1) A high concentration ratio indicates that:
A.The industry is highly profitable
B.The industry is highly competitive
C.Many firms produce most of the output in an industry
D.Few firms produce most of the output in an industry
2)
Refer to the information. If the Mudhens’ management wanted to maximize total
revenue from the game, it would set the ticket price at:
A.$5.
B.$7.
C.$9.
D.$13.
3) Answer the following questions based on the supply and demand diagram below.
(a) What is the equilibrium price and quantity in the market?
(b) Discuss the market outcome if the government were to enforce a price floor of $3.00
in the market.
(c) Discuss the market outcome if the government were to enforce a price floor of $1.00
in the market.
(d) How might the market respond to a binding price ceiling in this market?
4) Answer the next five questions on the basis of the following hypothetical data for a
nation Malthusia. All numbers are in billions of dollars.
(a)What was the balance on goods?
(b)What was the balance on goods and services?
(c)What was the balance on the current account?
(d)What is the balance on the financial account?
(e)What is the balance on the capital and financial account?
5) Autos and chemicals are in million of units in the following production possibilities
tables:
Refer to the tables above. Assume that prior to specialization and trade Germany and
the United States both choose production possibility C. Now if each specializes
according to its comparative advantage, the resulting gains from specialization and
trade will be:
A.8 million units of autos
B.6 million units of autos
C.6 million units of autos and 8 million units of chemicals
D.8 million units of autos and 6 million units of chemicals
6) All of the following could immediately or eventually lead to an inward shift of a
nation’s production possibilities curve, except:
A.emigration of skilled workers to other nations.
B.a decline in the birth rate.
C.an increase in the average skill level of all occupational groups.
D.depletion and reduced availability of major energy resources.
7)
Refer to the diagram, representing Slippery Slope Oil Company. A $10 increase in the
user cost would shift:
A.up the extraction cost curve only, and reduce the amount of oil extracted in the
present.
B.up both the extraction cost and total cost curves, and reduce the amount of oil
extracted in the present.
C.up the total cost curve only, and reduce the amount of oil extracted in the present.
D.down the total cost curve, and increase the amount of oil extracted in the future.
8) Consider the following payoff matrix in which the numbers indicate the profit in
millions of dollars for a duopoly based either on a high-price or a low-price strategy.
(a)What is the total profit and individual firm profits if the firms both choose a
high-price strategy?
(b)What is the total profit and individual firm profits if Firm A chooses a low-price
strategy while Firm B maintains a high-price strategy?
(c)What is the total profit and individual firm profits if Firm B chooses a low-price
strategy while Firm A maintains a high-price strategy?
(d)What is the total profit and individual firm profits if the firms both choose a
low-price strategy?
(e)Suppose the two firms decided to collude. What pricing scheme do you suspect the
firms will agree to?
(f)What problem do you expect will arise from collusion?
9) In which of the following market structures is there clear-cut mutual interdependence
with respect to price-output policies?
A.Pure monopoly.
B.Oligopoly.
C.Monopolistic competition.
D.Pure competition.
10) The Lorenz curve:
A.plots graphically the poverty rate over time.
B.is located closer to the diagonal today than it was in 1975.
C.plots graphically the distribution of income.
D.is located farther from the diagonal when income is defined to include the value of
noncash transfers.
11) The supply curve of antique reproductions is:
A.relatively elastic.
B.relatively inelastic.
C.perfectly inelastic.
D.unit elastic.
12) In the following question you are asked to determine, other things equal, the effects
of a given change in a determinant of demand or supply for product X upon (1) the
demand (D) for, or supply (S) of, X; (2) the equilibrium price (P) of X; and (3) the
equilibrium quantity (Q) of X.
Refer to the given information. If X is an inferior good, a decrease in income will:
A.decrease D, decrease P, and decrease Q.
B.decrease D, decrease P, and increase Q.
C.increase S, decrease P, and increase Q.
D.increase D, increase P, and increase Q.
13) The “eurozone”:
A.is another name for the European Union.
B.refers to the common currency used by all European Union members.
C.is a geographic region in Europe with no national sovereignty, where free trade
between European nations is allowed to occur.
D.is the subset of the EU that uses a common currency.
14)
Refer to the labor market diagrams. A monopsonistic labor market is represented by
Figure:
A.5
B.4
C.3
D.2
15) The user cost of extracting a nonrenewable resource is:
A.the sum of the dollar expenditures incurred to extract the resource.
B.the cost of not being able to extract it in the future if it is extracted and sold in the
present.
C.the selling price of the resource to the companies using it to produce goods and
services.
D.directly proportional to how much of the nonrenewable resource remains.
16)
Refer to the table. In relation to column (3), a change from column (5) to column (4)
would indicate a(n):
A.increase in demand.
B.decrease in demand.
C.increase in supply.
D.decrease in supply.
17) Which of the following interest rates is usually the highest?
A.30-year mortgage rate
B.20-year Treasury bond rate
C.Consumer credit-card rate
D.Prime rate of banks