1) A decrease in the prices of two products that a consumer buys out of a constant
budget would cause the consumer’s:
A.Indifference curves to shift outward from the origin
B.Indifference curves to shift inward to the origin
C.Budget line to shift outward from the origin
D.Budget line to shift inward to the origin
2) All of the following would affect the position of the supply curve for cranberries,
except the:
A.Popularity of cranberry drinks
B.Price of agricultural land for cranberries
C.Cost of fertilizers for cranberry production
D.Development of a new pest control for cranberries
3) Which of the following situations is not an example of market failure:
A.Ben’s Department Store cannot charge passers-by for using the sidewalk outside the
store
B.Ben cannot afford to buy a high-end Mercedes Benz luxury car
C.Ben’s Place is the only restaurant in town and thus he has significant power to set
menu prices
D.Ben’s Industries is dumping its wastewater into the unregulated river behind the
factory
4) How did Apple overcome consumers’ diminishing marginal utility for iPads?
A.Apple lowered the price of iPads so that previous buyers would purchase another
unit.
B.Apple introduced new features to entice previous buyers to purchase new models.
C.Apple ignored the problem and focused solely on attracting new buyers.
D.Apple was unable to overcome the problem and has faced steadily declining sales.
5) Which organization meets regularly to establish rules and settle disputes related to
international trade?
A.The United Nations Commission on Trade Law
B.The United Nations Conference on Trade and Development
C.The World Trade Organization
D.The World Economic Forum
6) Over the past decade, total and per capita trash generated in the United States have:
A.both increased at about the same rate.
B.increased and leveled off, respectively.
C.both fallen.
D.leveled off and fallen, respectively.
7) Sellers will opt out of markets in which:
A.there are significant negative externalities.
B.standardized products exist.
C.there are only foreign buyers.
D.information about buyers is inadequate, and some buyers can impose high costs on
the sellers.
8) If economic profits in an industry are zero and implicit costs are greater than zero,
then:
A.Resources will move out of the industry
B.There will be no production in the short run
C.Accounting profits are greater than zero
D.New firms will enter the industry
9) Answer the question on the basis of the following information for a public good. Pa
and Pb are the prices that individuals A and B are willing to pay for the last unit of a
public good, rather than do without it. These people are the only two members of
society.
Refer to the data. If the marginal cost of producing this good at the optimal quantity is
$4, the optimal quantity must be:
A.1 unit.
B.2 units.
C.3 units.
D.4 units.
10) The main difference between the short run and the long run is that:
A.Firms earn zero profits in the long run
B.The long run always refers to a time period of one year or longer
C.In the short run, some inputs are fixed and some are variable
D.In the long run, all inputs are fixed
11) The table below shows the marginal-utility schedules for goods A and B for a
hypothetical consumer. The price of good A is $1 and the price of good B is $2. The
income of the consumer is $8.
Refer to the above table. To maximize utility, the consumer will buy:
A.2 A and 3 B
B.4 A and 2 B
C.4 B
D.6 A and 1 B