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1) Which of the following would, other things equal, reduce the demand for U.S. farm
products?
A.Poorer crops abroad.
B.Strong economic growth abroad.
C.Improved trade relations with China and Russia.
D.Appreciation of the U.S. dollar.
2) New scientific knowledge mainly comes from university and government
laboratories, not private firms, because:
A.large corporations do not have funds available to channel toward basic research.
B.government pays scientists higher salaries than do private firms.
C.entrepreneurs find it difficult to secure venture capital to finance innovation.
D.basic scientific principles, as such, cannot be patented and do not always have
commercial applicability.
3) The labor market for teachers in a small, isolated community that has one school
district would be best described as a(n):
A.Natural monopoly
B.Bilateral monopoly
C.Monopsony
D.Oligopsony
4) If the demand for a product is perfectly inelastic, the incidence of an excise tax will
be:
A.entirely on the buyer.
B.mostly on the buyer.
C.entirely on the seller.
D.mostly on the seller.
5) Voters are making a choice to spend money on three projects: a dam, a school, or a
road. In the choice between the dam and the school, the majority favors the school. In a
choice between a dam and a road, the majority favors a dam. In a choice between a road
and a school, the majority favors a road. These rankings indicate that majority voting
may:
A.Result in economically efficient outcomes because of rent-seeking behavior
B.Reflect irrational preferences
C.Produce inconsistent choices
D.Lead to consistent choices in spite of irrational community preferences
6) A market for pollution rights can be expected to:
A.Eliminate all pollution
B.Produce a shortage of pollution
C.Encourage potential polluters to increase emissions
D.Provide potential polluters with a monetary incentive to reduce emissions
7)
Assume the figure applies to a pure monopolist and that MC is the same for both
graphs. If this firm is able to price discriminate between children and adults, its
profit-maximizing level of output will be:
A.Q1A + Q1C.
B.Q1C + Q2.
C.Q1A + Q2.
D.Q1A + Q1C + Q2.
8) Use the following table for Country X to answer the question below. Column 1 of the
table is the price of a product. Column 2 is the quantity demanded domestically (Qdd)
and Column 3 is the quantity supplied domestically (Qsd).
Refer to the table above. If Country X opens itself up to international trade, at what
world price will it begin exporting some units of the product?
A.Any price below $1.00
B.Any price above $1.00
C.Any price below $3.00
D.Any price above $3.00
9) Suppose a single firm has the marginal revenue product schedule for a particular type
of labor given in the left table. Assume there are 150 firms with the same
marginal-revenue-product schedules for this particular type of labor.
Refer to the above table and information. What will be the equilibrium wage rate?
A.$7
B.$8
C.$9
D.$10
10) State right-to-work laws:
A.permit employers to hire nonunion workers only if union labor is unavailable.
B.prohibit employers from discriminating against minority groups in hiring workers.
C.prohibit unions from discriminating against minority groups in recruiting members.
D.make compulsory union membership (for example, a union shop) illegal.
11) The rising prices, quantities, and costs of health care in the U.S. are the result of:
A.Demand for health care increasing faster than supply
B.Supply of health care decreasing
C.Supply of health care decreasing faster than demand
D.Supply of health care decreasing coupled with demand increasing
12) A demand curve:
A.shows the relationship between price and quantity supplied.
B.indicates the quantity demanded at each price in a series of prices.
C.graphs as an upsloping line.
D.shows the relationship between income and spending.
13) The political technique called logrolling:
A.always increases economic efficiency.
B.always decreases economic efficiency.
C.involves trading votes to secure favorable outcomes that otherwise could be rejected.
D.is an example of the paradox of voting.
14) Which of the following holds true?
A.There is no relationship between AP and AVC.
B.When MP is rising AVC is falling, and when MP is falling AVC is rising.
C.When AP is rising AVC is falling, and when AP is falling AVC is rising.
D.When AP is rising AVC is rising, and when AP is falling AVC is falling.
15) According to the circular flow model, product markets are where:
A.Households earn their money incomes
B.Businesses incur their consumption expenditures to households
C.Businesses acquire their inputs from households
D.Businesses earn their revenues from households
16) If the demand curve for wheat is inelastic, then total farm income from wheat will
be:
A.Higher in years of low yields and lower in years of high yields
B.Lower in years of low yields and higher in years of high yields
C.Higher in years of falling prices
D.Lower in years of rising prices
17) A market is in equilibrium:
A.provided there is no surplus of the product.
B.at all prices above that shown by the intersection of the supply and demand curves.
C.if the amount producers want to sell is equal to the amount consumers want to buy.
D.whenever the demand curve is downsloping and the supply curve is upsloping.
18) Suppose that total sales in an industry in a particular year are $600 million and sales
by the top four sellers are $200 million, $150 million, $100 million, and $50 million,
respectively. We can conclude that:
A.price leadership exists in this industry.
B.the concentration ratio is more than 80 percent.
C.this industry is a differentiated oligopoly.
D.the firms in this industry face a kinked demand curve.
