulting wage rate will always be above the competitive level.
B.employment may either increase or decrease.
C.employment will increase.
D.employment will decrease.
19) Discuss the problem of population in developing nations using the rule of 70.
20) The long-run industry supply curve in a constant-cost industry graphs as a
horizontal line. Explain.
21) Define demand.
22) How would a Verson stamping machine help a firm achieve economies of scale?
23) Explain how the firm decides on the optimal amount of research and development.
24) At the present time Social Security beneficiaries are limited in the amount of
income they can earn and still receive full benefits. Should this limitation be abolished?
Justify your answer.
25) Why might trade barriers be a highly ineffective technique for increasing domestic
employment?
26) How does the use of credible threats or empty threats by firms affect outcomes and
the Nash equilibrium in one-period games?