1) The marginal utility of leisure time appears to:
A.Be the same even for people with widely different incomes
B.Be exempt from the law of diminishing marginal utility
C.Increase as the quantity of available leisure time decreases
D.Equal zero for successful business executives
2) “Vote for my special local project and I will vote for yours.” This political technique:
A.illustrates the paradox of voting.
B.is called “logrolling.”
C.illustrates the median voter model.
D.undermines the benefits-received principle.
3) The term productive efficiency refers to:
A.any short-run equilibrium position of a competitive firm.
B.the production of the product mix most desired by consumers.
C.the production of a good at the lowest average total cost.
D.fulfilling the condition P = MC.
4) Health savings accounts (HSAs) implemented by the 2003 Medicare law:
A.are only available to those enrolled in Medicare.
B.allow workers to accumulate untaxed dollars for payment of qualified medical
expenses.
C.are criticized because they require workers to “use it or lose it” each year; workers are
not allowed to accumulate balances over time.
D.can only be used to pay for prescription drugs.
5) The empirical data indicate that the tax system and the transfer programs of the
government:
A.Increase the degree of inequality in the distribution of income
B.Make no change in the degree of inequality in the distribution of income
C.Reduce the degree of inequality in the distribution of income
D.Affect the distribution of wealth, not income
6) Where total utility is at a maximum, marginal utility is:
A.negative.
B.positive and increasing.
C.zero.
D.positive but decreasing.
7) Assume that Brazil and Mexico have floating exchange rates. Other things
unchanged, if the price level is stable in Mexico, but Brazil experiences rapid inflation:
A.gold bullion will flow into Brazil.
B.the Brazilian real will depreciate.
C.the Mexican peso will depreciate.
D.the Brazilian real will appreciate.
8) Allocative efficiency is concerned with:
A.producing the combination of goods most desired by society.
B.achieving the full employment of all available resources.
C.producing every good with the least-cost combination of inputs.
D.reducing the concavity of the production possibilities curve.
9) Elastic demand is analogous to a __________ and inelastic demand to a _________.
A.normal wrench; socket wrench
B.tight rubber band; loose rubber band
C.Ace bandage; firm rubber tie-down
D.one-foot ruler; tape measure
10) In a market system, the task of assessing and managing the business risk of a firm is
taken on by the firm’s:
A.Labor
B.Capital suppliers
C.Entrepreneurs
D.Customers
11) The elasticity of supply of product X is unitary if the price of X rises by:
A.5 percent and quantity supplied rises by 7 percent.
B.8 percent and quantity supplied rises by 8 percent.
C.10 percent and quantity supplied stays the same.
D.7 percent and quantity supplied rises by 5 percent.