1) The fast-food restaurant industry would be an example of which market model?
A.Monopolistic competition
B.Pure competition
C.Pure monopoly
D.Oligopoly
2) An electricity company has the opportunity to use natural gas to generate electricity
at a cost of $30 per unit in 2 years. The current market rate is 4 percent. The present
value of this cost is about:
A.$28
B.$29
C.$30
D.$32
3)
Refer to the graph. Which of the following schedules correctly reflects ‘supply”?
A.Option A
B.Option B
C.Option C
D.Option D
4) Nation Alpha has a comparative advantage in product X and nation Beta has a
comparative advantage in product Y. Trade in the two products will only benefit the two
nations if:
A.The exchange ratio of X for Y is fixed
B.The terms of trade increase in both nations
C.There is excess capacity in both economies
D.The prices charged for X and Y reflect their domestic opportunity costs
5)
Refer to the above graphs. (Assume that the pre-migration labor force in Country A is 0d
and that it is 0u in country B.) What part of domestic output in country A is the total wage
bill or total wage income before and after the immigration?
A.Area 0fad and area 0gce, respectively
B.Area 0fad and area bced, respectively
C.Area 0gbd and area bced, respectively
D.Area 0gbd and area 0gce, respectively
6) Other things equal, if wage rates increase by 20 percent, the greatest decline in
employment will occur when labor costs are a:
A.large proportion of total costs and product demand is elastic.
B.small proportion of total costs and product demand is elastic.
C.large proportion of total costs and product demand is inelastic.
D.small proportion of total costs and product demand is inelastic.
7) A unique feature of an oligopolistic industry is:
A.Low barriers to entry
B.Standardized products
C.Diminishing marginal returns
D.Mutual interdependence
8) Approximately what percentage of U.S. health care spending is financed by public
insurance?
A.17 percent.
B.33 percent.
C.50 percent.
D.83 percent.
9) Which of the following is not one of the ways the PPACA attempts to cover the
poor?
A.Requiring larger employers to provide insurance for all of their full-time employees.
B.Providing health care directly to the poor through government-run clinics and
hospitals.
C.Subsidizing the purchase of health insurance for those who buy to comply with the
personal mandate.
D.Expanding Medicaid to cover anyone with an income less than 133 percent of the
poverty level.
10) Assume the atmosphere of an urban area is able to reabsorb 4000 tons of pollutants
per year. The schedule below shows the price polluters would be willing to pay for the
right to dispose of 1 ton of pollutants per year and the total quantity of pollutants they
would wish to dispose of at each price.
(a)If there were no emission fee, how many tons of pollutants would there be and how
much greater would this amount be than the capacity for reabsorption?
(b)What pollution fee should the urban authorities charge to solve the problem?
(c)What would happen in this market for pollution rights if quantity demanded
increased by 1000 tons at each price?
11) Collusion refers to a situation where rival firms decide to:
A.Compete aggressively against each other
B.Cheat on each other
C.Agree with each other to set prices and output
D.Combine their operations and merge with each other
12) Behavioral economists have found that one major explanation for the inter-country
differences in participation rates in organ-donation programs is the:
A.Anchoring effect
B.Mental accounting effect
C.Status quo bias
D.Confirmation bias
13) The following are major observations made by behavioral economists regarding
human behavior, except:
A.Workers tend to spend and consume too much in the present, thus not saving enough
for retirement
B.People tend to stick with the default option when faced with various alternatives
C.People behave in ways that seem irrational at first glance, but are really rational
D.People often intentionally act in irrational ways