1) The principle of comparative advantage indicates that mutually beneficial
international trade can take place only when:
A.Tariffs are eliminated
B.Transportation costs are almost zero
C.Relative costs of production differ between nations
D.A country can produce more of some product than other nations can
2) The basic truth that underlies the study of economics is the fact that we all face:
A.Death
B.Taxes
C.Risk
D.Scarcity
3) Complete the following table, where L is the units of labor, TPL is the total product
of labor, MPL is the marginal product of labor, P is product price, TR is total revenue,
and MRPL is the marginal revenue product of labor.
(a)In what type of market is the firm selling its product? How do you know?
(b)Why does the MRP schedule decrease as labor increases?
(c)Complete the following table.
4) The so-called “rule of reason” in interpreting antitrust legislation suggests that the
application of antitrust laws should be based on industry:
A.Efficiency
B.Concentration ratios
C.Behavior
D.Structure
5) Use the following total-product schedule for a resource to answer the next three
questions. Assume that the quantities of other resources the firm employs remain
constant.
(a)If the firms product sells for a constant $2 per unit, what is the marginal revenue
product of the third unit of the resource?
(b)If the firms product sells for a constant $2 per unit and the price of this resource is
$8, how many units of the resource will the firm employ?
(c)If the firm can sell 12 units of output at a price of $1.00 per unit and 21 units of
output at a price of $0.80 per unit, what is the marginal revenue product of the second
unit of the resource?
6) Which of the following conditions does not need to occur for a market to achieve
allocative efficiency?
A.Consumers’ maximum willingness to pay equals producers’ minimum acceptable
price for the last unit of output.
B.The sum of producer and consumer surplus is maximized.
C.The total revenue received by producers equals the total cost of production.
D.The marginal benefit of the last unit produced equals the marginal cost of producing
that unit.
7) “Unfunded liability” refers to a government commitment to:
A.Not pay the government bonds that are coming due
B.Spend in the future without also committing to collect enough tax money to pay for it
C.Support the retirement funds of businesses who have gone bankrupt
D.Put money in specific mutual funds in order to vouch for the funds’ liabilities
8) The formula for cross elasticity of demand is percentage change in:
A.quantity demanded of X/percentage change in price of X
B.quantity demanded of X/percentage change in income.
C.quantity demanded of X/percentage change in price of Y
D.price of X/percentage change in quantity demanded of Y
9)
Of all of the people who became permanent legal residents of the U.S. in 2011, about how
many were sponsored by employers?
A.5%
B.13%
C.25%
D.33%
10) Normal profit is:
A.determined by subtracting implicit costs from total revenue.
B.determined by subtracting explicit costs from total revenue.
C.the return to the entrepreneur when economic profits are zero.
D.the average profitability of an industry over the preceding 10 years.
11)
In the above graph, the optimal amount of R&D spending and the interest-rate
cost-of-funds at that optimal level would be, respectively:
A.$10 million and 9 percent
B.$10 million and 13 percent
C.$30 million and 9 percent
D.$50 million and 6 percent
12) Which generalization is incorrect?
A.Given supply, the more elastic the demand for a product, the larger is the portion of
an excise tax that is shifted forward to consumers
B.Given demand, the more elastic the supply of a product, the larger is the portion of an
excise tax that is borne by producers
C.Given supply, the more elastic the demand for a product, the larger is the portion of
an excise tax that is borne by the sellers
D.Given demand, the less elastic the supply of a product, the larger is the portion of an
excise tax that is shifted forward to consumers
13) One of the major objectives of the World Bank is to:
A.Provide financial backing for the United Nations
B.Maximize its profits for its worldwide shareholders
C.Provide technical assistance to DVCs
D.Maintain stable exchange rates in IACs and DVCs