1) An economy will always operate at some point on its production possibilities curve.
2) The probable incidence of the tax on business property is on consumers.
3) A major factor explaining economies of scale is increased specialization of labor.
4) The Patient Protection and Affordable Care Act prohibits insurance companies from
denying coverage to anyone on the basis of a preexisting medical condition.
5) Variable costs are costs that change directly with output.
6) The present value of $4,000 deposited today at 8 percent interest is $5,038.85 three
years from now.
7) Commissions or royalties may be an inexpensive way of reducing shirking on a job
when the costs of monitoring work performance are high.
8) Anchoring leads people to consider irrelevant information when making decisions.
9) In drawing a particular budget line, money income and the prices of the two products
are fixed.
10) Majority voting assures that government will provide a public good if it yields total
benefits in excess of total costs.
11) Technological advance consists of short-run adjustments to the production process
that reduce costs.
12)
Studies show that the largest negative impact of illegal immigrants is on:
A.The wages of native-born workers
B.The average wage in the U.S.
C.Employment opportunities of native-born workers
D.The wages of previous immigrants
13) The automobile, household appliance, and automobile tire industries are all
illustrations of:
A.homogeneous oligopoly.
B.monopolistic competition.
C.pure monopoly.
D.differentiated oligopoly.
14) One main point of Frederic Bastiat’s satire is that:
A.Employment and jobs is the single most important measure of the standard of living
B.We should not try to produce what we can get from others at a lower cost
C.Some industries may reasonably require protection in order to grow
D.Exporting is always a worthwhile activity to be supported and enhanced
15) If a factor of production has many close substitutes, we would expect that its price
elasticity of demand would be:
A.Unity
B.Zero
C.Greater than one
D.Less than one, but greater than zero
16) Assume that the short-run cost and demand data given in the table below confronts
a monopolistic competitor selling a given product and engaged in a given amount of
product promotion. Compare the marginal cost and marginal revenue of each unit of
output and enter these figures in the table.
(a)At what output level and at what price will the firm produce in the short run? What
will be the total profit?
(b)What will happen to demand, price, and profit in the long run? How will the market
adjust to achieve this?
17) The initial proposed remedy for Microsoft violations of antitrust laws in the 2000
ruling from a Federal District Court was to:
A.Fine the company $100 million
B.Give software codes to Microsoft competitors
C.Split Microsoft into two companies
D.Apply the legal cartel theory of regulation to Microsoft
18)
Refer to the diagrams. The profit-maximizing firm’s total wage cost:
A.is 0abc.
B.is 0Wbc.
C.is Wab.
D.cannot be determined.
19) The law of supply indicates that, other things equal:
A.producers will offer more of a product at high prices than at low prices.
B.the product supply curve is downsloping.
C.consumers will purchase less of a good at high prices than at low prices.
D.producers will offer more of a product at low prices than at high prices.
20) A tax subsidy is involved in employer-financed health insurance because:
A.all working adults are covered by Medicare.
B.all working adults are covered by Medicaid.
C.employer payments for health insurance are not subject to income or payroll taxes.
D.corporations that provide health insurance pay lower corporate income tax rates.
21) Producer surplus:
A.is the difference between the maximum prices consumers are willing to pay for a
product and the lower equilibrium price.
B.rises as equilibrium price falls.
C.is the difference between the minimum prices producers are willing to accept for a
product and the higher equilibrium price.
D.is the difference between the maximum prices consumers are willing to pay for a
product and the minimum prices producers are willing to accept.
22) To stimulate economic growth, it would be best if developing countries adopted
policies to:
A.Discourage foreign investment
B.Subsidize state industries
C.Build more human capital
D.Increase population growth
23) Why is the supply of loanable funds not perfectly inelastic? (In other words, why is
the supply curve upsloping?)
24) Compensating wage differentials will attract U.S. workers even to otherwise
undesirable work. Explain.
25) Assess the arguments for and against patents in terms of creative destruction.
26)
27) Explain how giving to charity discredits the neoclassical model assumption that
individuals are purely self-interested.