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1) Price discrimination for concessions at ball parks is not applied to adults and children
because:
A.Children's demand for food is elastic and adults' demand for food is inelastic
B.Adults' demand for food is elastic and children's demand for food is inelastic
C.There can be exchange of the product from children, who buy it at a lower price, to
adults
D.There can be exchange of the product from adults, who buy it at a lower price, to
children
2) Suppose a firm can produce 70 units of a product, Zenia, by combining labor, land,
capital, and entrepreneurial ability, as in the four alternative techniques shown in the
table below. Assume further that the firm can hire labor at $3 per unit, land at $3 per
unit, capital at $6 per unit, and entrepreneurship at $9 per unit.
Refer to the above table. Which technique is the most economically efficient way of
producing Zenia?
A.A
B.B
C.C
D.D
3) Indy currently earns $50,000 in taxable income and pays $8,000 in taxes. Suppose
that Indy faces a marginal tax rate of 25 percent and his boss offers him a raise of
$2,000 per year. Indy should:
A.accept the raise because his after-tax income will rise by $1,500.
B.reject the raise because his after-tax income will fall by $3,000.
C.reject the raise because his after-tax income will fall by $4,500.
D.reject the raise because his after-tax income will fall by $6,000.
4) A monopolistically competitive industry combines elements of both competition and
monopoly. The monopoly element results from:
A.the likelihood of collusion.
B.high entry barriers.
C.product differentiation.
D.mutual interdependence in decision making.
5)
Refer to the diagram for a natural monopolist. If a regulatory commission were to set a
maximum price of P3, the monopolist would:
A.maximize profits.
B.increase output beyond the profit-maximizing level.
C.reduce output below the profit-maximizing level.
D.be unable to make a normal profit.
6) Answer the question on the basis of the following information: Suppose a firm hires
both labor (L) and capital (C) under purely competitive conditions. The price of labor is
PL and that of capital is PC. The marginal product of labor is MPL and that of capital is
MPC. The firm sells its product competitively at a price of PX.
Refer to the given information. In competitive labor markets, the marginal cost of an
additional unit of labor:
A.is equal to PL MPL.
B.is equal to MPL/PL.
C.is equal to PL.
D.cannot be determined from the information given.
7) The table below shows the supply and demand schedules for the European euro.
Refer to the table above. If the U.S. government decides to fix or peg the price of the
euro at $1.00, it would have to:
A.Buy 100 euros
B.Buy 360 euros
C.Sell 160 euros
D.Sell 360 euros
8) The fact many people give to charity, and the fact that most people obey the law
regardless of whether someone's watching or not, are field evidence for:
A.The invisible hand
B.Fairness
C.Self-interest
D.Cognitive biases
9) In the case of extraction of a nonrenewable resource, when user costs increase, it
implies that expected future profits:
A.Decrease, while the amount of current extraction increases
B.Decrease, and the amount of current extraction decreases
C.Increase, and the amount of current extraction increases
D.Increase, while the amount of current extraction decreases
10) Answer the question on the basis of the following table showing market shares of
firms in hypothetical industries. Assume these are distinct industries with no
buyer-seller relationships or competition among them.
Refer to the table. A merger between Firm 1 in Alpha and Firm 2 in Delta would be a:
A.vertical merger.
B.horizontal merger.
C.conglomerate merger.
D.diagonal merger.
11) Kara and Kyle are competing sockeye salmon fishers. Both have been allocated
ITQs that limit their catch to 2,000 tons of sockeye salmon each. Kara's cost per ton is
$8; Kyle's cost per ton is $12.
Refer to the information given and assume that the market price of sockeye salmon is
$15 per ton. If Kara pays Kyle $5 per ton for his ITQs, and if she then catches her new
limit of 4,000 tons, their combined profit would be:
A.$18,000.
B.$22,000.
C.$20,000.
D.$4,000.
12) A purely competitive firm:
A.must earn a normal profit in the short run.
B.cannot earn economic profit in the long run.
C.may realize either economic profit or losses in the long run.
D.cannot earn economic profit in the short run.
13) Over the past two decades, total and per capita water use in the United States have:
A.both increased.
B.leveled off and fallen, respectively.
C.fallen and leveled off, respectively.
D.increased and fallen, respectively.
14) Excess capacity refers to the:
A.amount by which actual production falls short of the minimum ATC output.
B.fact that entry barriers artificially reduce the number of firms in an industry.
C.differential between price and marginal costs that characterizes monopolistically
competitive firms.
D.fact that most monopolistically competitive firms encounter diseconomies of scale.
15) One difference between sales and excise taxes is that:
A.sales taxes are only applied at the state level, while excise taxes are only applied at
the federal level.
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 calculated as a percentage of the price paid, while excise taxes are
levied on a per-unit basis.
D.excise taxes are calculated as a percentage of the price paid, while sales taxes are
levied on a per-unit basis.
16) Kara is considering migrating to another country. Which of the following represents
a cost she will face if she decides to move?
A.Financial expenditures to transport herself and her belongings to her new country.
B.The income she currently earns in her home country.
C.The application fee for a green card.
D.All of these.
17)
Refer to the diagrams. In which case would the coefficient of cross elasticity of demand
be negative?
A.A
B.B
C.C
D.D
18)
Refer to the diagram. Which of the following would be consistent with an increase in
racial prejudice against African Americans and thus an increase in the discrimination
coefficients of employers, taken as a group?
A.A shift in the labor demand curve from D2 to D3.
B.A shift in the labor demand curve from D2 to D1.
C.An increase in African-American employment from Q2 to Q3.
D.An increase in the African-American wage rage from W1 to W2.
