1) The first working prototype of a microcomputer chip would be an example of an:
A.Innovation
B.Imitation
C.Invention
D.Infusion
2) A major criticism of the parity concept is that:
A.It is based on relative prices from a long time ago
B.It is not easily and objectively measured
C.The index is tracked by the government, not the private sector
D.There is no economic rationale for the concept
3) The countries of Macrostan and Micrastan have the production possibilities tables for
sheep and hogs shown in the tables below. Without trade Macro would produce at
Alternative D and Micra would also produce Alternative D. Note that the costs of
producing sheep and hogs are constant in both countries.
(a)In Macro, the cost of producing:
5 units of sheep is ______ hog units.
1 unit of sheep is ______ hog units.
(b)In Micra, the cost of producing:
4 units of sheep is ______ hog units.
1 unit of sheep is ______ hog units.
(c)Which country has the comparative advantage in sheep production and which
country has the comparative advantage in hog production?
(d)If each nation specializes in the product where it has a comparative advantage and
trades with the other, what will be the limits to the terms of trade for each sheep unit?
(e)If the nations do not specialize and trade but remain at alternative D in Macrostan
and D in Micrastan, the combined production of Macro and Micrastan will be how
many sheep and how many hogs?
(f)However, if the two nations specialize, the combined production of Macro and
Micrastan will be how many sheep and how many hogs?
(g)What will be the total gain of sheep and hogs if the countries specialize and trade?
4) Assume a drought in the Great Plains reduces the supply of wheat. Noting that wheat
is a basic ingredient in the production of bread and potatoes are a consumer substitute
for bread, we would expect the price of wheat to:
A.rise, the supply of bread to increase, and the demand for potatoes to increase.
B.rise, the supply of bread to decrease, and the demand for potatoes to increase.
C.rise, the supply of bread to decrease, and the demand for potatoes to decrease.
D.fall, the supply of bread to increase, and the demand for potatoes to increase.
5) Which of the following is most likely to be an inferior good?
A.Fur coats.
B.Ocean cruises.
C.Used clothing.
D.Steak.
6) Use the table below to answer the question for a purely competitive firm.
Refer to the above table. The marginal revenue from the third unit of output is:
A.$40
B.$50
C.$120
D.$160
7)
Refer to the above graph for a profit-maximizing monopolist. At equilibrium, the firm
will be earning:
A.Positive profits
B.Negative profits
C.Zero profits
D.Profits that cannot be determined from the given graph
8)
Refer to the graph above, showing the long-run supply and demand curves in a purely
competitive market. The curves suggest that this industry is:
A.A constant-cost industry
B.Increasing-cost industry
C.Decreasing-cost industry
D.Not possible, because the supply curve always slopes up
9) Electric companies generally practice price discrimination and charge higher prices
for electricity used for illumination and lower prices for electricity used for heat. These
lower prices for electric heating result primarily from:
A.The existence of good heating substitutes
B.Economies of scale in electric heat generation
C.Prices for electric heat being set at the socially optimal level
D.Strict government regulation of the price charged for electric heat
10) The XYZ Corporation’s collective bargaining agreement indicates that it may hire
either union or nonunion workers and that the latter are under no obligation to join the
union. This agreement embodies:
A.an open shop.
B.a closed shop.
C.a union shop.
D.an agency shop.
11) The long-run equilibrium position of the monopolistically competitive firm occurs
at a point where average costs are:
A.Constant
B.Increasing
C.Decreasing
D.At their minimum point
12) The following graph is the production possibilities curve of a nation:
Refer to the above graph. The total opportunity cost of nine drill presses is:
A.1 unit of bread
B.1 unit of drill presses
C.3 units of bread
D.10 units of drill presses