1) Which of the following claims is not made by opponents of a value-added tax
(VAT)?
A.Savings and investment is discouraged because future consumption is penalized.
B.The VAT is regressive, potentially leading to additional progressive taxes to offset the
regressive VAT.
C.Sellers bear a disproportionately large burden of the tax.
D.The VAT is a hidden tax, and thus easier to raise to support the expansion of
government.
2) X-inefficiency refers to a situation in which a firm:
A.is not as technologically progressive as it might be.
B.encounters diseconomies of scale.
C.fails to realize all existing economies of scale.
D.fails to achieve the minimum average total costs attainable at each level of output.
3) The socially optimal amount of pollution abatement occurs where society’s marginal:
A.benefit of abatement exceeds its marginal cost of abatement by the greatest amount.
B.benefit of abatement equals its marginal cost of abatement.
C.benefit of abatement is zero.
D.cost of abatement is at its maximum.
4) The demand for agricultural products is:
A.relatively elastic with respect to price.
B.relatively inelastic with respect to price.
C.relatively elastic with respect to income.
D.downsloping to the individual farmer but perfectly elastic to farmers as a group.
5) Compare pure competition, pure monopoly, monopolistic competition, and oligopoly
on each of the following points:
(a)Ability to manipulate price.
(b)Flexibility of prices.
(c)Expenditures on advertising and sales promotion.
(d)Efficiency in allocation of resources.
6) For a linear demand curve:
A.elasticity is constant along the curve.
B.elasticity is unity at every point on the curve.
C.demand is elastic at low prices.
D.demand is elastic at high prices.
7) Which is an example of a nontariff barrier (NTB)?
A.An export subsidy.
B.An excise tax on the physical volume of imported goods.
C.Box-by-box inspection requirements for imported fruit.
D.An excise tax on the dollar value of imported goods.
8)
Refer to the diagram, assuming that the firm represented is operating on curve TC1. If
the current price of the resource rises by $20, the optimal quantity extracted in the first
year will:
A.increase by 250
B.increase by 500
C.decline by 250
D.remain unchanged.
9) Collusive control over price may permit oligopolists to:
A.Use new technology, achieve economies of scale, and get government subsidies
B.Achieve economies of scale, reduce costs, and prevent price cheating
C.Increase product demand, increase product supply, and lower cost
D.Reduce uncertainty, increase profits, and possibly limit entry of new firms
10) A profit-maximizing firm operates in purely competitive product and resource
markets, with the following resource and production schedules.
The product price is $10 per unit and the cost per worker is $540. How many workers
will the firm employ?
A.4
B.5
C.6
D.7
11) The following is a total-product schedule for a resource. Assume that the quantities
of other resources the firm employs remain constant.
Refer to the above table. If the firm can sell 24 units of output at a price of $1.00 and 42
units of output at a price of $0.80, the marginal revenue product of the second unit of
the resource is:
A.$5.40
B.$7.80
C.$9.60
D.$12.20