An import quota does which of the following?
A. Decreases the price of the imported good for the consumer
B. Increases the price of the domestic good for the consumer
C. Redistributes income from domestic producers to domestic consumers
D. Decreases the price received by foreign producers
Answer:
Refer to the graph shown. The cost of 5 units of labor and 6 2/3 units of machines is the
same as the cost of:
A. 7.5 units of labor and 5 units of machines.
B. 10 units of labor and 10 units of machines.
C. 5 units of labor and 10 units of machines.
D. 15 units of labor and 2 units of machines.
Answer:
Suppose that the market labor supply and labor demand equations are given by Qs =
5W and Qd = 30 – 5W. If the minimum wage were set at $6 an hour, how many people
would not be able to find work?
A. 30
B. 20
C. 10
D. 0
Answer:
In the United States:
A. the upper class has become the largest class.
B. the lower class has become the largest class.
C. the middle class has become the largest class.
D. all three classes are the same size.
Answer:
The Environment Ministry in Japan proposed a new carbon tax to meet Japan’s
obligations to reduce carbon dioxide emissions under the Kyoto Treaty. The tax would
be levied on producers and importers of fossil fuels, and the expectation is that it would
be largely passed on to consumers. This proposal is an example of a:
A. progressive tax.
B. voluntary program.
C. tax incentive policy.
D. free rider problem.
Answer:
How do the concepts of market failure and failure of market outcome relate to the
concept of Pareto optimality?
A. Market failure is judged by the criteria of Pareto optimality; failure of market
outcome rejects Pareto optimality as the sole criterion.
B. Failure of market outcome is judged by the criteria of Pareto optimality; market
failure rejects Pareto optimality as the sole criterion.
C. Both market failure and failure of market outcome are judged by the criteria of
Pareto optimality.
D. Both market failure and failure of market outcome reject the criteria of Pareto
optimality for another criterion.
Answer:
Consider the table below, in which each production choice represents a point on a
production possibility curve.
This production possibility table could be graphed as a:
A. straight line with negative slope.
B. curved line with negative slope.
C. straight line with zero slope.
D. curved line with positive slope.
Answer:
Refer to the graphs shown. The arrow that would best illustrate the impact on
consumers of reducing sales tax on a good paid by suppliers is:
A. A.
B. B.
C. C.
D. D.
Answer:
Because a monopolistic competitor has some monopoly power, advertising to increase
that monopoly power makes sense as long as:
A. the marginal benefit of advertising is positive.
B. the marginal cost of advertising is positive.
C. the marginal benefit of advertising exceeds the marginal cost of advertising.
D. the marginal cost of advertising exceeds the marginal benefit of advertising.
Answer:
If the demand for widgets decreases, this will:
A. increase the supply of inputs used to produce widgets.
B. decrease the supply of inputs used to produce widgets.
C. increase the demand for inputs used to produce widgets.
D. decrease the demand for inputs used to produce widgets.
Answer:
A quota differs from a tariff in that quotas:
A. limit the volume of imports more than tariffs.
B. do not increase the price of imports as much as tariffs.
C. do not generate tax revenues, unlike tariffs.
D. reduce consumer welfare more than do tariffs.
Answer:
All of the following would cause the yen (currency of Japan) to appreciate except:
A. the discovery of a vegetable only grown in Japan that could be used as biofuel.
B. increased interest rates on Japanese financial assets.
C. a decrease in Japanese income.
D. a new, global trend for Japanese sushi.
Answer:
Of the following, the most likely example of price discrimination is when:
A. a firm sells different shoes for different prices.
B. hotels charge different rates for the same rooms when conventions are held.
C. restaurants charge different prices for chicken and beef.
D. supermarkets charge different prices for oranges and apples.
Answer:
An economic principle:
A. should be used to make every individual decision.
B. generally is stated as a normative statement.
C. can be combined with knowledge of economic institutions to make policy proposals.
D. is an action taken to influence the course of economic events.
Answer:
All of the following are possible explanations for the fact that on average women earn
lower wages than men in the United States except:
A. Women choose to work in low-wage industries.
B. Women are more productive than men on average.
C. Women enter and leave the labor force more frequently than men, causing them on
average to have less experience and a lower productivity than men.
