1) Kara and Kyle are competing sockeye salmon fishers. Both have been allocated ITQs
that limit their catch to 2,000 tons of sockeye salmon each. Kara’s cost per ton is $8;
Kyle’s cost per ton is $12.
Refer to the information given. If the market price of sockeye salmon is $15 per ton,
what is the minimum amount per ton that Kara would have to offer Kyle to convince
him to sell Kara his ITQs?
A.$3.
B.$4.
C.$5.
D.$7.
2) Suppose American winemakers convince the federal government to issue a directive
to serve only domestically produced wine at government functions. This would be an
example of:
A.moral hazard.
B.the principal-agent problem.
C.logrolling.
D.rent-seeking behavior.
3)
Refer to the above figure. If box A represents households, D the resource market, and C
businesses, then flow (8) would represent ___ while flow (7) would represent ___.
A.Goods and services; consumption expenditures
B.Consumption expenditures; goods and services
C.Resources; money income
D.Money income; resources
4)
Consider the purely competitive firm pictured above. At its short-run equilibrium point,
the firm is earning:
A.Zero normal profits
B.Zero economic profits
C.Zero accounting profits
D.We can say nothing about this firm’s profit or loss situation
5)
Refer to the diagram pertaining to two nations and a specific product. The equilibrium
level of exports and imports occurs at:
A.H, where GB and FC intersect.
B.J, where the vertical distance between A and B equals the vertical distance between C
and D.
C.world price level F.
D.world price level G.
6) Even though local newspapers are very inexpensive, people rarely buy more than one
of them each day. This fact:
A.is an example of irrational behavior.
B.implies that electronic media sources are displacing print sources for many
consumers.
C.contradicts the economic perspective.
D.implies that, for most people, the marginal benefit of reading a second newspaper is
less than the marginal cost.
7) At the optimal quantity of a public good:
A.marginal benefit exceeds marginal cost by the greatest amount.
B.total benefit equals total cost.
C.marginal benefit equals marginal cost.
D.marginal benefit is zero.
8) Assume that the real output of a developing nation increases from $120 billion to
$140 billion while its population expands from 100 to 110 million. As a result, real
income per capita has increased by about:
A.$56 per person
B.$64 per person
C.$72 per person
D.$88 per person
9) The general conclusion of most economists about deregulation of previously
regulated industries in the United States is that it resulted in:
A.Increased monopoly power
B.Lower rates of innovation
C.Increased bureaucratic control
D.Decreased prices of goods and services
10) Assume that a consumer purchases only two products and there is a decrease in the
consumer’s income. The prices of the two products stay constant. The decrease in
income will result in a:
A.Shift of the budget line inward to the left
B.Shift of the budget line outward to the right
C.A decrease in the slope of the budget line
D.An increase in the slope of the budget line
11) Which of the following statements is true about productive and allocative
efficiency?
A.Realizing allocative efficiency implies that productive efficiency has been realized.
B.Productive efficiency can only occur if there is also allocative efficiency.
C.Society can achieve either productive efficiency or allocative efficiency, but not both
simultaneously.
D.Productive efficiency and allocative efficiency can only occur together; neither can
occur without the other.
12)
The graph above shows two indifference curves and QR and QS represent different
budget lines. A change in the equilibrium position on the diagram from point 1 to point
2 could result, other things being equal, from:
A.An increase in the price of B
B.A decrease in the price of A
C.A decrease in the consumer’s money income
D.An equal percentage increase in the consumer’s money income and in the price of B
13) Government changes in interest rates to regulate the economy are part of:
A.monetary policy.
B.fiscal policy.
C.debt policy.
D.liability policy.
14) A government is considering undertaking one or more construction projects. The
estimated marginal costs and benefits of each project are given in the table.
Refer to the above table and information. What is the total amount that the government
should spend on construction projects?
A.$8 million
B.$14 million
C.$19 million
D.$37 million
15) The data below relate to a pure monopolist and the product it produces. What is the
profit-maximizing output and price for this monopolist?
A.P = $12;Q = 5
B.P = $14;Q = 4
C.P = $15;Q = 3
D.P = $18;Q = 2
16)
As a result of a major overhaul of the U.S. welfare system in 1996:
A.Benefits were expanded for immigrants
B.Immigrants are denied benefits for their first five years in the U.S.
C.Immigrants are denied benefits for their first three years in the U.S.
D.More immigrants qualified for welfare benefits
17) Recent government policies to provide price and income subsidies in agriculture are
economically inefficient because they:
A.Increase the interest costs for farmers
B.Maintain high production levels for farm products
C.Limit the adoption of new technology to increase output
D.Give control over production and prices to a few, large agribusinesses
18) Which is true of pure competition but not of monopolistic competition?
A.There are no significant barriers to entry
B.Long-run economic profits are zero
C.There are a large number of firms in the market
D.Long-run equilibrium occurs at the minimum point on the ATC curve
19) Suppose that the price of product X rises by 20 percent and the quantity supplied of
X increases by 15 percent. The coefficient of price elasticity of supply for good X is:
A.negative and therefore X is an inferior good.
B.positive and therefore X is a normal good.
C.less than 1 and therefore supply is inelastic.
D.more than 1 and therefore supply is elastic.