1)
Refer to the diagrams. The case of substitute goods is represented by figure:
A.A
B.B
C.C
D.D
2) Normative statements are concerned primarily with:
A.facts and theories.
B.what ought to be.
C.what is.
D.rational choice involving costs and benefits.
3) In economics, the pleasure, happiness, or satisfaction received from a product is
called:
A.marginal cost.
B.rational outcome.
C.status fulfillment.
D.utility.
4) Susie purchased a nonrefundable ticket to a soccer match for $20. It will cost her $10
worth of gas and wear and tear to drive to the match and $5 to park her car. On the day
of the match, Susie’s boss offers her $100 to come to work instead. In considering what
to do, which of the above would be considered a sunk cost?
A.The $20 ticket to the match.
B.The $10 cost to drive to the match.
C.The $5 cost to park at the stadium.
D.The $100 offered by Susie’s boss.
5) Many people do not steal or commit fraud because to them, the resulting feelings of
guilt and uneasiness make the:
A.Marginal utility of the act increase
B.Marginal utility of the act decrease
C.Marginal cost of the act increase
D.Marginal cost of the act decrease
6) Underemployment occurs:
A.when workers do not have jobs.
B.when farm workers become more productive.
C.when workers are working fewer hours than they desire or when they are working
less productively than they are capable.
D.in IACs but not in the DVCs.
7) Farm price support programs tend to:
A.Benefit both farmers and consumers of the farm products
B.Benefit farmers and impose a smaller cost on consumers and taxpayers
C.Lead to net social benefits
D.Benefit farmers but impose a larger cost on consumers and taxpayers
8) In a graph of the production possibilities curve, the two axes of the graph indicate
the:
A.Prices of the two products that a nation can produce
B.Maximum quantities of the two resources that a nation possesses
C.Price of the products on the vertical axis, and quantities on the horizontal
D.Quantities of the two products that a nation can produce
9) The demographic transition view of population and growth in DVCs is that:
A.The most important factor affecting population growth in DVCs are demographic
changes among the elderly
B.Slower population growth is neither desirable nor productive for DVCs given the
state of the economies in these nations
C.Reduced birthrates must come first in DVCs, and then higher per capita incomes will
follow
D.Higher per capita incomes must come first in DVCs, and then reduced birth rates will
follow
10) A major distinction between government purchases and government transfer
payments is that:
A.Government purchases divert resources from private uses to public uses while
transfer payments do not
B.Transfer payments divert resources from private uses to public uses while
government purchases do not
C.Government purchases have to be approved by Congress while transfer payments do
not
D.Government purchases of goods and services have increased more rapidly during the
past twenty years than have transfer payments
11) The ambitious plan to wean American agriculture from subsidies, as embodied in
the Freedom to Farm Act of 1996:
A.Became fully realized by 2000
B.Unraveled in 1998 and 1999 when farm prices fell
C.Was not approved by the President
D.Was extended in 2002
12) If the inflation rate is 10 percent, what is a bank’s real rate of return on a loan of
$100 at 10 percent interest?
A.$100
B.$10
C.10 percent
D.0 percent
13) Sometimes, we observe cases where the price of a product rose and the quantity
bought by buyers also increased. Such cases occur due to a violation of the:
A.Law of Demand
B.Law of Supply
C.Allocative efficiency rule
D.Ceteris paribus assumption
14) As a consequence of the problem of scarcity:
A.There is never enough of anything
B.Individuals have to make choices from among alternatives
C.Only some people can “have it all”
D.Things which are plentiful have relatively high prices
15) Resources are efficiently allocated when production occurs at that output at which:
A.P equals MR
B.P equals AVC
C.P exceeds MR
D.P equals MC
16) The best output or the optimal production of the nation is:
A.A combination of products at the midpoint of the production possibilities curve
B.A combination of products at the two endpoints of the production possibilities curve
C.Determined by equalizing the marginal benefits and marginal costs of each product
D.The production combination where the opportunity costs are minimized
17) The less elastic a monopolistic competitor’s long-run demand curve, the:
A.less its excess capacity.
B.higher its price relative to that of a pure competitor having the same cost curves.
C.higher its long-run profits.
D.lower its average total cost at its equilibrium level of output.
18) The percentage of the U.S. population living in poverty during the 2000 to 2011
period:
A.Decreased slightly
B.Increased
C.Remained relatively constant
D.Decreased sharply
19)
Refer to the four graphs above. Select the graph that best shows the changes in demand
and supply in the market specified in the following situation: In the market for beef, if a
new diet fad favoring beef consumption becomes hugely popular, while cattle producers
see steeply rising costs of cattle feed.
A.Graph A
B.Graph B
C.Graph C
D.Graph D
20) Answer the question based on the following information. Normal University has
found it necessary to institute a crime-control program on its campus to deal with the
high costs of theft and vandalism. The university is now considering several alternative
levels of crime control. This table shows the expected annual costs and benefits of these
alternatives.
Refer to the above information. The marginal benefits of crime control for
A.$10,000
B.$40,000
C.$50,000
D.$200,000