1)
“The bigger the volume, the lower the cost, and we pass these savings on to you” is a
familiar slogan. Its idea is illustrated in which of the above graphs?
A.Graph A
B.Graph B
C.Graph C
D.Graph D
2)
Refer to the above table. What is the producer surplus for all producers A, B, C, and D?
A.$6
B.$13
C.$19
D.$24
3) Which of the following statements is true?
A.”Behavioralists” believe that all monopolists are “bad” monopolists
B.”Structuralists” strongly abide by the “rule of reason” in applying antitrust laws
C.”Behavioralists” believe that some monopolists are “good” monopolists
D.”Structuralists” believe that some monopolists are “good” monopolists
4) Which of the following is not a barrier to entry in an industry?
A.Economies of scale
B.Profit maximization
C.Strategic pricing
D.Government licensing
5) Productive inputs that are actually or virtually fixed in supply are known as:
A.renewable natural resources.
B.natural capital.
C.nonrenewable natural resources.
D.alternative fuels.
6) The demand curve for labor will most likely increase when the price of a:
A.Complementary input increases, provided the substitution effect is greater than the
output effect
B.Substitute input decreases, provided the output effect is greater than the substitution
effect
C.Substitute input increases, provided the output effect is greater than the substitution
effect
D.Substitute input decreases, provided the substitution effect is greater than the output
effect
7) The effect of higher prices from the domestic sugar beet program in the United States
is:
A.Economically efficient because it maintains the income of sugar beet farmers and
reduces potential unemployment costs
B.That it discourages the production of sugar beets in the United States because
businesses cannot afford to use sugar beets in production
C.That it increases exports of sugar beets from the United States to other nations
D.”Regressive” because low-income households spend a larger percentage of their
income on food than do high-income households
8)
Refer to the above supply and demand graph. S1 and D1 represent the current market
supply and demand, respectively. S2 and D2 represent the socially optimal supply and
demand. One way that the government could shift supply to its socially optimal level is
to:
A.Tax the sellers
B.Subsidize the buyers
C.Produce the product
D.Regulate the production of the good
9) The following table contains hypothetical data for the U.S. balance of payments in a
year. Answer the following question on the basis of these data. All figures are in billions
of dollars.
U.S. goods exports +$390
U.S. goods imports -498
U.S. service exports +133
U.S. service imports -107
Net investment income +12
Net transfers -22
Capital account -5
Foreign purchases of U.S. assets +156
U.S. purchases of foreign assets -59
Refer to the table above. If there was a net inflow of $7 billion in official reserves in the
capital and financial account that year, the United States experienced a
balance-of-payments:
A.Surplus of $7 billion
B.Deficit of $7 billion
C.Surplus of $99 billion
D.Deficit of $99 billion
10) Indiana’s health care plan for state employees:
A.has reduced total spending on health care, but at the cost of employees forgoing
important preventative care procedures.
B.has reduced total spending on health care without people forgoing important
preventative care procedures.
C.has increased total spending on health care, but with the benefit of increasing the
overall health of state workers who now take greater advantage of preventative care
procedures.
D.has reduced health care spending for those who participate in the plan, but only a
small (less than 10 percent) percentage of state employees actually use the system.
11) Henry Ford’s development of an assembly method for building cars and trucks
would be an example of:
A.Product improvement
B.Fast-second strategy
C.Process innovation
D.Inverted-U theory
12)
Refer to the given data. If this firm can hire as few or many workers as it wants at $8, it
is:
A.hiring labor in a monopsony labor market.
B.hiring labor in a purely competitive labor market.
C.selling its product in a monopolized product market.
D.selling its product in a purely competitive product market.
13)
Refer to the diagram in which S is the before-tax supply curve and St is the supply
curve after an excise tax is imposed. The total amount of the tax paid by producers is
shown by area(s):
A.A + B + F.
B.C only.
C.A + B + C.
D.E + F.
14) Which would be a qualification to the view that oligopoly is allocatively and
productively inefficient?
A.Less foreign competition has stimulated more price competition in oligopolies
B.Oligopolies are less technologically competitive so they lose market share
C.Oligopolies may purposely keep prices below short-run profit-maximizing levels to
bolster barriers to entry
D.The more collusive practices of oligopolies lead to more profit-sharing among firms
in the industry
15)
Refer to the diagram. Other things equal, this economy will achieve the most rapid rate
of growth if:
A.the ratio of capital to consumer goods is minimized.
B.it chooses point C.
C.it chooses point B.
D.it chooses point A.
16) Why do supporters of social regulation need to remember that there is no free
lunch?
17) Compare pure competition, pure monopoly, monopolistic competition, and
oligopoly for technological advance in the form of new product development.
18) What is the free-rider problem and how does it cause the underproduction of a
public good in a competitive market?
19) Explain how the Internet has affected the average fixed cost of a daily print
newspaper.
20) Evaluate the statement: No nation can grow without a large natural resource base.
21) What is the difference between an exclusive union and an inclusive union? What
are the economic effects of each type?
22) Explain the economic effects of farm price supports on society in terms of the
allocation of resources to agriculture and three other social costs.
23) How does monopoly compare with pure competition in terms of price, output, and
efficiency?
24) Why is the price or exchange value of a nations currency an unusual price?
25) On the below demand curve, indicate the character of the price elasticity of demand
across all prices.