1) Answer the question on the basis of the following cost data for a firm that is selling
in a purely competitive market.
Refer to the data. If the market price for this firm’s product is $24, it will produce:
A.4 units at a loss of $150.
B.6 units at a loss of $90.
C.3 units at an economic profit of zero.
D.4 units at a loss of $138.
2) In 2010, about what percentage of the world’s land area was forested?
A.10 percent
B.30 percent
C.50 percent
D.75 percent
3) Economic growth may hinge on whether individuals and institutions within a nation
want growth badly enough to change their traditional ways of doing things. This
statement refers to:
A.in-kind investment.
B.the capricious universe view.
C.human capital investment.
D.the will to develop.
4) If the demand for a product increases proportionately faster than the increase in
consumers’ incomes, then the income elasticity of demand for the product is:
A.Zero
B.Greater than zero
C.Less than zero
D.Equal to 1
5) Behavioral economics attempts to make better predictions about human behavior by
combining insights from the following fields, except:
A.Economics
B.Biology
C.Physics
D.Psychology
6)
Refer to the diagram. If farmers produce a bumper crop of Qb, their gross income:
A.will be 0PpPBQb.
B.will be 0PbBQb.
C.will be Pb Qn.
D.cannot be determined.
7) U.S. union membership has declined substantially in recent years. Which of the
following is not usually cited as a causal factor?
A.Most nonunion workers are in manufacturing industries.
B.Import competition has reduced or restrained the growth of employment in some
highly unionized industries.
C.Some industries and firms have migrated to the less-unionized South.
D.Managerial opposition to unions has intensified.
8) Suppose that TC = $550, TVC = $500, and MC = $100. If the firm produces 10 units
of output, then:
A.AVC > MC
B.AFC = AVC
C.MC > AVC
D.AVC = MC
9) Suppose a person pays $80 of annual interest on a loan that has a 5 percent annual
interest rate. The loan amount is:
A.$400.
B.$1,600.
C.$160.
D.$85.
10) An argument for making regulated monopolies adopt marginal cost pricing is that
this would:
A.Increase productive efficiency by making price equal average cost
B.Benefit higher income groups by making monopoly products more affordable
C.Increase managerial incentives to reduce employment and production
D.Make the marginal cost equal to society’s valuation of the marginal benefit
11) If a purely competitive firm is producing at the MR = MC output level and earning
an economic profit, then:
A.the selling price for this firm is above the market equilibrium price.
B.new firms will enter this market.
C.some existing firms in this market will leave.
D.there must be price fixing by the industry’s firms.
12) Population will necessarily fall if the:
A.birthrate exceeds the replacement rate.
B.replacement rate exceeds the birthrate.
C.birthrate exceeds the total fertility rate.
D.total fertility rate exceeds the birthrate.
13) The table below shows the utility schedule for a consumer of candy bars.
Refer to the above table. This consumer begins to experience diminishing marginal
utility when consuming the:
A.Third candy bar
B.Fourth candy bar
C.Sixth candy bar
D.Seventh candy bar
14) Suppose the total demand and supply of loanable funds (in billions) are as follows:
(a)What will be the market or equilibrium interest rate? What is the equilibrium
quantity of loanable funds? Complete the surplus-shortage column.
(b)Why will 4% not be the equilibrium interest rate in this market? Why not 14%?
(c)Now suppose that the government establishes a usury loan that sets the interest rate
at 6%. Explain the economic effects of this usury law.
15) A firm is both hiring labor and selling output in purely competitive markets and is
maximizing profits. It is currently operating in the elastic range of its MRP curve. If the
wage rate increases, its total spending on wages at the new equilibrium will:
A.Be larger
B.Be smaller
C.Be unchanged
D.Change in an undetermined direction
16)
Other things equal:
A.Workers with higher levels of human capital will tend to migrate to countries providing
greater wage opportunities
B.Workers with lower levels of human capital will tend to migrate to countries providing
greater wage opportunities
C.Smaller wage differences between countries will tend to increase the flow of
immigration between countries
D.Workers with higher levels of human capital will migrate to higher-wage countries
regardless of the distance between countries
17) In the diagrams below, the subscript “1” refers to the initial position of the curve,
while the subscript “2” refers to the final position after the curve shifts.
Refer to the diagrams above. In which of them would we see a shortage at the initial
price after the indicated curve has shifted?
A.A and D
B.B and D
C.B and C
D.A and C