1) Whenever a foreign producer is selling a product like steel at a lower price than
domestic producers, then dumping is being practiced and must be corrected.
2) Given supply, the more inelastic the demand for a product, the larger the portion of
an excise tax that is shifted to consumers.
3) In the long run, monopolistically competitive firms make normal profits because they
are forced to operate at the minimum point on their average total cost curve.
4) An improvement in the technology of pollution control is likely to increase society’s
optimal amount of pollution abatement.
5) Game-theory analyzes oligopoly behavior by using concepts derived from the study
of games-of-chance such as dice games, solitaire, and roulette.
6) The following table contains hypothetical data for the U.S. balance of payments in a
year. Answer the following question on the basis of these data. All figures are in billions
of dollars.
U.S. goods exports +$390
U.S. goods imports -498
U.S. service exports +133
U.S. service imports -107
Net investment income +12
Net transfers -22
Capital account -5
Foreign purchases of U.S. assets +156
U.S. purchases of foreign assets -59
Refer to the table above. The balance on the current account was a:
A.$51 billion surplus
B.$92 billion deficit
C.$22 billion surplus
D.$82 billion deficit
7) The demographers predict that the worldwide total fertility rate will decline to one
birth per woman per lifetime. If this happens, then:
A.Each generation will be one-fourth as large as the previous one
B.Each generation will be half as large as the previous one
C.Each generation will be as large as the previous one
D.Each generation will be one half larger than the previous
8) The following table contains hypothetical data for the U.S. balance of payments in a
year. Answer the following question on the basis of these data. All figures are in billions
of dollars.
U.S. goods exports +$390
U.S. goods imports -498
U.S. service exports +133
U.S. service imports -107
Net investment income +12
Net transfers -22
Capital account -5
Foreign purchases of U.S. assets +156
U.S. purchases of foreign assets -59
Refer to the table above. The balance of trade in goods and services was:
A.$107 billion surplus
B.$82 billion deficit
C.$115 billion deficit
D.$55 billion surplus
9) The production possibilities curve:
A.shows all of those levels of production that are consistent with a stable price level.
B.indicates that any combination of goods lying outside the curve is economically
inefficient.
C.is a frontier between all combinations of two goods that can be produced and those
combinations that cannot be produced.
D.shows all of those combinations of two goods that are most preferred by society.
10) Fast-second strategies are more likely to be used by:
A.dominant firms than by start-up firms.
B.pure competitors rather than by oligopolists.
C.start-up firms rather than by existing firms.
D.entrepreneurs rather than by corporations.
11) The incentive problem under communist central planning refers to the idea that:
A.planners had to direct required inputs to each enterprise.
B.workers, managers, and entrepreneurs could not personally gain by responding to
shortages or surpluses or by introducing new and improved products.
C.the immediate effect of more investment was less consumption.
D.exports had to be equal to imports for a central plan to work.
12) Assume a firm faces these costs: total cost of capital = $4,000; price paid for labor =
$20 per labor unit; and price paid for raw materials = $8 per raw-material unit.
Refer to the above information. If the firm can produce 2,000 units of output by
combining its fixed capital with 200 units of labor and 500 units of raw materials, what
are the total cost (TC) and average total cost (ATC) of producing the 2,000 units of
output?
A.TC = $4,000; ATC = $4.00
B.TC = $8,000; ATC = $5.00
C.TC = $12,000; ATC = $6.00
D.TC = $15,000; ATC = $8.00
13) Answer the question on the basis of the following information. The demand for
commodity X is represented by the equation P = 100 – 2Q and supply by the equation P
= 10 + 4Q.
Refer to the given information. If demand changed from P = 100 – 2Q to P = 130 – Q,
the new equilibrium price is:
A.$90
B.$110
C.$96
D.$106
14) Use the information in the table to answer the questions below.
(a)Complete the information in the columns (3), (5), and (6).
(b)Graph the derived demand curve on the graph provided below. Be sure to label the
axis.
(c)Suppose the equilibrium wage is $12. What is the quantity of workers that will be
employed?
15) As a general rule, oligopoly exists when the four-firm concentration ratio:
A.exceeds the Herfindahl index.
B.is less than the Herfindahl index.
C.is 40 percent or more.
D.is 15 percent or more.
16)
As it relates to migration, self-selection is most likely to apply to:
A.Highly-skilled immigrants
B.Low-skilled immigrants
C.Highly-skilled domestic workers
D.Low-skilled domestic workers
17) Which of the following nations is not considered an industrially advanced country?
A.Russia
B.Japan
C.Canada
D.Australia
18) Which of the following methods is used by farmers to “hedge” against short-run
price and output fluctuations?
A.Securing prices for their output in the futures market.
B.Purchasing crop revenue insurance to insure against natural disasters.
C.Leasing land to other farmers in return for stable rent payments.
D.All of these risk-management techniques are used.
19) Fixed costs of production in the short run:
A.Cannot be reduced by producing less output
B.Are a function of the level of variable costs
C.Are low in proportion to variable costs in the short run
D.Increase as the firm produces more output
20) The principal-agent problem as it applies to labor employment refers to:
A.Employer and workers wanting the firm to survive and thrive
B.Firms having the profit motive, while workers may be shirking on the job
C.Employers having a problem finding qualified workers
D.Workers facing a problem finding employment
21) Which of the following combinations is plausible, as it relates to a nation’s balance
of payments?
A.Current account = $+40 billion; capital account = $-10 billion; financial account =
$-50 billion.
B.Current account = $+50 billion; capital account = $-20 billion; financial account = $
+30 billion.
C.Current account = $+10 billion; capital account = $+40 billion; financial account = $
+50 billion.
D.Current account = $+30 billion; capital account = $-20 billion; financial account =
$-10 billion.
22)
A nation can maximize the net benefits from immigration by:
A.Contracting immigration until the extra welfare cost for taxpayers is zero
B.Expanding immigration until its marginal benefits equal its marginal costs
C.Expanding immigration because it benefits society with a greater supply of products and
increased demand for them
D.Contracting immigration because the benefits are minor and it reduces the wage rates of
domestic workers
23) Answer the question on the basis of the following information for a pure
monopolist:
If the given profit-maximizing monopolist is able to price discriminate, charging each
customer the price associated with each given level of output, how much profit will the
firm earn?
A.$120.
B.$250.
C.$300.
D.$420.
24) State the law of demand and explain why the other-things-equal assumption is
critical to it.
25) What has been the general approach to the enforcement of antitrust laws based on
the type of mergers and price fixing among firms?
26) In most industries increased spending is a sign of prosperity. Why is increased
spending a cause for alarm in the health care industry?
27) How did economist Irving Fisher explain interest to a masseur?
28) Is the tax structure of the United States progressive at the Federal level, the state
and local level, and combined? How do transfer payments affect the distribution of
income?
29) What is a balance-of-payments deficit?
30) What requirement does the PPACA place on individuals?
31) What are tying contracts? How are tying contracts treated by antitrust enforcers?
32) Is the following quotation consistent with the theory of consumer behavior? The
yield on time spent working increases as the result of economic growth. Productivity
per hour rises. This means that the time allocation which has represented equilibrium at
our previous income level is disrupted. The yield on time devoted to other activities
must also be raised. We are aware that time in production becomes increasingly scarce
with economic growth. What we will now claim in addition to this is that changes in the
use of time will occur, so that the yield on time in all other activities is brought into
parity with the yield on working time. In other words, economic growth entails a
general increase in the scarcity of time. (From: Staffan Linder, The Harried Leisure
Class)
33) What are usury laws and what are their economic effects?