1) In constructing models, economists:
A.make simplifying assumptions.
B.include all available information.
C.must use mathematical equations.
D.attempt to duplicate the real world.
2) Suppose there are only two planets in the universe, Zenope and Zuranda. On each
planet, its inhabitants consume two productscoffee and fried chicken. Each planet has
an equal population. Producing solely coffee, Zenope can produce 50 units of coffee,
while Zuranda can produce 80 units of coffee. Producing solely fried chicken, Zenope
can produce 25 units, while Zuranda can produce 30 units.
(a)Which planet has the absolute advantage in coffee? In fried chicken?
(b)Which planet has the comparative advantage in coffee? In fried chicken?
3)
Refer to the diagram. Demand is relatively elastic:
A.in the P2P1 price range.
B.in the 0P1 price range.
C.in the P2P4 price range.
D.only at price P2.
4) Overproduction of farm products in the European Community has been primarily the
result of:
A.Low U.S. tariffs on imports of farm products
B.Subsidies to farmers in the European Community
C.Increasing world trade in agricultural commodities
D.Quotas imposed by the European Community on imported products
5) At any level of a mining firm’s output, total cost will be equal to extraction costs:
A.Plus user costs
B.Minus user costs
C.Times user costs
D.Divided by user costs
6)
Suppose you have money income of $10, all of which you spend on Coke and popcorn.
In the diagram, the prices of Coke and popcorn respectively are:
A.$.50 and $1.00.
B.$1.00 and $.50.
C.$1.00 and $2.00.
D.$.40 and $.50.
7) When a buyer or seller of an agricultural commodity takes action to protect against a
future change in the value of the commodity, then the buyer or seller is:
A.Logrolling
B.Hedging
C.Allotting
D.Bolstering
8) A consumer is making purchases of products Alpha and Beta such that the marginal
utility of product Alpha is 30 and the marginal utility of product Beta is 40. The price of
product Alpha is $5 and the price of product Beta is $10. The utility-maximizing rule
suggests that this consumer should:
A.Increase consumption of product Beta and decrease consumption of product Alpha
B.Increase consumption of product Beta and increase consumption of product Alpha
C.Increase consumption of product Alpha and decrease consumption of product Beta
D.Make no change in the consumption of Alpha or Beta
9) According to the paradox of voting:
A.public goods that cost more than the total benefits they confer may get produced
under majority voting.
B.trading of votes may either add to or subtract from economic efficiency.
C.the median voter decides what public goods all voters should have.
D.majority voting fails under some circumstances to make consistent choices that
reflect the community’s underlying preferences.
10) In 1975, McDonald’s introduced its Egg McMuffin breakfast sandwich, which
remains popular and profitable today. This longevity illustrates the idea of:
A.opportunity cost.
B.upsloping supply.
C.consumer sovereignty.
D.specialization.
11) Assume you are spending your full budget and purchasing such amounts of X and Y
that the marginal utility from the last units consumed is 40 and 20 utils respectively.
Assume (a) the prices of X and Y are $8 and $4 respectively; (b) it takes 3 hours to
consume a unit of X and 1 hour to consume a unit of Y; and (c) your time is worth $2
per hour. You:
A.should substitute X for Y until the marginal utility per hour is the same for both
products.
B.are consuming X and Y in the optimal amounts.
C.should consume less of Y and more of X.
D.should consume less of X and more of Y.
12) Answer the question on the basis of this table showing the marginal benefit that a
particular public project will provide to each of the three members of a community. No
vote trading is allowed.
If the tax cost of this proposed project is $300 per person, a majority vote will:
A.defeat this project and resources will be underallocated to it.
B.pass this project and resources will be allocated efficiently.
C.pass this project and resources will be underallocated to it.
D.defeat this project and resources will be overallocated to it.
13) Consider the following situations. Evaluate how they would affect the level of
productivity of labor.
(a)The cost of health care skyrockets.
(b)Trade barriers with other countries are reduced.
(c)An energy shortage develops.
(d)Vast improvements are made in production technology.
14)
Assumptions: (1) Employers in this market are willing and able to ignore minimum
wage laws; (2) Sd represents the supply of domestic-born (and legal immigrant)
workers; (3) St represents the total supply of workers in this labor market (Sd plus
illegal immigrants); and (4) unless otherwise stated, illegal immigration is not
effectively blocked by the government.
Refer to the given figure and assumptions. How many illegal immigrant workers will be
hired at equilibrium?
A.20,000.
B.50,000.
C.60,000.
D.70,000.
15)
Human capital refers to the:
A.Stock of knowledge and skills that enables a person to be productive and earn income
B.Number of workers in a country’s labor force
C.Number of labor hours worked in a country
D.Schools, highways, and other infrastructure that increases labor productivity
16) Assuming pure competition, which of the following are equivalents?
A.MRPL/PL = MRPC/PC and Px = 1/MC.
B.MRPL/PL = MRPC/PC and Px = AVC.
C.Px = MC and MRPL/PL = MRPC/PC = 1.
D.Px = MC and MPL/PL = MPC/PC.
17) Explain how Social Security helps deal with the issue of myopia.
18) In the U.S. balance of payments account for a certain year, a positive number in the
financial account means a:
A.net buildup of assets held by the U.S.
B.net reduction in the ownership of assets by U.S. interests.
C.buildup of total foreign debt.
D.reduction of total foreign debt.
19) The main reason for the high price of antiques is that:
A.Supply is relatively elastic and demand increases over time
B.Supply is relatively inelastic and demand increases over time
C.Demand is relatively elastic and supply increases over time
D.Demand is relatively inelastic and supply increases over time