1) The safest way for an individual to leave a burning theater is to run for the nearest
exit; it is therefore also the best means of escape for a large audience. This assertion
illustrates the:
A.”after this, therefore because of this” fallacy.
B.correlation fallacy.
C.fallacy of composition.
D.fallacy of limited decisions.
2) The worldwide duration of patents that begins at the time of application is:
A.10 years
B.1 year
C.20 years
D.50 years
3) Which of the following is a noncash transfer?
A.A payment to a divorced mother under TANF.
B.SNAP (food stamps).
C.A social security payment to a retiree.
D.Unemployment compensation benefits.
4) Consider an economy that is producing inside its production possibilities curve. This
economy could move closer towards its production possibilities curve by:
A.Distributing incomes more equally
B.Employing more of its available resources
C.Increasing the levels of wages and prices
D.Acquiring additional resources
5) A characteristic of centrally planned economies is that:
A.The price is relatively unimportant in allocating resources
B.Output reflects the pattern of consumer spending
C.Entrepreneurship is quite prevalent and highly rewarded
D.There are many incentives for innovation and hard work
6) The relationship between quantity supplied and price is _____ and the relationship
between quantity demanded and price is _____.
A.direct; inverse
B.inverse; direct
C.inverse; inverse
D.direct; direct
7) The following is cost information for the Creamy Crisp Donut Company:
Entrepreneur’s potential earnings as a salaried worker = $50,000
Annual lease on building = $22,000
Annual revenue from operations = $380,000
Payments to workers = $120,000
Utilities (electricity, water, disposal) costs = $8,000
Value of entrepreneur’s talent in the next best entrepreneurial activity = $80,000
Entrepreneur’s forgone interest on personal funds used to finance the business = $6,000
Refer to the data. If, other things equal, Creamy Crisp’s revenue fell to $286,000:
A.its implicit costs, including a normal profit, would exceed its explicit costs.
B.it would earn a normal profit but not an economic profit.
C.it would suffer an economic loss.
D.its accounting profit would fall to zero.
8) If variables X and Y are positively correlated, this means that:
A.X is the cause of Y.
B.Y is the cause of X.
C.causation necessarily exists, but we don’t know whether X or Y is the cause.
D.causation may or may not exist between X and Y.
9) The U.S. Federal Reserve, the Bank of Japan, the Bank of England, and the European
Central Bank are all in charge of what for the countries they represent?
A.Debt management.
B.Unfunded liabilities.
C.Monetary policy.
D.Fiscal policy.
10) Other things equal, an excise tax on a product will:
A.increase its supply.
B.increase its price.
C.increase the quantity sold.
11) The table below shows the utility schedule for a consumer of candy bars.
Refer to the above table. The consumption of which bar yields the greatest marginal
utility?
A.Third
B.Fourth
C.Sixth
D.Second
12) The real wage will rise if the nominal wage:
A.falls more rapidly than the general price level.
B.increases at the same rate as labor productivity.
C.increases more rapidly than the general price level.
D.falls at the same rate as the general price level.
13) In moving along a given budget line:
A.the prices of both products and money income are assumed to be constant.
B.each point on the line will be equally satisfactory to consumers.
C.money income varies, but the prices of the two goods are constant.
D.the prices of both products are assumed to vary, but money income is constant.
14) Suppose a powerful labor union negotiates a wage for its members above the
equilibrium wage rate in a nonunionized market. A likely result of this is that:
A.The union will have difficulty recruiting new members
B.Union members will be able to work more overtime than before
C.This firm will make up for the higher wage rate by expanding output
D.Not everyone who wants to work at the new wage will be able to find jobs