1) answer the next question(s) on the basis of the following data. all figures are in
billions of dollars.
refer to the above data. disposable income is:
a.$83.
b.$73.
c.$75.
d.$77.
2) a demand curve which is parallel to the vertical axis is:
a.perfectly inelastic.
b.perfectly elastic.
c.relatively inelastic.
d.relatively elastic.
3) suppose that a pure monopolist can sell 20 units of output at $10 per unit and 21
units at $9.75 per unit. the marginal revenue of the twenty-first unit of output is:
a.$9.75.
b.$204.75.
c.$4.75.
d.$.25.
4) the demand for commodity x is represented by the equation p = 10 – 0.2q and supply
by the equation p = 2 + 0.2q.
refer to the above information. if demand changed from p = 10 – .2q to p = 7 – .3q, the
new equilibrium quantity is:
a.10.
b.20.
c.15.
d.30.
5) in a competitive market:
a.external benefits will always exceed external costs.
b.resources will be misallocated if government does not properly adjust demand and
supply for large external costs and benefits.
c.resources will be allocated efficiently only if external benefits equal external costs.
d.an efficient allocation of resources is realized even where there are large external
costs and benefits.
6) Entrepreneurs:
A.include everyone engaged in R&D work.
B.are located in small enterprises only.
C.try to anticipate the future.
D.work exclusively in government and university R&D laboratories.
7)
refer to the above diagram. increases in the quantity and quality of human resources and
capital are best represented by a:
a.shift in the production possibilities curve from ab to cd.
b.move from y on cd to x on ab.
c.shift in the production possibilities curve from cd to ab.
d.move from x to z along ab.
8)
Refer to the above data. Suppose that the union that provides labor to firms in this
market successfully negotiates an increase in the wage rate from $10 to $12. As a result
of the wage increase, firms will hire:
A.fewer workers and the total paid out for wages will decline.
B.fewer workers, but the total paid out for wages will increase.
C.fewer workers, but the total paid out for wages will remain unchanged.
9) if a firm increases all of its inputs by 10 percent and its output increases by 10
percent, then:
a.it is encountering diseconomies of scale.
b.it is encountering economies of scale.
c.it is encountering constant returns to scale.
d.the marginal products of all inputs are falling.
10)
refer to the above diagram for athletic shoes. if the current output of shoes is q3, then:
a.resources are being allocated efficiently to the production of shoes.
b.society would consider additional units of shoes to be more valuable than alternative
products.
c.society would consider additional units of shoes to be less valuable than alternative
products.
d.society would experience a net gain by producing more shoes.
11) the demand schedule or curve confronted by the individual purely competitive firm
is:
a.relatively elastic, that is, the elasticity coefficient is greater than unity.
b.perfectly elastic.
c.relatively inelastic, that is, the elasticity coefficient is less than unity.
d.perfectly inelastic.
12) Which of the following statements is correct for a private closed economy?
A.Saving equals planned investment only at the equilibrium level of GDP.
B.All levels of GDP where planned investment exceeds saving will be too high for
equilibrium.
C.Planned and actual investment are identical at all possible levels of GDP.
D.Saving equals actual investment only at the equilibrium level of GDP.
13) Use the table below that shows the rate of return and R&D spending for a
hypothetical firm. Assume the interest-rate cost of funds is 8%.
(a)What is the optimal amount of R&D expenditures? At this amount, what will be the
marginal cost and what will be the marginal benefit of R&D spending?
(b)Now assume that the interest-rate cost of funds rises to 12%. What will be the
optimal amount of R&D spending? For this amount of R&D spending, what will be the
marginal cost and what will be the marginal benefit (expected rate of return)?
(c)Now assume that the interest-rate cost of funds falls to 6%. What will be the optimal
amount of R&D spending? For this amount of R&D spending, what will be the
marginal cost and what will be the marginal benefit (expected rate of return)?
14) Occupational licensing:
A.functions essentially the same as inclusive unionism.
B.attracts large numbers of workers and therefore depresses wages.
C.often restricts occupational entry and raises the incomes of licensees.
D.has been declared illegal in the majority of states.
15) In which of the following U.S. industries is the rate of unionization the highest?
A.construction
B.government
C.retail trade
D.agriculture
16) cost-push inflation:
a.is caused by excessive total spending.
b.shifts the nation’s production possibilities curve leftward.
c.moves the economy inward from its production possibilities curve.
d.is a mixed blessing because it has positive effects on real output and employment.
17) accounting profits are typically:
a.greater than economic profits because the former do not take explicit costs into
account.
b.equal to economic profits because accounting costs include all opportunity costs.
c.smaller than economic profits because the former do not take implicit costs into
account.
d.greater than economic profits because the former do not take implicit costs into
account.
18) Compensating differences in wages:
A.compensate workers for differences in their human capital.
B.are wage differences that compensate for differences in the desirability of jobs.
C.describe the tendency for the wages of all occupations to adjust to the median level.
D.do not exist if jobs have different nonmonetary characteristics.
19) The theory of rational expectations concludes that:
A.the public’s expectations can influence the outcome of monetary policy, but not of
fiscal policy.
B.the public’s expectations can influence the outcome of fiscal policy, but not of
monetary policy.
C.the public’s expectations as to the effects of economic policies tends to reinforce the
effectiveness of those policies.
D.by reacting in its self-interest to the expected effects of stabilization policy, the public
tends to negate the impact of those policies.