1) Export subsidies tend to hurt domestic consumers and benefit the foreign consumers.
2) Answer the question on the basis of the following information. Assume that by
devoting all its resources to the production of X, nation Alpha can produce 20 units of
X. By devoting all its resources to Y, Alpha can produce 30Y. Comparable figures for
nation Beta are 60X and 40Y.
Refer to the given information. Alpha would prefer terms of trade at, or close to, 1X =
2/3Y.
3) The regulation of natural monopolies has been criticized because it creates a
tendency for regulated firms to use too much labor and too little capital in the
production process.
4) Generally speaking, the demand for luxury goods is more price elastic than is the
demand for necessities.
5) When a producer cannot get all consumers of their product to pay for enjoying it,
such as in the case of a fireworks display, then we’d have a demand-side market failure.
6) Diseconomies of scale are caused by the law of diminishing marginal returns.
7) Majority voting produces efficient outcomes because it takes into account the
strength of the preferences of individual voters.
8) The free-rider problem makes a good highly profitable for a private firm to provide.
9) If a particular R&D expenditure is expected to be worthwhile, the firm should
undertake it because the project will definitely increase the firm’s future profits.
10) Kara’s Kettles, Inc. has developed a new and improved type of cookware. Alex, a
typical consumer, will necessarily purchase Kara’s new product if his MU/P for the new
cookware exceeds that of competing products.
11)
Refer to the data. This industry illustrates:
A.pure competition.
B.monopolistic competition.
C.oligopoly.
D.pure monopoly.
12) The cross elasticity of demand between Quaker State motor oil and Texaco motor
oil is likely to be:
A.Zero
B.A positive number
C.A small negative number
D.A large negative number
13) The French term “laissez-faire” means:
A.”there is no free lunch.”
B.”let it be.”
C.”circular flow.”
D.”public ownership.”
14) The share of total income for “capitalists” in America (in the form of rent, interest,
and profits) has been about:
A.20 percent
B.40 percent
C.50 percent
D.75 percent
15) The Social Security tax is regressive because:
A.The Social Security tax rate applied does not rise with the salary level
B.No Social Security tax is collected for incomes in excess of a “cap” income level
C.Each individual must pay a set percentage of his or her income in Social Security
taxes
D.As income increases, the Social Security tax rate increases at a decreasing rate
16) The story about artist Pablo Picasso illustrates the point that:
A.the demand for labor is a derived demand.
B.geographical immobility impedes an efficient allocation of labor resources.
C.principal-agent problems can occur in unusual settings.
D.present skills reflect past accumulations of human capital.
17)
Refer to the table. If demand is represented by columns (3) and (1) and supply is
represented by columns (3) and (4), equilibrium price and quantity will be:
A.$10 and 60 units.
B.$9 and 60 units.
C.$8 and 80 units.
D.$7 and 30 units.
18) Which of the following statements about government borrowing is not true?
A.It provides the government the ability to maintain spending levels during economic
downturns
B.”Crowding out” of private investments is a major opportunity cost of government
borrowing
C.Its opportunity cost is likely to be quite high during an economic downturn
D.A bigger budget deficit will result in a bigger amount of government borrowing
19) Suppose that friends Jennifer, Stephanie, and Megan cannot agree on how much to
spend for a bouquet of flowers to send to a person that allowed them to use their beach
house for the weekend. Jennifer wants to buy a moderately priced bouquet, Stephanie
wants to buy an expensive bouquet, and Megan wants to buy a very expensive bouquet.
Assuming no paradox of voting, majority voting will result in the decision to buy:
A.an inexpensive bouquet.
B.a very expensive bouquet.
C.a moderately priced bouquet.
D.an expensive bouquet.
20)
Refer to the cost data given above. How much is the firm’s total fixed costs?
A.$900
B.$500
C.$400
D.Cannot be determined from the given data
21) If the income elasticity of demand for lard is -3.00, this means that:
A.lard is a substitute for butter.
B.lard is a normal good.
C.lard is an inferior good.
D.more lard will be purchased when its price falls.
22) The lowest point on a purely competitive firm’s short-run supply curve corresponds
to:
A.the minimum point on its ATC curve.
B.the minimum point on its AVC curve.
C.the minimum point on its AFC curve.
D.the minimum point on its MC curve.
23) The slope of a line parallel to the horizontal axis is:
A.zero.
B.one.
C.infinite.
D.one-half.
24) Economists claim that a farmer who owns her land and provides all her own labor,
and calculates her profits from the farm by subtracting explicit costs from total
revenues, will:
A.Overstate her accounting profits
B.Understate her accounting profits
C.Overstate her economic profits
D.Understate her economic profits
25) If an oligopolist’s demand curve has a “kink” in it, then over some interval:
A.The oligopolist’s marginal cost curve will have a break in it
B.The oligopolist need not fear entry into the industry by new firms
C.The oligopolist’s competitors will not react to its price changes, either up or down
D.Changes in marginal cost will not cause a change in the profit-maximizing price
26) To maximize profit, a pure monopolist must:
A.maximize its total revenue.
B.maximize the difference between marginal revenue and marginal cost.
C.maximize the difference between total revenue and total cost.
D.produce where average total cost is at a minimum.
27) Define supply.
28) Describe the characteristics of private capital flows to DVCs.
29) Provide three reasons why Mexico generally opposes stronger border enforcement
by the United States.
30) Assume that in a purely competitive industry: (1) the entry and exodus of firms are
the only long-run adjustments; (2) firms in the industry have identical cost curves; and
(3) the industry is a constant-cost industry. Explain how long-run equilibrium is
eventually achieved in the industry when there are initially economic profits and losses.
31) What two explanations are offered for why unions have declined?
32) Production of goods and services require different mixes of resources. Discuss the
three different production resource intensities and give examples of each.
33) List the four major sources of Federal revenues.
34) Compare the factors that will cause shifts in the downsloping resource demand and
product demand curves.