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1) Economic profits are calculated by subtracting:
A.explicit costs from total revenue.
B.implicit costs from total revenue.
C.implicit costs from normal profits.
D.explicit and implicit costs from total revenue.
2) Assume that you pay $10,000 of tax on a taxable income of $50,000. If your taxable
income were $150,000, your tax payment would be $25,000. This suggests the tax is:
A.progressive.
B.proportional.
C.regressive.
D.discriminatory.
3) Harvey quit his job at State University where he earned $45,000 a year. He figures
his entrepreneurial talent or foregone entrepreneurial income to be $5,000 a year. To
start the business, he cashed in $100,000 in bonds that earned 10 percent interest
annually to buy a software company, Extreme Gaming. In the first year, the firm sold
11,000 units of software at $75 for each unit. Of the $75 per unit, $55 goes for the costs
of production, packaging, marketing, employee wages and benefits, and rent on a
building.
Refer to the above information. The economic profits of Harvey's firm in the first year
were:
A.$155,000
B.$160,000
C.$220,000
D.$280,000
4) Human capital refers to:
A.the accumulated knowledge and skills that allow a person to be productive.
B.machinery that requires extensive human interaction to be productive.
C.the accumulated financial assets of people.
D.all of these things.
5) Singapore's health care system is identified by critics of the PPACA as one good
alternative system to study and emulate. Singapore has the following characteristics,
except:
A.Singapore has among the world's lowest infant mortality rates
B.Singapore spends about the same on health care per person as the U.S., but it ranks
among the top in every health-quality category monitored by the World Health
Organization unlike the U.S.
C.Singapore has among the world's highest life expectancies
D.Singapore spends less than 4% of its GDP on health care
6) In monopolistic competition there is an under-allocation of resources at the
profit-maximizing level of output, which means that:
A.ATC is not equal to MC
B.Price is greater than MR
C.Price is greater than minimum ATC
D.Price is greater than MC
7) The benefits-received principle of taxation is:
A.The basis for the gasoline tax
B.Easy to apply because benefits received are conveniently measurable
C.Applied in income-redistribution programs
D.The principle behind the income tax system
8)
In the above graph, the difference between points a and b indicates that at $10M of
R&D spending, the:
A.Marginal cost is greater than the marginal benefit
B.Marginal benefit is greater than the marginal cost
C.Interest-rate cost-of-funds is equal to the expected rate of return
D.Interest-rate cost-of-funds is greater than the expected rate of return
9) Assume that by devoting all of its resources to the production of X, nation Alpha can
produce 40 units of X. By devoting all of its resources to Y, Alpha can produce 60Y.
Comparable figures for nation Beta are 60X and 40Y. We can conclude that:
A.the terms of trade will be 3X equals 1Y.
B.Alpha should specialize in Y and Beta in X.
C.Alpha should specialize in X and Beta in Y.
D.there is no basis for mutually beneficial specialization and trade.
10) At the profit-maximizing level of output for a monopolist:
A.Price is greater than marginal cost
B.Price is greater than average revenue
C.Average total cost equals marginal cost
D.Total revenue is greater than total cost
11) In the past few years, the demand for donuts has greatly increased. This increase in
demand might best be explained by:
A.an increase in the cost of making donuts.
B.an increase in the price of coffee.
C.consumers expecting donut prices to fall.
D.a change in buyer tastes.
12) In making an investment decision, a business firm is most interested in the:
A.nominal interest rate.
B.real interest rate.
C.nominal interest rate minus the real interest rate.
D.the future supply of loanable funds.
13)
Refer to the given data. Suppose that the union that provides labor to firms in this
market successfully negotiates an increase in the wage rate from $10 to $12. As a result
of the wage increase, firms will hire:
A.fewer workers and the total paid out for wages will decline.
B.fewer workers, but the total paid out for wages will increase.
C.fewer workers, but the total paid out for wages will remain unchanged.
D.more capital, if capital and labor are used in fixed proportions in production.
14)
Refer to the above table. The marginal revenue product of the fourth unit of input is
approximately:
A.$27
B.$21
C.$16
D.$13
