1) The equilibrium world price of a product equates the quantities of exports supplied
and imports demanded.
2) the existence of “beaten paths” tends to discourage immigration because of the
perception that job prospects have been exhausted.
3)
refer to the above diagram for a nondiscriminating monopolist. at the profit-maximizing
output the firm’s economic profit will be bafg.
4) strong patent laws encourage innovation and promote economic growth.
5) if marginal utility is diminishing, total utility must also be declining.
6) if there is substantial unemployment in the economy, it would be appropriate for
government to cut tax rates.
7) African-Americans have higher unionization rates than whites.
8) if an economy is currently producing on its production possibilities curve, a
rightward shift of the curve is a necessary but not sufficient condition for economic
growth.
9) a market that achieves productive efficiency is producing the quantity of goods most
desired by society.
10)
refer to the above diagrams. both firms are selling their products in purely competitive
markets.
11) A decline in the price of resource A will:
A.increase the demand for complementary resource B.
B.shift the demand curve for A to the left.
C.shift the demand curve for A to the right.
D.reduce the demand for complementary resource B.
12) Answer the next question(s) on the basis of the following table for a particular
country in which C is consumption expenditures, Ig is gross investment expenditures, G
is government expenditures, X is exports, and M is imports. All figures are in billions of
dollars. Each question is independent of the other questions.
Refer to the above table. A decrease in the interest rate would:
A.increase the values in column (3) and increase aggregate demand.
B.decrease the values in column (3) and increase aggregate demand.
C.increase the values in column (2) and decrease aggregate demand.
D. decrease the values in column (2) and decrease aggregate demand.
13)
refer to the above diagram in which the downsloping linear lines are budget lines and
i1, i2, and i3 comprise an indifference map. the combinations of products m and n
indicated by points 1, 2, and 5 are such that:
a.point 2 yields more utility than either 1 or 5
b.points 1 and 5 yield more utility than point 2
c.points 1, 2, and 5 yield equal amounts of utility.
d.the levels of utility associated with these three points cannot be compared.
14) in a typical year which of the following measures of aggregate output and income is
likely to be the smallest?
a.gross domestic product
b.national income
c.disposable income
d.personal income
15) The following production possibilities tables for two countries, Latalia and
Trombonia:
Refer to the above tables. Assume that before specialization and trade, Latalia produced
combination C and Trombonia produced combination B. If these two nations now
specialize completely based on comparative advantage, the total gains from
specialization and trade will be:
A.4 tons of beans.
B.1 ton of pork and 2 tons of beans.
C.4 tons of pork.
D.2 tons of pork and 4 tons of beans.
16) suppose that the price of product x rises by 20 percent and the quantity supplied of
x increases by 15 percent. the coefficient of price elasticity of supply for good x is:
a.negative and therefore x is an inferior good.
b.positive and therefore x is a normal good.
c.less than 1 and therefore supply is inelastic.
d.more than 1 and therefore supply is elastic.
17) refer to the above diagram. the profit-maximizing level of output for this firm:
a.is at point a
b.is at point b
c.is at point c
d.cannot be determined from the information given
18)
Refer to the above diagram in which T is tax revenues and G is government
expenditures. All figures are in billions. The tax system of this economy is such that:
A.it is regressive.
B.it is progressive.
C.tax revenues equal 50 percent of GDP.
D.it tends to destabilize the economy.
19) “the government deregulated the electricity industry in california and a shortage of
electricity soon occurred. it is clear that the deregulation caused the shortage.” this
statement needs careful analysis because it may reflect the:
a.the fallacy of composition.
b.post hoc, ergo propter hoc fallacy.
c.use of loaded terminology.
d.the law of averages.
20)
in the above diagram variables x and y are:
a.both dependent variables.
b.directly related.
c.inversely related.
d.unrelated.
21) real gdp per capita:
a.cannot grow more rapidly than real gdp.
b.cannot grow more slowly than real gdp.
c.necessarily grows more rapidly than real gdp.
d.can grow either more slowly or more rapidly than real gdp.
22) Why is the demand for resources called a derived demand? On what two factors
does the strength of the demand for resources depend? How are these two factors
related?
23) Using the below axes draw a supply and demand graph for land showing it as a free
good.
24) What are the sources of increasing returns and economies of scale of the recent
productivity acceleration experienced in the U.S.?
25) What is the profit-maximizing condition for the use of a resource?
26) Why is the level of output at which marginal revenue equals marginal cost the
profit-maximizing output?
27) (Last Word) Based on the discussion in the text, use the ADAS framework to depict
why the rise in oil prices has had less effect on prices than in the past.
28) If the political system follows the median voter model, why will many people likely
still be dissatisfied by the extent of government involvement? What do some people do
to remedy this?
29) Give examples of the stickiness of prices based on the average number of months
between price changes for selected goods and services.