1) In the long run, typical firms that are monopolistically competitive earn economic
profits.
2)
In recent years, immigration has contributed an insignificant amount to the U.S. population
growth.
3) If a firm produces zero output in the short run, then its profits will also be zero.
4) “Defensive medicine” means the same thing as “preventive medicine”.
5) A positive cross-elasticity of demand between two goods indicates that the two goods
are both normal goods.
6) Allocative efficiency occurs where the collective sum of consumer and producer
surplus is at a maximum.
7) A bilateral monopoly case is a situation where a firm is a monopolist in its product
market and is also a monopsonist in the market where it acquires its major resource.
8) Most product innovations consist of minor changes to existing products and are
incremental improvements.
9) Nonrivalry in the use or consumption of a good means that only one person is
consuming the good without any rivals.
10) If three or four homogeneous oligopolists collude, the resulting price and
production outcomes will be similar to those of pure monopoly.
11) Increased resource productivity will, ceterisparibus, increase a firm’s demand for an
input.
12) Given that the demand for grains is price-inelastic, we would expect that if the
harvest of grains increases significantly, other factors constant, then grain farmers’ total
revenues would increase.
13) In order to derive the market supply curve from individual supply curves, we add
up the:
A.Various prices that individual sellers are charging for the product
B.Various quantities that individual sellers want to sell at specific price levels
C.Total number of sellers in the market at a given time
D.Costs that all individual sellers incur in producing the product
14) A demand curve that is parallel to the horizontal axis is:
A.perfectly inelastic.
B.perfectly elastic.
C.relatively inelastic.
D.relatively elastic.
15) Public choice economists contend public bureaucracies are inefficient primarily
because:
A.the value of public goods is more easily measured than is the value of private goods.
B.of the absence of competitive market pressures.
C.public sector workers are more security-conscious than are private sector workers.
D.relatively low pay in government attracts workers of lesser quality.
16) According to Yale University’s Environmental Performance Index (EPI):
A.countries with lower GDP per person tend to have healthier environments.
B.countries with higher GDP per person tend to have healthier environments.
C.there is no correlation between GDP per person and environmental quality.
D.growth in GDP per person initially improves environmental quality and then
gradually reduces it.
17) (Consider This) The story about three sellers of Native American arts and crafts best
illustrates the idea of:
A.strategic behavior.
B.excess capacity.
C.the role of advertising.
D.product differentiation.
18) In the 1800s, railroads broke up the monopoly position of wagons, ships, and barges
as the major means of transporting goods. This would be an example of:
A.The fast-second strategy
B.The inverted-U theory
C.Creative destruction
D.Venture capital
19) In pure competition, each extra unit of output that a firm sells will yield a marginal
revenue that is:
A.Equal to the price
B.Less than the price
C.Greater than the price
D.Equal to the average cost
20) The following diagram is a flexible exchange market for foreign currency:
Refer to the diagram. Other things equal, a leftward shift of the supply curve would:
A.appreciate the euro.
B.cause a shortage of euros.
C.increase the equilibrium quantity of euros.
D.appreciate the dollar.
21) Which of the following nations saw a significant decline in the amount of land
covered by forests in the period 2005-2010?
A.Thailand
B.Puerto Rico
C.Nigeria
D.United States
22) The Federal personal income tax:
A.Has a regressive structure
B.Is actually less progressive than official tax schedules would indicate because of
various tax exemptions and deductions
C.Has become extremely progressive as a result of taxpayers’ being pushed into higher
tax brackets by higher income levels
D.Has experienced substantial increases in rates during the past two years
23)
The two leading countries of origin of U.S. legal immigrants in 2011 were Mexico and:
A.China
B.India
C.The Dominican Republic
D.The Philippines
24) A straight-line downward-sloping demand curve has a price elasticity of demand
which:
A.Decreases as price decreases
B.Increases as price decreases
C.Is zero at all prices
D.Is unitary at all prices
25) Which of the following impacts would economists expect to result from chronic
budget deficits?
A.Greater economic efficiency resulting from the abundance of public goods produced.
B.Permanently high levels of output and continued economic growth.
C.Greater political control over monetary policy.
D.Government control of an inefficiently large share of the economy’s resources.
26) A newspaper reports that the average price of new homes in a certain city had
decreased, and the number of new homes sold had also decreased. This situation is
probably caused by:
A.Declining costs of construction materials and services in that city
B.Declining incomes of people in that city
C.Higher government subsidies to new homebuyers in that city
D.A rising population in that city
27) Which of the following is a factor limiting saving in DVCs?
A.The lack of foreign aid and loans from the World Bank
B.Governments control the banking system and set low interest rates
C.The flight of private savings to investments in IACs where there is less risk
D.Those who do save make their savings available only to their families who use it for
consumption
28) What are conflict diamonds and what do they illustrate about resource use?
29) How are countries classified based on income?
30) Suppose that Mexico devalues the peso. What objectives would prompt the
devaluation? Be specific.
31) Describe the importance and major features of the Sherman Act of 1890.
32) How equal is the distribution of personal income by households in the United
States?
33) John is determining whether he should close his construction firm. His accountant
has advised him to remain open because he is making an accounting profit. As his
economist friend, give him advice on whether he should remain in business or shut his
business down.