The graph shown exhibits diseconomies of scale:
A. in region a.
B. in region b.
C. in region c.
D. over the entire range of output.
Answer:
The supply of euros on the foreign exchange market slopes:
A. upward because European consumers buy fewer foreign goods when the value of the
euro decreases.
B. upward because European consumers buy more foreign goods when the value of the
euro decreases.
C. downward because European consumers buy fewer foreign goods when the value of
the euro decreases.
D. downward because European consumers buy more foreign goods when the value of
the euro decreases.
Answer:
Refer to the graphs shown, which depict a perfectly competitive market and firm in a
constant-cost industry. If market demand decreases from D0 to D1, in the long run:
A. new firms will enter this market and the price will return to P0.
B. new firms will enter this market and the price will remain at P1.
C. some firms will exit this market and the price will return to P0.
D. some firms will exit this market and the price will remain at P1.
Answer:
Your opportunity cost of taking this course is:
A. the tuition you paid for the course.
B. the net benefit of the activity you would have chosen if you had not taken the course.
C. the net benefit of taking this course.
D. the cost of the activity you would have chosen if you had not taken the course.
Answer:
Which of the following is the best example of a positive question?
A. How should the government deal with the next recession?
B. Should the government reduce inflation?
C. How are price and quantity demanded related?
D. Should government allow two large companies to merge?
Answer:
Refer to the following table. Fill in the table and answer the following question.
What is the total utility of five cans of soda?
A. 6
B. 8
C. 50
D. 44
Answer:
Refer to the graph shown. The figure shows the demand and supply curves for eggs and
shows two equilibrium points, E1 and E2. An increase in demand from D1 to D2 would
cause:
A. price to decline from $1.25 to $1.00 a dozen and a shortage of 2,000 dozen eggs per
week.
B. price to remain at $1.00 a dozen and a shortage of 2,000 dozen eggs per week.
C. price to rise from $1.00 to $1.25 a dozen and equilibrium quantity to be 3,000 dozen
eggs per week.
D. price to rise from $1.00 to $1.25 a dozen and a surplus of 2,000 dozen eggs per
week.
Answer:
George Davis has estimated that for every 1 percent increase in the price of natural
Christmas trees, the demand for artificial trees rises by .188 percent. From this
information one can conclude that:
A. the income elasticity of demand for natural Christmas trees is less than 1.
B. natural Christmas trees are luxuries.
C. natural and artificial Christmas trees are substitutes.
D. natural and artificial Christmas trees are complements.
Answer:
Regulations created some years ago allow cell phone customers to keep the same phone
number even when they switch to a different provider. This change:
A. increased the monopoly power of cell phone providers.
B. reduced the monopoly power of cell phone providers.
C. showed that lobbyists employed in the telecom industry are interested only in
engaging in rent-seeking activities.
D. did not affect the degree of competition in the industry.
Answer:
Refer to the table shown that depicts a third-party payer market. What is the quantity
demanded if a $1 co-pay is established?
A. 0
B. 300
C. 600
D. 900
Answer:
Suppose that in Slovakia one unit of labor can produce either 20 tons of wheat or 40
tons of soy and in Poland one unit of labor can produce either 40 tons of wheat or 20
tons of soy. If each country has two units of labor, which of the following consumption
combinations can be attained only with trade?
A. Slovakia consumes 80 tons of soy.
B. Slovakia consumes 30 tons of both soy and wheat.
C. Poland consumes 80 tons of wheat.
D. Poland consumes 40 tons of wheat and 20 tons of soy.
Answer:
Historically, technology has:
A. increased and the demand for labor has decreased as output has increased.
B. increased and the demand for labor has increased as output has increased.
C. decreased and the demand for labor has decreased as output has decreased.
D. decreased and the demand for labor has increased as output has decreased.
Answer:
Refer to the graph shown. If the firm wishes to double output from 500 to 1,000:
A. average total costs will fall.
B. average total costs will remain the same.
C. average total costs will rise.
D. it is impossible to determine what will happen to average total costs.
Answer:
A decrease in quantity and price are consistent with a:
A. leftward shift in demand keeping supply constant.
B. leftward shift in supply keeping demand constant.
C. rightward shift in supply and demand.
D. rightward shift in demand and a leftward shift in supply.
Answer:
Refer to the graph shown. If this monopolist were forced to set price equal to marginal
cost, in the long run it probably would produce:
A. 0 units of output.
B. 300 units of output.
C. 500 units of output.
D. 900 units of output.
Answer:
The following table lists the utility that Gwen receives from consuming bananas at
$0.25 apiece. What is the total utility of consuming four bananas?
A. 46
B. 30
C. 8
D. 2
Answer:
Refer to the table shown. From this table we can conclude that:
A. France has a comparative advantage in both goods.
B. France has a comparative advantage in wine and Germany has a comparative
advantage in electric generators.
