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1) Consumer's income = $12
Refer to the data. Assume new product Z is introduced. How many units of Z will this
consumer buy, given his or her $12 budget?
A.Zero units.
B.2 units.
C.4 units.
D.6 units.
2) The primary force encouraging the entry of new firms into a purely competitive
industry is:
A.normal profits earned by firms already in the industry.
B.economic profits earned by firms already in the industry.
C.government subsidies for start-up firms.
D.a desire to provide goods for the betterment of society.
3)
Refer to the figure. An increase in the number of highly skilled and educated potential
immigrants would:
A.increase MB and increase the optimal quantity of immigrants.
B.reduce MB and reduce the optimal quantity of immigrants.
C.increase MC and increase the optimal quantity of immigrants.
D.reduce MC and reduce the optimal quantity of immigrants.
4) Behavioral economists criticize neoclassical models as being:
A.Messy and imprecise
B.Accurate but artificially elegant
C.Precise but inaccurate
D.Vague but accurate
5)
Refer to the above graph, where TP = total product and L = labor input. If this graph is
for a firm that sells its product in a purely competitive market, then its marginal revenue
product of labor (MRP):
A.Is constant at all levels of L
B.Increases at an increasing rate as L increases
C.Decreases as the labor input L increases
D.Increases at a decreasing rate as L increases
6) Newspaper dispensing devices seemingly "trust" people to take only a single paper,
but the devices actually rely on the law of:
A.supply.
B.increasing opportunity costs.
C.demand.
D.diminishing marginal utility.
7) Which statement is correct?
A.Farmers fared considerably better than most other economic groups during the Great
Depression
B.Farmers typically sell their products in highly competitive markets and buy in
imperfectly competitive markets
C.The principal beneficiaries of government farm subsidies have been the
very-low-income farmers
D.The use of price supports has accelerated the exodus of resources from agriculture
8)
Refer to the diagram for a noncollusive oligopolist. We assume that the firm is initially
in equilibrium at point E, where the equilibrium price and quantity are P and Q. If the
firm's rivals will ignore any price increase but match any price reduction, over what
range might marginal cost rise without disturbing equilibrium price and output?
A.bE
B.ab
C.Qa
D.Qb
9) Behavioral economics assume that people are:
A.Eager to, and capable of, estimating the benefits and costs of their decisions
B.Very much aware of their preferences and are consistent in their preferences
C.Prone to falling prey to temptation because they lack sufficient willpower
D.Always focusing on their self-interest and maximizing their own net benefits
10)
Refer to the diagram. The U.S. response to the events of September 11, 2001, is
illustrated by the:
A.shift of the production possibilities curve from CD to AB.
B.shift of the production possibilities curve from AB to CD.
C.move from x to y on production possibilities curve AB.
D.move from y to x on production possibilities curve AB.
11) About what percentage of research and development spending by businesses in the
United States in 2009 went to development (innovation and imitation) and about what
percentage went to basic research and invention, respectively?
A.20, 80
B.40, 60
C.80, 20
D.60, 40
12)
Refer to the data for a nondiscriminating monopolist. At its profit-maximizing output,
this firm's price will exceed its marginal cost by ____ and its average total cost by ____.
A.$20; $27.33
B.$10; $10.40
C.$24; $27.33
D.$30; $20.50
13) (Consider This) From an economist's perspective:
A.small government is better than big government.
B.big government is better than small government.
C.regardless of size, government is incapable of achieving allocative or productive
efficiency.
D.the size of government doesn't matter, as long as spending occurs up to where MB =
MC.
14) Which of the following statements best describes the demand for agricultural
commodities?
A.It takes a small decline in price to induce a large increase in the amount of
agricultural products demanded.
B.The marginal utility of additional units of agricultural output diminishes very rapidly.
C.Small increases in income cause demand to increase by a proportionately larger
amount.
D.When price declines, the resulting substitution effect is very large.
15) In a purely competitive market, how would a surplus of a product be eliminated?
A.The price of the product would decrease
B.The price of the product would increase
C.The quantity supplied of the product would increase
D.The quantity demanded for the product would decrease
16) In the standard model of pure competition, a profit-maximizing firm will produce
the output quantity in the short run where the gap between:
A.Marginal revenue and marginal cost is the largest, with revenue higher than cost
B.Average revenue and average cost is the largest, with revenue higher than cost
C.Total revenue and total cost is the largest, with revenue higher than cost
D.Average revenue and average variable cost is the largest
17) A natural monopoly occurs when:
A.long-run average costs decline continuously through the range of demand.
B.a firm owns or controls some resource essential to production.
C.long-run average costs rise continuously as output is increased.
D.economies of scale are obtained at relatively low levels of output.
18) The largest category of federal spending is for:
A.health care.
B.science, space, and technology.
C.pensions and income security.
D.national defense.
