1) The following data show the supply and demand schedules for a product.
Refer to the above data. The government now introduces a subsidy payment to
producers of $30 per unit. Assuming a purely competitive market for the product, the
new equilibrium price will be between:
A.$40-$50
B.$50-$60
C.$60-$70
D.$70-$80
2) If we say that two variables are directly related, this means that:
A.the relationship between the two is purely random.
B.an increase in one variable is associated with a decrease in the other variable.
C.an increase in one variable is associated with an increase in the other variable.
D.the two graph as a downsloping line.
3) One reason that the quantity demanded of a good increases when its price falls is that
the:
A.price decline shifts the supply curve to the left.
B.lower price shifts the demand curve to the left.
C.lower price shifts the demand curve to the right.
D.lower price increases the real incomes of buyers, enabling them to buy more.
4) A decrease in the price of a productive resource will result in each of the following
except a(n):
A.Downward shift in the average-cost curves for all products which use the resource
B.Rightward shift in the supply of products which use the resource
C.Rightward shift in the demand curves for all products which use the resource
D.Increase in the quantity demanded of this productive resource
5) Neoclassical economics does not hold which of the following assumptions?
A.People are fundamentally rational
B.People can make errors initially, but they learn quickly
C.People’s errors are random and rare
D.People make regularly-repeated mistakes
6) The budget line shows:
A.the amount of product A that a consumer is willing to give up to obtain one more unit
of product B.
B.all possible combinations of two goods that can be purchased, given money income
and the prices of the goods.
C.the minimum amount of two goods that a consumer can purchase with a specific
money income.
D.all possible combinations of two goods that yield the same level of utility to the
consumer.
7) Smaller groups are sometimes able to achieve political victories against larger
groups. This is referred to as the:
A.moral hazard problem.
B.featherbedding problem.
C.collective action problem.
D.pork barrel problem.
8) The substitution effect indicates that a profit-seeking firm will use:
A.more of an input whose price has fallen and less of other inputs in producing a given
output.
B.more of all inputs if production costs fall.
C.more of those inputs whose marginal productivity is the greatest.
D.less of an input whose price has fallen and more of other inputs in producing a given
output.
9)
In this market, economists would call a government-set maximum price of $40 a:
A.price ceiling.
B.price floor.
C.equilibrium price.
D.fair price.
10)
Refer to the above graph for a monopolistically competitive firm. A successful
advertising campaign by the firm will cause its demand curve to shift from:
A.A to B and become more elastic
B.A to B and become less elastic
C.B to A and become more elastic
D.B to A and become less elastic
11) The optimal amount of social regulation occurs where the marginal benefit of such
regulation:
A.equals the marginal cost.
B.exceeds the marginal cost by the greatest amount.
C.is zero.
D.is at its maximum.