D. Women are discriminated against in labor markets.
Answer:
Globalization represents:
A. a return to isolationism.
B. the opposite of isolationism.
C. the economic complement of political isolationism.
D. the political complement of economic isolationism.
Answer:
A person buying a used car could ask the seller for permission to take the car to a
mechanic for an inspection. If the seller says no, the prospective buyer has gained
information about the car. This process is known as:
A. screening.
B. signaling.
C. licensing.
D. internalizing the externality.
Answer:
An economic force given relatively free rein by society to work through the market is:
A. a market force.
B. a social force.
C. a price mechanism.
D. a political force.
Answer:
In principle, socialism is:
A. less concerned about fairness than capitalism.
B. just as concerned about fairness as capitalism.
C. more concerned about fairness than capitalism.
D. not concerned about fairness at all.
Answer:
In the 1990s the number of hogs slaughtered rose to record levels. The increase in
production was the result of the rise of megaproducers that operated at a lower average
cost than smaller producers. What economic concept does this describe?
A. Economies of scope.
B. Economies of scale.
C. Indivisible setup costs
D. Minimum efficient production.
Answer:
Which of the following best defines rational behavior?
A. Analyzing the total gains from a decision
B. Improving net gain by pursuing decisions as long as the marginal benefits exceed the
marginal costs
C. Seeking to gain by choosing to undertake actions as long as the marginal costs
exceed the associated marginal benefits
D. Seeking to maximize total gain regardless of cost
Answer:
Focusing on how people actually behave is the main motivation behind ____
economics.
A. traditional
B. behavioral
C. modern
D. home
Answer:
Behavioral economists have found that:
A. people are always irrational when considering incentives.
B. markets are the best way to organize mutually beneficial exchanges.
C. only market prices matter when people make decisions.
D. design mechanisms must take social factors as well as price into account.
Answer:
Comparable worth laws are laws that mandate comparable pay for:
A. people with comparable abilities.
B. comparable work.
C. everyone.
D. people with comparable levels of seniority.
Answer:
In the absence of economies of scale, advertising and product differentiation:
A. reduce social welfare by increasing average total cost.
B. increase social welfare by giving consumers a greater variety of goods to choose
from.
C. have an uncertain effect on welfare because they increase both average total cost and
product variety.
D. benefit consumers if product variety increases.
Answer:
Graphically, deadweight loss is shown by the:
A. welfare loss rectangle.
B. welfare loss triangle.
C. tax revenue rectangle.
D. consumer surplus loss triangle.
Answer:
According to the law of supply, what will motivate firms to increase their quantity
supplied of a product?
A. Production cost
B. Fixed cost
C. Price
D. Supply
Answer:
Long-run competitive equilibrium in an industry implies that no firm:
A. is earning a normal profit.
B. is producing at the output level where price equals long-run average total cost.
C. has an incentive to enter or exit the industry.
D. is earning accounting profits.
Answer:
You run a small business producing picture frames. This month your total cost is
$10,000, your variable cost is $5,000, and your output is 5,000 picture frames. Given
this information, your:
A. average variable cost is $2.
B. average total cost is $3.
C. average total cost is $1.
D. average fixed cost is $1.
Answer:
An example of share distribution of income is how much:
A. the top 10 percent of a population gets.
B. blacks get relative to whites.
C. two-parent households get relative to single-parent households.
D. the young get relative to the old.
Answer:
Since Fidel Castro assumed power in Cuba, the United States has not allowed U.S.
citizens to trade with Cuba. This is an example of:
A. a quota.
B. a tariff.
C. an embargo.
D. a regulatory trade restriction.
Answer:
Strategic bargaining:
A. always reduces the number of trade restrictions.
B. always increases the number of trade restrictions.
C. may increase the number of trade restrictions if it is successful.
D. may reduce the number of trade restrictions if it is successful.
Answer: