1) The user cost of nonrenewable resources is:
A.The current cost of extracting and selling the resource
B.The future cost of extracting and selling the resource
C.The opportunity cost of extracting and selling the resource today instead of in the
future
D.The cost of future extraction and sale of a resource instead of current extraction and
sale
2) If there is a surplus of a product, its price:
A.is below the equilibrium level.
B.is above the equilibrium level.
C.will rise in the near future.
D.is in equilibrium.
3) The provision of loan guarantees can improve economic efficiency when:
A.There’s a moral hazard problem among investors
B.The project supported has significant external benefits
C.There is regulatory capture in the industry
D.The private investors are providing too much funds to the project
4) The short-run average total cost curve is U-shaped because:
A.average fixed costs decline continuously as output increases.
B.of increasing and diminishing returns.
C.of economies and diseconomies of scale.
D.minimum efficient scale is encountered.
5) The basic characteristic of the short run is that:
A.barriers to entry prevent new firms from entering the industry.
B.the firm does not have sufficient time to change the size of its plant.
C.the firm does not have sufficient time to cut its rate of output to zero.
D.a firm does not have sufficient time to change the amounts of any of the resources it
employs.
6) The term “growing income inequality” implies that the:
A.poor are getting poorer in both a relative and an absolute sense.
B.Lorenz curve is shifting toward the diagonal.
C.diagonal is shifting toward the Lorenz curve.
D.upper quintiles of income receivers are getting relatively more of the total income
than before and the lower quintiles are getting relatively less.
7) If discrimination based on gender and race was eliminated, we would expect the:
A.personal distribution of income to become less equal.
B.personal distribution of income to become more equal.
C.personal distribution of income to be unaffected.
D.functional distribution of income to change in favor of profits and interest.
8) Use your basic knowledge and your understanding of market structures to answer
this question. Which of the following companies most closely approximates a
monopolistic competitor?
A.Subway Sandwiches.
B.Pittsburgh Plate Glass.
C.Ford Motor Company.
D.Microsoft.
9)
Refer to the diagram. If demand is D2, a tax of X per acre will:
A.encourage the substitution of land for other productive resources.
B.lower the cost of land to individual farmers.
C.reduce the demand for land to, say, D3 or D4.
D.not affect the quantity of land available to society.
10) One shortcoming of the kinked demand curve model of oligopoly is that it does not
explain:
A.Why the marginal revenue curve is kinked
B.How the current price gets determined
C.What the level of profits is for the firm
D.Why the firm is a least-cost producer
11) Most demand curves are relatively elastic in the upper-left portion because the
original price:
A.and quantity from which the percentage changes in price and quantity are calculated
are both large.
B.and quantity from which the percentage changes in price and quantity are calculated
are both small.
C.from which the percentage price change is calculated is small and the original
quantity from which the percentage change in quantity is calculated is large.
D.from which the percentage price change is calculated is large and the original
quantity from which the percentage change in quantity is calculated is small.
12) The sole proprietor of the Milwaukee Machine Company receives all accounting
profits earned by her firm and a $28,000-a-year salary. She has a standing salary offer
of $35,000 a year working for a large corporation. If she had invested her capital
outside her own company, she estimates that would have returned $22,000 this year. If
accounting profits for the year were $50,000, economic profits were:
A.$0
B.-$7,000
C.$21,000
D.$50,000
13) A decrease in demand and an increase in supply will:
A.Affect price in an indeterminate way and decrease the equilibrium quantity
B.Increase price and affect the equilibrium quantity in an indeterminate way
C.Decrease price and affect the equilibrium quantity in an indeterminate way
D.Increase price and increase the equilibrium quantity
14)
Refer to the diagram. The decline in price from P1 to P2 will:
A.increase total revenue by D
B.increase total revenue by B + D
C.decrease total revenue by A
D.increase total revenue by D – A
15)
Refer to the table. If per capita income increases by 10 percent over five years in each
of the nations shown, the per capita income gap between country C and country A:
A.will remain the same.
B.will rise from $30,934 to $34,027.
C.may rise or fall depending on the rate of population growth.
D.will rise from $31,555 to $34,710.
16) Health care spending accounted for what percentage of U.S. GDP in 1960 and in
2011?
A.4.0% and 4.4%, respectively
B.9.2% and 10.1%, respectively
C.5.2% and 17.9%, respectively
D.20.4% and 18.6%, respectively
17) What are four-firm concentration ratios? How do economists use them to define
monopolistically competitive industries and oligopolistic industries?
18) How do preferences and risk contribute to income inequality?
19) How can discrimination be viewed as resulting from a preference or taste for which
the prejudiced employer is willing to pay? What will determine whether the prejudiced
employer hires nonpreferred workers in this model?
20) Explain in nontechnical terms why oligopolistic prices may tend to be inflexible.
21) Indicate how the following events will shift the firms demand curve for labor:
increase it (I); decrease it (D); keep it the same (S).
___Technological advances increase labors productivity.
___The wage rate increases.
___The demand for the product that labor produces decreases.
___The wage rate decreases.
___Absenteeism reduces labors productivity.
___The price of labor-saving machinery is reduced and the substitution effect is greater
than the output effect.
22) Discuss the political pressures associated with monetary policy. What has the
United States done to try to reduce these political pressures?