1) Farm policy in the United States over the past eight decades has been designed
primarily to:
A.Shift resources from the farm sector to the nonfarm sector
B.Reduce monopoly in the farm sector
C.Enhance and stabilize farm prices and income
D.Produce a strategic reserve of food
2) The minimum rate of return or payment necessary to keep an entrepreneur in some
specific enterprise is referred to as:
A.The pure rate of interest
B.The real interest rate
C.Economic profit
D.Normal profit
3) Other things being equal, the international value of foreign currencies will increase
against the U.S. dollar if:
A.U.S. citizens reduce spending on imports
B.The U.S. Federal Reserve raises real interest rates
C.There is an increase in the number of foreign tourists in the United States
D.There are withdrawals of funds by foreigners from U.S. money markets
4) The impact of increasing, as opposed to constant, costs is to:
A.intensify and prolong the comparative advantages that any nation may have initially.
B.expand the limits of the terms of trade.
C.cause the bases for further specialization to disappear as nations specialize according
to comparative advantage.
D.cause nations to realize economies of scale in those products in which they
specialize.
5) Other things equal, if the price of a key resource used to produce product X falls, the:
A.product supply curve of X will shift to the right.
B.product demand curve of X will shift to the right.
C.product supply curve of X will shift to the left.
D.product supply curve of X will not shift.
6) Answer the following questions based on the graph below.
(a)Discuss the equilibrium wage and quantity present in the market.
(b)Suppose an increase in immigration leads to a greater number of workers in the
workforce. Depict and discuss the effect this has for the market equilibrium and the
individual firm.
7) Which of the following is correct as it relates to cost curves?
A.Average variable cost intersects marginal cost at the latter’s minimum point.
B.Marginal cost intersects average total cost at the latter’s minimum point.
C.Average fixed cost intersects marginal cost at the latter’s minimum point.
D.Marginal cost intersects average fixed cost at the latter’s minimum point.
8) Assume that Japan and the United States are engaged in a system of flexible
exchange rates.
Refer to the graph above. If more people in the United States decide to purchase
Japanese cars, what effect will this have on the market for yen?
A.The price of yen will increase
B.The price of yen will decrease
C.The supply of yen will increase
D.The supply of yen will decrease
9) The two largest sources of tax revenue for the U.S. Federal government are:
A.Excise taxes and customs duties
B.Payroll taxes and excise taxes
C.Personal income taxes and payroll taxes
D.Personal income taxes and corporate income taxes
10) When producers (say, of roads) are not able to make all consumers pay for enjoying
their product (i.e., the roads), they tend to see a:
A.Marginal cost of production that is too low, and there is a supply-side market failure
B.Marginal benefit of production that is too high, and there is a demand-side market
failure
C.Marginal cost of production that is too high, and there is a supply-side market failure
D.Marginal benefit of production that is too low, and there is a demand-side market
failure
11) Which of the following statements is correct?
A.The value of the independent variable is determined by the value of the dependent
variable.
B.The value of the dependent variable is determined by the value of the independent
variable.
C.The dependent variable designates the “cause” and the independent variable the
“effect.”
D.Dependent variables graph as upsloping lines; independent variables graph as
downsloping lines.
12) Allocative efficiency occurs when the:
A.Minimum of average total cost equals average revenue
B.Minimum of average total cost equals marginal revenue
C.Marginal cost equals the marginal benefit to society
D.Marginal revenue equals marginal benefit to society
13) Answer the question on the basis of the following cost data:
Refer to the data. The total variable cost of producing 5 units is:
A.$61.
B.$48.
C.$37.
D.$24.