1) If you pay a $2,000 tax on $10,000 of taxable income and a $4,000 tax on a taxable
income of $16,000, the tax is progressive.
2) The supply curve for a monopolist is the upward-sloping portion of the marginal cost
curve that lies above the average variable cost curve.
3) When a competitive firm sees the price fall below the minimum possible average
total cost in the long run, then it will decide that it could do better by moving to a
different industry.
4) In recent years, a greater proportion of private capital flows to DVCs has been direct
foreign investment rather than loans to DVC governments.
5) When a consumer shifts purchases from X to Y, the marginal utility of X falls and the
marginal utility of Y rises.
6) Sellers’ sense of fairness is always consistent with the notion of rational self-interest
of neoclassical economics.
7) A conglomerate merger is a merger between firms at different stages of the
production process of a product, such as a merger between a flour milling company and
a baking company.
8) In pure competition, a competitive firms supply curve is that section of its marginal
cost curve above ATC and at any price below the average cost, the firm will produce
nothing.
9) The Clayton Act prohibits the acquisition of ____________ of competing
corporations when the acquisition would lessen competition; the Celler-Kefauver Act
prohibits the acquisition of ____________ of one firm by another firm when the
acquisition would lessen competition.
A.Stocks; assets
B.Assets; stocks
C.Stocks; customers
D.Stocks; bonds
10) “Consumer equilibrium” refers to the situation when the consumer is getting:
A.The highest total utility out of spending a given budget on various goods
B.The highest marginal utility out of spending a given budget on various goods
C.Equal marginal utility values from each product consumed
D.Equal total utility values from each product consumed
11) Approximately what portion of health care spending in the U.S. is paid by the
patients (out-of-pocket)?
A.17 percent
B.33 percent
C.54 percent
D.70 percent
12) Birth- and population-control efforts in many DVCs (developing countries) face the
following obstacles, except:
A.Low literacy rates
B.Religious reasons
C.Peasant agriculture view about children
D.Government authorities
13) If all resources used in the production of a product are increased by 10 percent and
output increases by less than 5 percent, then the firm is experiencing:
A.Economies of scale
B.Diseconomies of scale
C.Constant returns to scale
D.Decreasing average total costs
14) People who buy foreign currency for the sole goal of selling it at a profit are called:
A.numismatists.
B.currency hedgers.
C.currency manipulators.
D.currency speculators.
15) In which of the following statements are the terms “demand” and “quantity
demanded” used correctly?
A.When the price of ice cream rose, the demand for both ice cream and ice cream
toppings fell.
B.When the price of ice cream rose, the quantity demanded of ice cream fell, and the
demand for ice cream toppings fell.
C.When the price of ice cream rose, the demand for ice cream fell, and the quantity
demanded of ice cream toppings fell.
D.None of these statements use the terms correctly.
16) In the table below are the marginal-product and marginal-revenue-product
schedules for resource A and resource B. Both resources are variable and are employed
in purely competitive markets. The price of A is $2 and the price of B is $4.
(a)What is the least-cost combination of resources A and B that would enable the firm
to produce 240 units of output?
(b)What is the profit-maximizing combination of A and B?
(c)What is the total output and profit when the firm is employing the profit-maximizing
combination of A and B?
17) In part as a result of the U.S. government’s ethanol program, between 2005 and
2012 the inflation-adjusted price of a bushel of corn:
A.tripled.
B.rose 200 percent.
C.fell 20 percent.
D.collapsed to only 5 percent of its pre-2005 level.
18) What are the two categories of cognitive biases identified by behavioral
economists?
A.Unevolved capacity for solving modern problems and faulty heuristics.
B.Bad information and lack of impulse control.
C.Lack of intellect and mental disorders.
D.Inability to reason and inability to delay gratification.
19) If the equation y = -10 + 2.5x was plotted:
A.the vertical intercept would be -10.
B.the slope would be -7.5.
C.it would graph as a downsloping line.
D.the slope would be -10.
20) Which of the following do economists consider to be capital?
A.A pair of stockings.
B.A construction crane.
C.A savings account.
D.A share of IBM stock.
21) If a nation restricts trade with other nations, then the most likely effect is:
A.Lower prices of goods and services in the nation
B.Increased specialization of production
C.Expanded economic wealth of the nation
D.Make consumers in the nation worse off
22) Nonmonetary considerations tend to be most important in the allocation of:
A.Land resources
B.Capital resources
C.Labor resources
D.Natural resources
23) Weak government enforcement of contracts and laws tends to:
A.increase economic efficiency by minimizing government interference.
B.stimulate innovation and investment.
C.discourage economic activity by encouraging private-sector coercion such as
blackmail and extortion.
D.not affect economic activity, as incentives for theft and deception are low.
24) The market system is said to be characterized by “consumer sovereignty.” This is
because:
A.A sovereign government determines which consumer goods will be produced
B.The prices of consumer goods are regulated by a sovereign government
C.Firms must match their production decisions to the consumers’ choices
D.Consumer goods are considered to be more important than capital goods
25) The effectiveness of regulation is sometimes criticized because:
A.Regulators try to please everybody
B.Of the high profits in regulated industries
C.Regulators don’t know how to regulate industries
D.Regulators usually have been closely associated with the industries they regulate
26) A college graduate who works at a firm is also working part-time on a master’s
degree in business and expects to be paid a higher wage after earning the degree. The
basic reason for this wage differential is:
A.Efficiency wages
B.Compensating differences
C.Investment in human capital
D.Nonmonetary aspects of work
27) Command systems are also known as:
A.market systems.
B.pure capitalism.
C.laissez-faire capitalism.
D.communism.
28) Marginal product of labor refers to the:
A.Last unit of output produced by labor at the end of each period
B.Increase in output resulting from employing one more unit of labor
C.Total output divided by the number of labor employed
D.Smallest unit of the output produced by labor
29) Why are price fixing among firms and price discrimination treated differently under
antitrust legislation?
30) What conditions are necessary to determine if the purely competitive firm should
produce in the short run? State the marginal revenue and marginal cost conditions and
the total revenue and total cost conditions.
31) How do the consumer and producer surpluses in the monopolistic case differ from
those in the competitive case?
32) What are the many different sources of funding to finance firms R&D expenditures?
If an entrepreneur uses personal funds is there a cost for financing?
33) A firms labor input, total output of labor, and product price schedules are given
below. If labor is the only variable input, how much labor should the firm employ if the
wage rate is $8 per day?