C. Germany has a comparative advantage in wine and France has a comparative
advantage in electric generators.
D. Germany has a comparative advantage in both goods.
Answer:
Performing cost/benefit analysis involves:
A. quantifying the costs and benefits associated with a given activity and deeming the
activity worthwhile only if the costs exceed the benefits.
B. quantifying the costs and benefits associated with a given activity and deeming the
activity worthwhile only if the benefits exceed the costs.
C. only those activities which provide an explicit monetary loss and gain.
D. only those activities which provide an implicit monetary loss and gain.
Answer:
A mixed strategy means a player:
A. makes random moves in a sequential game.
B. makes random moves in a simultaneous game.
C. mixes random moves with nonrandom moves.
D. mixes optimal and suboptimal moves to confuse her opponent.
Answer:
The merger between two general merchandise stores, Sears and Kmart, each of which
carried some specialty items, most likely produced:
A. neither economies of scope nor economies of scale.
B. both economies of scope and economies of scale.
C. economies of scope but not economies of scale.
D. economies of scale but not economies of scope.
Answer:
The rationality assumptions of game theory:
A. always hold in the real world.
B. never hold in the real world.
C. sometimes hold in the real world.
D. make game theory irrelevant.
Answer:
If a single union supplies all the labor in a competitive labor market, the union probably
will:
A. increase labor supply to raise employment.
B. restrict labor supply to raise wages.
C. increase union membership to increase wages.
D. behave as a monopsonist.
Answer:
China imposed a tax on its textile exports when the international quota system for
textiles expired. Many countries were worried about rapid Chinese expansion into
textiles, and there was discussion of new tariffs and quotas to slow an anticipated
increase in Chinese exports. Is there any advantage to China from imposing export
tariffs rather than having importers impose import tariffs?
A. No; both result in fewer jobs in China and higher prices in the United States.
B. Yes; with a Chinese export tariff, China would get the revenue, whereas with an
American import tariff, the United States would get the revenue.
C. Yes; with the Chinese export tariff, China will lose fewer jobs than it would with an
American import tariff.
D. Yes; with the Chinese export tariff, prices will not rise in the United States as they
would with an American import tariff.
Answer:
If government were to issue a fixed number of licenses to produce a good or provide a
service, this would likely:
A. lower the price of the good or service to consumers.
B. lower the wage received by those who have licenses.
C. increase the wage received by those who have licenses.
D. increase the demand for goods.
Answer:
When the drug Vioxx was pulled from the market by pharmaceutical company Merck
due to its association with heart problems, the demand for other pain medications:
A. increased, putting upward pressure on their price.
B. increased, putting downward pressure on their price.
C. decreased, putting upward pressure on their price.
D. decreased, putting downward pressure on their price.
Answer:
A lawyer who drives a beat-up car and wears frumpy clothes may have a hard time
getting clients. Potential clients may conclude from his appearance that he is poor, and
if he is poor, he probably is not very good. If this is true for a lawyer, dressing in
expensive and stylish clothing is a way of:
A. internalizing externalities.
B. changing a nonrival good into a rival good.
C. changing a nonexcludable good into an excludable good.
D. signaling quality.
Answer:
Federal tax and expenditure programs:
A. are somewhat effective means of redistributing income in the United States.
B. are not effective means of redistributing income in the United States.
C. have worsened the inequality of income in the United States.
D. have dramatically equalized income in the United States.
Answer:
Suppose a recent and widely circulated medical article reports new benefits of exercise.
Simultaneously, the price of the parts needed to make bikes falls. What is the likely
effect on the equilibrium price and quantity of exercise bikes sold?
A. Price of exercise bikes decreases and quantity sold remains the same.
B. Price of exercise bikes increases and quantity sold also increases.
C. Price of exercise bikes remains the same and quantity sold increases.
D. The change in price is ambiguous, but the quantity sold increases.
Answer:
When the polio vaccine first became available in the United States, the government
controlled the price with an effective price ceiling. Production of the vaccine was not
sufficient to fill all orders and the government had to regulate its distribution. Had the
vaccine been sold without government intervention, the shortage would have been
eliminated by price:
A. falling, quantity demanded decreasing, and supply increasing.
B. falling, demand decreasing, and supply increasing.
C. rising, demand decreasing, and quantity supplied increasing.
D. rising, quantity demanded decreasing, and quantity supplied increasing.
Answer:
In a mixed strategy:
A. the payoffs are mixed during each round.
B. the order of who chooses first is mixed.
C. moves can be predicted.
D. players try to avoid demonstrating a pattern.
Answer:
Suppose both wages and employment decrease. These changes most likely were caused
by:
A. a decline in immigration.
B. an increase in emigration.
C. an increase in the working age population.
D. a decline in business activity in the economy.
Answer: