1) Fixed cost is:
A.the cost of producing one more unit of capital, for example, machinery.
B.any cost that does not change when the firm changes its output.
C.average cost multiplied by the firm’s output.
D.usually zero in the short run.
2) Which of the following is the main problem with the barter system of exchange?
A.It encourages self-interest
B.It fosters the division of labor
C.It requires a coincidence of wants
D.It undermines the right to bequeath
3) Suppose that interest payments are $140 per year on a $1,000 loan and $1,188 per
year on an $8,485 loan. The interest rates on the two loans are:
A.14 percent and 20 percent, respectively.
B.14 percent on both loans.
C.18.8 percent on both loans.
D.1.4 percent and 11.8 percent, respectively.
4) The merger of a firm in one industry with another firm in the same industry that sells
similar products is called a:
A.Vertical merger
B.Secondary merger
C.Horizontal merger
D.Conglomerate merger
5)
Refer to the diagrams that show identical marginal utility from income curves for
Singer and Catalano. If an initial distribution of $15,000 to Singer and $5,000 to
Catalano is altered in favor of greater equality, it may be argued that:
A.the combined total utility of the two consumers will decline because Catalano has a
greater capacity to derive utility from income than does Singer.
B.incentives to produce will be weakened and total income will decrease.
C.incentives to produce will be enhanced and total income will increase.
D.the combined total utility of the two consumers will decline because Singer has a
greater capacity to derive utility from income than does Catalano.
6) How can supply and demand analysis be used to explain the equilibrium price and
quantity of exports and imports for aluminum when there is trade between two nations
(e.g., the United States and Canada)?
7)
Refer to the cost table above. Now suppose that there are 600 identical firms in this
industry, each with the same cost data as the single firm discussed above. Suppose, too,
that the demand curve for this industry is as follows:
At equilibrium, each firm will realize:
A.An economic profit of $155
B.An economic profit of $35
C.A loss of $45
D.A loss of $135
8) The “rule of reason” indicated that:
A.if less than four firms account for three-fourths of an industry’s sales, the industry is
in violation of the Sherman Act.
B.social regulation should not be enforced unreasonably so that costs exceed benefits.
C.the mere possession of monopoly power is a violation of the antitrust laws.
D.only contracts and combinations that unreasonably restrain trade violate the antitrust
laws.
9)
Refer to the diagram, which relates to Firm A. Which of the following would shift A’s
average total cost curve from ATC1 to ATC2?
A.An increase in the price of a key component used by A in producing its product.
B.A decrease in the incomes of A’s customers.
C.A move along A’s total product curve (not shown).
D.An improved production method that shifts A’s total product curve upward.
10) Which of the following nations is not a member of the OPEC oil cartel?
A.Saudi Arabia.
B.Iran.
C.Venezuela.
D.Norway.
11) The plus items below are “export-type” entries and the minus items are
“import-type” entries in the balance of payments for the hypothetical country of Zippo.
Refer to the given information. On the basis of its balance of payments position, and
other things equal, we can expect the international value of Zippo’s currency to:
A.increase.
B.decrease.
C.remain constant.
D.gyrate up and down.
12) Suppose a firm can produce 70 units of a product, Zenia, by combining labor, land,
capital, and entrepreneurial ability, as in the four alternative techniques shown in the
table below. Assume further that the firm can hire labor at $3 per unit, land at $3 per
unit, capital at $6 per unit, and entrepreneurship at $9 per unit.
Refer to the above table. If the price of labor declines from $3 to $2 per unit, then what
is the least costly way of producing Zenias?
A.A
B.B
C.C
D.D
13) Assuming no change in product demand, a pure monopolist:
A.can increase price and increase sales simultaneously because it dominates the market.
B.adds an amount to total revenue that is equal to the price of incremental sales.
C.should produce in the range where marginal revenue is negative.
D.must lower price to increase sales.
14) To Americans buyers, there is a decrease in the relative prices of Japanese goods
when the:
A.Yen appreciates
B.Dollar appreciates
C.Inflation rate in the United States is higher than the inflation rate in Japan, and there
are flexible exchange rates
D.Inflation rate in Japan is higher than the inflation rate in the United States and there
are fixed exchange rates
15)
The situation where movers are less capable and less motivated than similarly educated
people who don’t migrate is called:
A.Backflow
B.Brain drain
C.Reverse migration
D.Negative self-selection
16) If average variable cost is $74 and total fixed cost is $100 at 5 units of output, then
average total cost at this output level is:
A.$91
B.$94
C.$97
D.$100