1) Which would cause an increase in the supply curve of cell-phone services?
A.A decrease in the wages of phone-company workers
B.An increase in the price of cell-phone services
C.An increase in the taxes paid by cell-phone service providers
D.A decrease in a subsidy given to cell-phone service providers
2) Answer the question on the basis of the following cost data:
Refer to the data. The profit-maximizing output for this firm:
A.is 3.
B.is 4.
C.is 5.
D.cannot be determined from the information given.
3) The Bear Corporation finds that its total spending on machine parts increases after
the price of machine parts falls, other things being equal. Which of the following is true
about the Bear Corporation’s demand for machine parts with the price change?
A.It is unit elastic
B.It is price elastic
C.It is price inelastic
D.It is perfectly inelastic
4) Which pair of market structures provides firms with the greatest ability to finance
R&D out of retained earnings?
A.Oligopolists and pure monopolists.
B.Pure competitors and pure monopolists.
C.Pure competitors and monopolistic competitors.
D.Monopolistic competitors and pure monopolists.
5) If the opportunity cost of producing extra units of one good (expressed in terms of
the amount of another good given up) remains constant, then the shape of the
production possibilities curve is:
A.A straight horizontal line
B.A straight downward-sloping line
C.An upward-sloping line
D.A vertical line
6)
Refer to the above table. What is the market structure in the firm’s product and labor
markets?
A.Purely competitive in both the product market and the labor market
B.Imperfectly competitive in both the product market and the labor market
C.Purely competitive in the product market, but imperfectly competitive in the labor
market
D.Imperfectly competitive in the product market, but purely competitive in the labor
market
7)
Refer to the above graph. All data are for the short run. Which of the following
statements is correct?
A.Production is profitable only when price is above P3
B.Average fixed cost is P1P3 at output Q1
C.The firm will produce an output of Q1 when price is P1
D.At price P1, the firm will close down
8) Answer the question on the basis of the following information. Assume that if the
interest rate that businesses must pay to borrow funds were 20 percent, it would be
unprofitable for businesses to invest in new machinery and equipment, so investment
would be zero. But if the interest rate were 16 percent, businesses would find it
profitable to invest $10 billion. If the interest rate were 12 percent, $20 billion would be
invested. Assume that total investment continues to increase by $10 billion for each
successive 4 percentage point decline in the interest rate.
Refer to the information. Which of the following is an accurate verbal statement of the
described relationship?
A.There is no regular or dependable relationship between business investment and the
interest rate.
B.The amount of business investment is unaffected by changes in the interest rate.
C.Investment spending by businesses varies inversely with the interest rate.
D.Investment spending by businesses varies directly with the interest rate.
9) Other things equal, and given that the elasticity of demand for health care is 0.2, a 10
percent increase in the price of health care in the United States will reduce the quantity
of health care demanded by about:
A.1 percent.
B.2 percent.
C.5 percent.
D.20 percent.
10) A monopolist can sell 20 toys per day for $8.00 each. To sell 21 toys per day, the
price must be cut to $7.00. The marginal revenue of the 21st toy is:
A.-$10
B.-$13
C.+$7
D.+$21
11) Monetary stimulus is only helpful to an economy:
A.that is experiencing high inflation.
B.that is in recession.
C.experiencing significant negative externalities.
D.with few public goods.
12) A fast-food company spends millions of dollars to develop and promote a new
hamburger on their menu only to find that consumers won’t buy it because they don’t
like the taste. From an economic perspective, the company should:
A.Keep the hamburger on the menu because they’ve spent so much money and time
developing and promoting the product
B.Spend more money to develop a more efficient way to cook the hamburger so it
cooks in a shorter time
C.Pull the hamburger off the menu and treat the development and promotion
expenditures as a sunk cost
D.Keep trying to sell the hamburger so that people who developed and promote it have
a job with the company
13) Specialization and international trade allows a nation to:
A.Produce a combination of goods that is beyond (or outside) its production
possibilities
B.Consume a combination of goods that is beyond (or outside) its production
possibilities
C.Have an upward-sloping production possibilities curve
D.Consume a lot of goods without having to produce any output
14)
Refer to the diagram, which relates to Firm X. Suppose X implements an innovative
new production method that shifts its total product curve from TP2 to TP1. Other things
equal:
A.the average product of X’s labor would fall.
B.the average total cost of X’s output would decline.
C.X would supply less output at each product price than before.
D.the demand curve for X’s product would shift to the right.
15) Assume that pizza and hamburgers are the only food items available to consumers.
If the price of pizza increases, other factors constant, then which of the following will
definitely happen?
A.Total revenues received by pizza sellers will increase
B.Total revenues received by pizza sellers will decrease
C.Total revenues received by hamburger sellers will increase
D.Total revenues received by hamburger sellers will decrease
16) Which of the following was not an objection raised by opponents of the Patient
Protection and Affordable Care Act?
A.The revenue generated by the new taxes in the PPACA would be insufficient to cover
costs of the program.
B.The PPACA moves the United States closer to creating a national health insurance
system with nonprice rationing of health care.
C.The subsidies would lead to higher prices and increased consumption of health care.
D.The percentage of health care spending coming directly out of consumers’ pockets
would increase.
17) Price-fixing:
A.is prohibited by Section 7 of the Clayton Act.
B.is a per se violation of the antitrust laws.
C.may be either legal or illegal depending on whether or not it produces above-normal
profits.
D.is illegal under terms of the Federal Trade Commission Act.
18)
Refer to the graph. A decrease in fixed costs is shown by:
A.a move along short-run average total cost curve ATC2 from point e to point f.
B.a move along short-run average total cost curve ATC1 from point a to point b.
C.the shift of the short-run average total cost curve from ATC1 to ATC2.
D.the shift of the short-run average total cost curve from ATC2 to ATC1.
19) Monopsonist’s employment schedule.
Refer to the above table. What is the firm’s marginal labor cost of hiring the eleventh
worker?
A.$24
B.$48
C.$150
D.$200
20)
Refer to the above graph of the supply and demand for loanable funds. Assume that the
government sets a 10% limit on the interest rate that banks can charge to customers for
credit card loans. In this case, the quantity of loanable funds:
A.Demanded will exceed the quantity supplied by $150 billion
B.Demanded will exceed the quantity supplied by $100 billion
C.Demanded will exceed the quantity supplied by $50 billion
D.Supplied will exceed the quantity demanded by $50 billion