1) Which of the following statements regarding people’s wants is true?
A.Over time, people’s wants tend to be stable and constant
B.As people consume more products, their wants will be reduced
C.Intangible serves, like tangible goods, may satisfy people’s wants
D.People’s wants do not include their basic needs
2) The price elasticity of a monopolistically competitive firm’s demand curve varies:
A.inversely with the number of competitors and the degree of product differentiation.
B.directly with the number of competitors and the degree of product differentiation.
C.directly with the number of competitors but inversely with the degree of product
differentiation.
D.inversely with the number of competitors but directly with the degree of product
differentiation.
3) If we say that a price is too high to clear the market, we mean that:
A.quantity demanded exceeds quantity supplied.
B.the equilibrium price is above the current price.
C.quantity supplied exceeds quantity demanded.
D.the price of the good is likely to rise.
4) Some sellers of used cars provide warranties to buyers, with the aim of reassuring
buyers that the car is of good quality. These warranties help reduce the chance of what
occurring?
A.Negative externalities.
B.Adverse selection.
C.Spillover benefits.
D.Moral hazard.
5) The main difference between sales and excise taxes is that:
A.sales taxes apply to a wide range of products, while excise taxes apply only to a
select group of products.
B.excise taxes apply to a wide range of products, while sales taxes apply only to a
select list of products.
C.sales taxes are consumption taxes, while excise taxes are not.
D.excise taxes are consumption taxes, while sales taxes are not.
6) The following table contains data for the U.S. balance of payments in a prior year.
Answer the question on the basis of this information. All figures are in billions of
dollars.
U.S. goods exports +$793
U.S. goods imports -1573
U.S. exports of service +280
U.S. imports of services -222
Net investment income +5
Net transfers -81
Capital account -5
Foreign purchases of assets in the U.S. +1198
U.S. purchases of foreign assets -395
Refer to the table above. The data indicate that Americans:
A.Bought foreign assets abroad more than foreigners bought assets in the U.S.
B.Invested abroad more than foreigners invested in America
C.Earned more from their investments abroad than foreigners earned from their
investments in America
D.Sold more products to buyers abroad than what foreign producers sold to buyers in
America
7) Per se violations in antitrust law refer to:
A.Activities that are illegal in and of themselves
B.Violations that are alleged but not yet proven
C.Cases that are subject to the rule of reason
D.Antitrust cases that are pending resolution
8) The demand curve for labor would shift leftward as the result of:
A.an increase in the price of the product labor is producing.
B.a decrease in the productivity of labor.
C.an increase in the price of labor.
D.a decrease in the price of capital, provided the output effect exceeds the substitution
effect.
9)
Refer to the table above for a certain product’s market in Econland. Assume that the
world price of the product is $6. What would be the difference in the total revenue
received by foreign producers after a quota of 400 units is imposed, compared against
the total revenue received by foreign producers when a $1 per unit tariff is paid?
A.$0 revenue difference
B.$100 more in revenue with a quota than with a tariff
C.$400 more in revenue with a quota than with a tariff
D.$400 more in revenue with a tariff than with a quota
10) The total revenue received by sellers of a good is the same amount as the:
A.Total income earned by the buyers
B.Total amount spent on the good by the buyers
C.Price paid by the buyers for each unit of the good
D.Profits earned by the sellers of the good
11) In order to derive a market demand curve from individuals’ demand curves, we add
up the:
A.Various individuals’ quantities demanded at each price level
B.Various prices that each buyer is willing and able to pay
C.Incomes of all buyers, assuming that their tastes remain constant
D.Total number of buyers in the market at each time period
12)
Refer to the graph above representing the purely competitive market for a product.
When the market is at equilibrium, the consumer surplus would be represented by the
area:
A.a + b + c + d
B.a + b + c
C.a
D.b + c
13)
Refer to the above graph. Consider a situation where price decreases from P2 to P1. In
this price range, demand is relatively:
A.Inelastic because the loss in total revenue (areas D + G + I + J) is greater than the
gain in total revenue (areas C + F + H)
B.Elastic because the loss in total revenue (areas C + F + H) is greater than the gain in
total revenue (area J)
C.Elastic because the loss in total revenue (area J) is less than the gain in total revenue
(areas C + F + H)
D.Inelastic because the gain in total revenue (area J) is less than the loss in total revenue
(areas C + F + H)