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1) Legislation designed to regulate natural monopolies would be based on which theory
of regulation?
A.Social
B.Legal cartel
C.Public interest
D.Price fixing
2) The graph below shows the supply and demand curves for dollars in the pound/dollar
market.
Refer to the graph above. Assume that D1 and S1 are the initial demand for and supply
of dollars. Now suppose that Great Britain increases its imports of American products.
Assuming freely floating exchange rates:
A.The pound price of dollars will fall to 1/5 pound equals $1
B.The pound price of dollars will rise to 1/4 pound equals $1
C.The dollar price of pounds will increase to $5 equals 1 pound
D.A dollar shortage of MN will result in Britain
3)
Economists point out that the strong inflow of undocumented workers to some extent
reflects the:
A.Increasing return to capital in the United States
B.Increasing scarcity of unskilled labor in other countries
C.More lenient immigration laws
D.Increasing scarcity of domestic unskilled labor in the United States
4)
Refer to the data for a nondiscriminating monopolist. At its profit-maximizing output,
this firm's total costs will be:
A.$300.
B.$248.
C.$198.
D.$126.
5) The property tax may be regressive even though wealthy people own much more
taxable property than do poor people. This possibility arises because:
A.marginal and average tax rates on property tend to converge.
B.wealthy people can evade property taxes while poor people cannot.
C.property taxes on rental property and business property are shifted.
6) Game theory, which is used in studying oligopoly behavior, originated from the study
of games such as the following, except:
A.Poker
B.Solitaire
C.Chess
D.Bridge
7) Suppose you go to a doctor but your health insurance plan does not reimburse you
because you have not yet paid enough out of pocket for the year to qualify for insurance
benefits. This is an example of:
A.coinsurance.
B.a deductible.
C.monopsony power.
D.a deferred benefit plan.
8) Which of the following would be an avenue for resolving the inefficiencies
associated with majority voting?
A.Political logrolling
B.Progressive taxation
C.Proportional taxation
D.The paradox of voting
9) For a pure monopolist the relationship between total revenue and marginal revenue is
such that:
A.marginal revenue is positive when total revenue is at a maximum.
B.total revenue is positive when marginal revenue is increasing, but total revenue
becomes negative when marginal revenue is decreasing.
C.marginal revenue is positive when total revenue is increasing, but marginal revenue
becomes negative when total revenue is decreasing.
D.marginal revenue is positive so long as total revenue is positive.
10) In the United States:
A.taxes decrease, but transfers increase, income inequality.
B.taxes increase, but transfers reduce, income inequality.
C.both taxes and transfers decrease income inequality.
D.both taxes and transfers increase income inequality.
11) It is generally easier to prevent deforestation than fishery collapse because:
A.it is easier to establish and enforce property rights on national lands than in
international waters.
B.there is greater incentive to have sustainable forests than sustainable fisheries.
C.the demand for wood products has dropped significantly while the demand for fish
has grown significantly.
D.all of these.
12) Which of the following will cause the demand curve for product A to shift to the
left?
A.Population growth that causes an expansion in the number of persons consuming A.
B.An increase in money income if A is a normal good.
C.A decrease in the price of complementary product C.
D.An increase in money income if A is an inferior good.
13) A consumer allocates all income between two products, A and B. If, on an
indifference map, the equilibrium position shifts onto a higher indifference curve, then:
A.The consumer must be purchasing more of both products
B.The relative prices of A and B must have changed
C.The prices of A and B must have increased
D.Total utility must have increased
14) The addition of government to the circular-flow model illustrates that government:
A.purchases resources in the resource market.
B.provides services to businesses and households.
C.purchases goods in the product market.
D.does all of these.
15) The Alcoa case:
A.supported the structuralist approach to antitrust.
B.struck down the treble damages provision of the antitrust laws.
C.called for federal regulation of any industry with a four-firm concentration ratio in
excess of 50 percent.
D.decision was consistent with a behavioralist approach.
16) If a tax is progressive, then:
A.The average and marginal tax rates are always equal
B.As the tax base increases, the marginal tax rate declines
C.As the tax base rises, the average tax rate is greater than the marginal tax rate
D.As the tax base increases, the marginal tax rate is greater than the average tax rate
17) The table below shows the quantity of coal per ton, the extraction cost per ton, and
user cost per ton for the BTU Coal Company in the current year.
(a)If the current price of a ton of coal is $200, how many tons of coal should BTU
extract and sell this year to maximize profits?
(b)If the current price of a ton of coal is $300, how many tons of coal should BTU
extract and sell this year to maximize profits?
(c)BTU has been told by government regulators that it must cease operations in a year.
If the current price of a ton of coal is $250, how many tons of coal should BTU extract
and sell this year to maximize profits?
(d)If user costs increase by $50 at each level of output and if the current price of a ton
of coal is $300, how many tons of coal should BTU extract and sell this year to
maximize profits?
18) In which two market models would advertising be used most often?
A.Pure competition and monopolistic competition
B.Pure competition and pure monopoly
C.Monopolistic competition and oligopoly
D.Pure monopoly and oligopoly
