1) In the short run, the individual competitive firm’s supply curve is that segment of the:
A.average variable cost curve lying below the marginal cost curve.
B.marginal cost curve lying above the average variable cost curve.
C.marginal revenue curve lying below the demand curve.
D.marginal cost curve lying between the average total cost and average variable cost
curves.
2) Efficiency gains from migration:
A.will tend to be greater when workers migrate from nations with high unemployment
to nations experiencing full employment.
B.imply that all workers, domestic and migrant, are financially better off as a result of
migration.
C.will tend to be greater in countries experiencing “brain drain.”
D.usually benefit one nation at the expense of another.
3) If a firm is hiring variable resources D and F in imperfectly competitive input
markets, it will maximize profits by employing D and F in such quantifies that:
A.MRPD/MRCD = MRPF/MRCF = 1
B.MRPD/MRCD = MRPF/MRCF.
C.MRPD/PD = MRPF/PF = 1
D.MRPD/PD = MRPF/PF.
4) The long-run trend of real wages:
A.cannot be determined from available data on nominal wages and the price level.
B.has been downward because the price level has risen faster than nominal wages.
C.has been upward.
D.has been downward because labor’s share of the domestic income has fallen.
5) Steve went to his favorite hamburger restaurant with $3, expecting to buy a $2
hamburger and a $1 soda. When he arrived he discovered that hamburgers were on sale
for $1 each, so Steve bought two hamburgers and a soda. Steve’s response to the
decrease in the price of hamburgers is best explained by:
A.the substitution effect.
B.the income effect.
C.the price effect.
D.a rightward shift in the demand curve for hamburgers.
6) With a downsloping demand curve and an upsloping supply curve for a product, an
increase in consumer income will:
A.increase equilibrium price and quantity if the product is a normal good.
B.decrease equilibrium price and quantity if the product is a normal good.
C.have no effect on equilibrium price and quantity.
D.reduce the quantity demanded but not shift the demand curve.
7) Since 1950, U.S. farm exports have:
A.increased as a percentage of U.S. farm output.
B.declined as a percentage of U.S. farm output.
C.averaged about 10 percent of U.S. farm output.
D.averaged about 50 percent of U.S. farm output.
8) Social insurance is distinguished from public assistance, or welfare, by the fact that:
A.All social insurance benefits are paid in cash while all public assistance benefits are
paid in kind (food, housing, medical care)
B.An individual acquires a right to social insurance benefits by meeting objective
eligibility criteria while public assistance benefits are determined according to
individual need
C.The total amount paid in benefits is much larger in the public assistance programs
than in the social insurance programs
D.Payroll taxes are used to finance public assistance programs while general revenues
are used to finance social insurance programs
9)
Refer to the above table. At what consumption level for this product does diminishing
marginal utility set in?
A.4 units
B.5 units
C.8 units
D.7 units
10)
A “backflow” refers to:
A.Unauthorized aliens who enter an industrialized nation looking for work
B.Legal aliens who enter an industrialized nation looking for work
C.Migrants who enter a series of industrialized nations looking for work
D.Migrants who repeatedly return to their home countries after seeking work in another
country
11) An increase in the price of product A will:
A.reduce the demand for resources used in the production of A.
B.increase the demand for complementary product C.
C.increase the demand for substitute product B.
D.reduce the demand for substitute product B.
12)
Refer to the table above. What is the price that yields the maximum total revenue?
A.$2
B.$3
C.$4
D.$5
13) Anything that is generally acceptable in trading for goods and services is a:
A.Medium of exchange
B.Capital good
C.Store of value
D.Token money
14) The market system is also known as:
A.Capitalism
B.Socialism
C.Central planning
D.Production system
15) 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 product the firm produces sells for a constant $2 per
unit, the marginal revenue product of the third unit of the resource is:
A.$6
B.$12
C.$18
D.$24
16) Assume that there is a supply and demand market for non-preferred workers. If
prejudice against these workers among employers decreases, then there will be a(n):
A.Increased supply of these workers, a rise in their wage rate, and a decrease in their
employment
B.Increased demand for these workers, a rise in their wage rate, and an increase in their
employment
C.Decreased supply of these workers, a fall in their wage rate, and a decrease in their
employment
D.Decreased demand for these workers, a fall in their wage rate, and a decrease in their
employment
17) Assuming migration is unimpeded and costless, which of the following statements
is most accurate about the effect of immigration on wages in both the origin and
destination nations?
A.Wages will rise in the origin nation and fall in the destination nation, and overall
wage income must rise.
B.Wages will rise in both nations, and overall wage income must rise.
C.Wages will rise in the origin nation and fall in the destination nation, and the wage
changes must cancel each other, resulting in no net change in overall wage income.
D.Wages will rise in the origin nation and fall in the destination nation, but the effect on
overall wage income depends on the elasticities of labor demand.
18) How can the migration distance affect the costbenefit evaluation of moving to
another nation?
19) What is the rationale for efficiency wages? How do efficiency wages help address
the principalagent problem?
20) Explain the principalagent problem in job performance and briefly describe actions
that can be taken to correct the problem.
21) Why does price equal marginal revenue for the purely competitive firm? What is
the relationship to the demand curve for the firm?
22) Define producer surplus.
23) Meaning well, your grandmother gives you a new wool sweater for your birthday
that she knitted herself. You, however, hate wearing wool. What is the utility problem
that you face? What can you do to remedy the problem?
24) Explain how neoclassical economists and behavioral economists would react to the
following statement: People have stable preferences that are consistent no matter the
situation.
25) What are the major components of the capital and financial account?
26) Suppose a producer sells 1000 units of a product at $5 per unit one year, 2000 units
at $8 the next year, and 3000 units at $10 the third year. Is this evidence that the law of
demand is violated? Explain.