1) If a more efficient technology was discovered by a firm, there would be:
A.An upward shift in the AVC curve
B.An upward shift in the AFC curve
C.A downward shift in the AFC curve
D.A downward shift in the MC curve
2) So-called precommitments are effective ways of fighting:
A.Framing effects
B.Mental accounting
C.Anchoring
D.Self-control problems
3) The regulatory mechanism of the market system is:
A.self-interest.
B.private property.
C.competition.
D.specialization.
4) Copyrights and trademarks are examples of:
A.capital goods.
B.human capital.
C.property rights.
D.public goods.
5) Private property:
A.discourages cooperation because people don’t want to part with what they own.
B.discourages innovation, as people are often afraid to risk losing their own property.
C.encourages owners to maintain or improve their property so as to preserve or enhance
value.
D.does everything indicated by the other answers.
6) Creative destruction is least beneficial to:
A.workers in the “destroyed” industries.
B.workers in the “created” industries.
C.consumers.
D.society as a whole.
7) In a market system, the distribution of goods and services among consumers is
largely determined by:
A.The willingness and ability of consumers to pay the prices
B.Whoever needs the goods and services the most
C.Whoever has the closest connection to firms and the government
D.A random factor that is almost impossible to predict
8) If the demand for a product is perfectly inelastic and the supply curve is upsloping, a
$1 excise tax per unit of output will:
A.raise price by less than $1.
B.raise price by more than $1.
C.raise price by $1.
D.lower price by $1.
9) The graph below shows the supply and demand curves for dollars in the pound/dollar
market.
Refer to the graph above. Assume that D1 and S1 are the initial demand for and supply
of dollars. The exchange rate will be:
A.$5 equals 1 pound
B.$4 equals 1 pound
C.$1 equals 5 pounds
D.$0.20 equals 1 pound
10) The equilibrium point in the market is where S and D curve intersect.
Refer to the graph above. At equilibrium, the total maximum amount that consumers
would have been willing to pay for the product is represented by the area:
A.a + b
B.a + b + c
C.a
D.b + c
11) Which of the following statements about human-brain activity is true?
A.Unconscious intuition uses the newer parts of the brain in the front part of the head
B.Conscious deliberation uses the older parts of the brain in the front part of the head
C.Conscious deliberation uses the newer parts of the brain in the front part of the head
D.Unconscious intuition uses the older parts of the brain in the front part of the head
12) To say that land rent performs no incentive function means that:
A.higher rental payments will not bring forth a larger quantity of land.
B.rent is not a cost to specific firms, but it is a cost from the standpoint of the economy
as a whole.
C.rent does not allocate land in terms of productive efficiency.
D.rent tends to allocate land into the most productive uses.
13) Innovations that lower production costs or create new products:
A.are rare in competitive industries.
B.discourage new firms from entering the industry.
C.often generate short-run economic profits that do not last into the long run.
D.usually generate long-run economic profits for the innovator.
14) The firm’s short-run marginal-cost curve is increasing when:
A.Marginal product is increasing
B.Marginal product is decreasing
C.Total fixed cost is increasing
D.Average fixed cost is decreasing
15) Suppose that as the price of Y falls from $2.00 to $1.90, the quantity of Y demanded
increases from 110 to 118. Then the price elasticity of demand is:
A.4.00
B.2.09
C.1.45
D.3.94
16)
What portion of the engineering and computer-science doctorate degree-holders in the U.S.
are foreign-born?
A.About 10%
B.About 25%
C.About 50%
D.About 75%
17) The variety of products and features which consumers may choose from in
monopolistically competitive industries:
A.At least partially offsets the economic inefficiencies of this market structure
B.Leads to an optimal allocation of resources in the market structure
C.Guarantees that firms produce at full-capacity output levels
D.Makes the demand curves facing firms in these industries perfectly elastic
18) Kodak introduced to the marketplace a digital camera that uses no film but that
takes photos that can be shown on personal computers. This is an example of:
A.economies of scale.
B.product innovation.
C.process innovation.
D.venture capital.
19) John’s friend Rosika won a major lottery jackpot. Seeing this, and despite the fact
that millions don’t win and the odds of winning are infinitesimal, John goes out and
buys a bunch of lottery tickets despite struggling financially. John’s decision to buy the
lottery tickets under these circumstances would best be explained by the:
A.hindsight bias.
B.self-serving bias.
C.confirmation bias.
D.availability heuristic.