1) Which of the following is not an example of a compensating differential?
a.paying workers who do dull, boring work higher wages than workers who do fun,
interesting work, all else equal
b.paying workers who work on the night shift higher wages than workers who work the
day shift, all else equal
c.paying workers who do more dangerous work higher wages than workers who do less
dangerous work, all else equal
d.paying workers with PhDs higher wages than workers with BAs, all else equal
2) Which of the following is not a reason for the existence of a monopoly?
a.sole ownership of a key resource
b.patents
c.copyrights
d.diseconomies of scale
3) In the long run, monopolistically competitive firms produce where demand equals
marginal cost.
a.True
b.False
4) Which of the following would be considered a private good?
a.a ferry boat ride to an island with open seating
b.a public beach
c.fish in the ocean
d.a swimming suit
5) When entry and exit behavior of firms in an industry does not affect a firm‘s cost
structure,
a.the long-run market supply curve must be horizontal.
b.the long-run market supply curve must be upward-sloping.
c.the long-run market supply curve must be downward-sloping.
d.we do not have sufficient information to determine the shape of the long-run market
supply curve.
6) Which of the following statements is correct?
a.Strategic situations are more likely to arise when the number of decision-makers is
very large rather than very small.
b.Strategic situations are more likely to arise in monopolistically competitive markets
than in oligopolistic markets.
c.Game theory is useful in understanding certain business decisions, but it is not really
applicable to ordinary games such as chess or tic-tac-toe.
d.Game theory is not necessary for understanding competitive or monopoly markets.
7) The diagram below pertains to the demand for turkey in the United States.
All else equal, a decrease in the price of the grain fed to turkeys would cause a move
from
a.DA to DB.
b.DB to DA.
c.x to y.
d.y to x.
8) An efficient tax system is one that imposes small
a.deadweight losses and administrative burdens.
b.marginal rates and deadweight losses.
c.administrative burdens and transfers of money.
d.marginal rates and transfers of money.
9) If a competitive firm is currently producing a level of output at which marginal cost
exceeds marginal revenue, then
a.average revenue exceeds marginal cost.
b.the firm is earning a positive profit.
c.decreasing output would increase the firm‘s profit.
d.All of the above are correct.
10) Two economists found empirical evidence that when the price of rice decreased in
the Hunan province of China, local residents consumed less rice than before the price
decrease. The study provides a real-world example of a(n)
a.normal good.
b.inferior good that is not a Giffen good.
c.Giffen good.
d.luxury good.
11) Advocates of a tax on soda and other sugary drinks argue that such a tax
a.may encourage better nutrition.
b.will protect our future selves from the long run negative effects of consuming these
drinks.
c.is needed because people tend to behave inconsistently over time.
d.All of the above are correct.
12) Suppose that flu shots create a positive externality equal to $8 per shot. Further
suppose that the government offers a $6-per-shot subsidy to producers. What is the
relationship between the equilibrium quantity and the socially optimal quantity of flu
shots produced?
a.They are equal.
b.The equilibrium quantity is greater than the socially optimal quantity.
c.The equilibrium quantity is less than the socially optimal quantity.
d.There is not enough information to answer the question.
13) The value of the marginal product is
a.total revenue minus total cost.
b.the change in total output divided by the change in an input.
c.the marginal product of an input times the price of the output.
d.total output divided by total inputs.
14) The U.S. federal government collects about one-half of the taxes in our economy.
a.True
b.False