1) Answer the question on the basis of the following information: Harry owns a barber
shop and charges $6 per haircut. By hiring one barber at $10 per hour, the shop can
provide 24 haircuts per eight-hour day. By hiring a second barber at the same wage rate,
the shop can now provide a total of 42 haircuts per day.
Refer to the given information. The MP of the second barber is:
A.$240.
B.$108.
C.18 haircuts.
D.42 haircuts.
2) If the Canadian dollar price of United States dollars increases from C$.80 to C$1.00,
it can be concluded that:
A.Both countries are on the international gold standard
B.The Canadian dollar has appreciated in value relative to the United States dollar
C.The United States dollar has depreciated in value relative to the Canadian dollar
D.The Canadian dollar has depreciated in value relative to the United States dollar
3) By requiring car producers to install emission control devices on cars, the
government forces these producers to internalize some of the external costs of auto
pollution. This will lead to the equilibrium price of cars:
A.Decreasing and the quantity increasing
B.Decreasing and the quantity decreasing
C.Increasing and the quantity increasing
D.Increasing and the quantity decreasing
4) According to behavioral economics, placement of goods in retail stores is often
designed to accomplish which of the following?
A.Maximize impulse buying by consumers.
B.Minimize shelving costs.
C.Maximize convenience for customers.
D.Maximize the amount of product the store can display.
5) When monetary policy becomes highly politicized, the policy tends to:
A.Become more effective at stabilizing the economy
B.Lose any effect at all on the economy
C.Become destabilizing, instead of promoting stability
D.Lead to rising budget surpluses
6)
Refer to the diagram above. If box E represents government, box C businesses, box D
the resource market, and box B the product market, then government hiring of teachers,
soldiers, police, and judges would be illustrated by arrows:
A.5 and 6
B.7 and 8
C.9 and 10
D.10 and 11
7) Behavioral economists believe that the human brain is generally:
A.efficient and accurate.
B.efficient but prone to errors.
C.inefficient but accurate.
D.inefficient and prone to errors.
8)
Refer to the diagram. In the P1 to P2 price range, we can say:
A.that consumer purchases are relatively insensitive to price changes.
B.nothing concerning price elasticity of demand.
C.that demand is inelastic with respect to price.
D.that demand is elastic with respect to price.
9) Answer the next two questions on the basis of the following demand and supply data
for a competitive market:
(a)If government levies a per unit excise tax of $2 on suppliers of this product, what
would the equilibrium price and quantity be? How much tax will be paid?
(b)If government has instead provided a per unit subsidy of $2 to suppliers of this
product, what would the equilibrium price and quantity be?
10) Which of the following generalizations is not correct?
A.The larger an item is in one’s budget, the greater the price elasticity of demand.
B.The price elasticity of demand is greater for necessities than it is for luxuries.
C.The larger the number of close substitutes available, the greater will be the price
elasticity of demand for a particular product.
D.The price elasticity of demand is greater the longer the time period under
consideration.
11)
Refer to the payoff matrix. Suppose that Speedy Bike and Power Bike are the only two
bicycle manufacturing firms serving the market. Both can choose large or small
advertising budgets. If this is a repeated game with no cooperation or reciprocity, cell A:
A.is not the expected outcome of this game.
B.is the expected outcome of this game, and it is both a Nash equilibrium and a
prisoner’s dilemma.
C.is the expected outcome of this game, but it is neither a Nash equilibrium nor a
prisoner’s dilemma.
D.is the expected outcome of this game, and it is a Nash equilibrium but not a prisoner’s
dilemma.
12)
In the figure, curves 1, 2, 3, and 4 represent the:
A.ATC, MC, AFC, and AVC curves respectively.
B.MC, AFC, AVC, and ATC curves respectively.
C.MC, ATC, AVC, and AFC curves respectively.
D.ATC, AVC, AFC, and MC curves respectively.
13) The U.S. Census Bureau estimates that from 2000 to 2009, the net inflow of
unauthorized immigrants was about:
A.100,000 annually.
B.250,000 annually.
C.350,000 annually.
D.700,000 annually.
14) Which of the following would cause a leftward shift in the supply curve for car
washes?
A.An increase in the number of cars in the city
B.A decrease in taxes on car washes
C.An increase in the price of car washing equipment
D.A decrease in the price of water
15) The fallacy of composition is essentially the error of:
A.omitting relevant variables in constructing a model.
B.reasoning from the general to the particular.
C.confusing cause and effect in economic relationships.
D.generalizing from the particular to the general.