1) To keep the exchange rate constant, an increase in the demand for a country’s
currency should be matched by a corresponding increase in supply to be administered
by the government.
2) Both neoclassical and behavioral economics believe that people are mostly rational
in both their decision making and their actions.
3) Welfare payments to immigrants have steadily increased since 1996.
4) Consumers buy more of normal goods as their incomes rise.
5)
Refer to the diagram. Given production possibilities curve a, the combination of civilian
and war goods indicated by point X is unattainable to this economy.
6) If there are many firms in an industry, then it must be a purely competitive market.
7) The short-run supply curve slopes upward because producers must be compensated
for rising marginal costs.
8) We would expect the coefficient of cross elasticity of demand for DVD players and
DVDs to be positive.
9) Neoclassical and behavioral economics are generally complementary.
10) When congressional representatives vote on an appropriations bill, they must vote
yea or nay, taking the bad with the good. This statement best reflects the:
A.paradox of voting.
B.regulatory capture effect.
C.benefits-received principle.
D.concept of limited and bundled choices.
11) Advertising can impede economic efficiency when it:
A.reduces entry barriers.
B.reduces brand loyalty.
C.leads to greater monopoly power.
D.provides consumers with useful information about product quality.
12) The degree of strictness in the enforcement of antitrust laws often depends on:
A.Political appointments
B.The rule of reason
C.Use of the Herfindahl index
D.Per se violations
13) Suppose that an industry is characterized by a few firms and price leadership. We
would expect that:
A.price would equal marginal cost.
B.price would equal average total cost.
C.price would exceed both marginal cost and average total cost.
D.marginal revenue would exceed marginal cost.
14) Answer the question on the basis of the following demand and cost data for a
specific firm.
Refer to the above data. In the long run, the number of firms in this monopolistic
competitive industry will most likely:
A.Decrease
B.Increase
C.Stay the same
D.Cannot be determined from the given data
15) A movement from one point to another along the production possibilities curve
would imply that:
A.The labor force available to society has grown
B.Productivity has increased over time
C.Productivity has declined over time
D.Society is producing a different combination of outputs
16) Product variety is likely to be greater in:
A.monopolistic competition than in pure competition.
B.pure competition than in monopolistic competition.
C.homogeneous oligopoly than in monopolistic competition.
D.homogeneous oligopoly than in differentiated oligopoly.
17) Which of the following is most characteristic of developing nations?
A.A small percentage of the labor force in agriculture
B.A relatively equitable distribution of income
C.Low levels of labor productivity
D.Low rates of population growth
18) You are the only seller of eggs in town, and the price-elasticity coefficient for eggs
is known to be 0.8. If you want to increase your sales quantity by 10% through a
price-change, what should you do to price?
A.Increase price by 12.5%
B.Reduce price by 12.5%
C.Increase price by 8%
D.Reduce price by 8%
19) Suppose an employer is considering hiring either a white worker or an
African-American worker for a position. Consider the following conditions and decide
which worker the employer is likely to hire.
(a)The employer is prejudiced against African-Americans and it costs him a disutility of
$3/hour to hire the African-American. Suppose the African-American is willing to work
for $9/hour, while the white worker will work for $11/hour. Whom will the employer
hire?
(b)The employer is prejudiced against African-Americans and it costs him a disutility of
$2/hour to hire the African-American. Suppose the African-American is willing to now
work for $8/hour, while the white worker will work for $11/hour. Whom will the
employer hire?
(c)The employer has no preference between the white and African-American workers.
Suppose the African-American and the white workers are both willing to work for $12
an hour. Whom will the employer hire?
20) Which of the following is a valid explanation for real wage growth?
A.The rising cost of capital accumulation
B.A contraction of employment in manufacturing industries
C.An increase in the quantity of labor
D.A rising rate of labor productivity growth
21) An industry is expected to expand if firms in the industry are earning positive:
A.Normal profits
B.Economic profits
C.Accounting profits
D.Total revenues
22)
Refer to the diagram, in which solid arrows reflect real flows; broken arrows are
monetary flows. Flow (3) might represent:
A.government salaries paid to school teachers.
B.property tax payments.
C.a state university’s purchase of computers.
D.social security payments to retirees.
23) A large portion of foreign aid from IACs to DVCs is provided on the basis of:
A.Economic considerations
B.Geographical considerations
C.Humanitarian considerations
D.Politico-military considerations
24) The following data shows the relationship between price and quantity demanded at
four different prices for a product:
P = $11, Qd = 16
P = $9, Qd = 24
P = $7, Qd = 32
P = $5, Qd = 40
Using the midpoint formula, what is the price elasticity of demand between: (a) $11 and
$9; (b) $9 and $7; (c) $7 and $5.
25) The graphs below illustrate the market for a product on which an excise tax has
been imposed by government.
Refer to the above graph. What is the area that represents the portion of the excise tax
that is the burden to consumers?
A.WXTV
B.WXZU
C.VTZU
D.WXYZU
26) What is the real cost of putting an unemployed laborer to work raking leaves or
digging holes and refilling them during a severe recession? Explain.
27) A major reason the economy of the former Soviet Union collapsed was due to a lack
of incentives that are provided by the profit system. Evaluate.
28) What are the two types of legal immigration in the United States?
29) What is Medicaid?
30) What are the problems encountered in any strict application of benefits-received
and ability-to-pay principles of taxation?
31) What are the economic advantages of specialization?