1) a decreasing-cost industry is one in which:
a.contraction of the industry will decrease unit costs.
b.input prices fall or technology improves as the industry expands.
c.the long-run supply curve is perfectly elastic.
d.the long-run supply curve is upsloping.
2) A doubling of Social Security benefits is likely to:
A.decrease the demand for loanable funds and increase the equilibrium interest rate.
B.increase the supply of loanable funds and decrease the equilibrium interest rate.
C.decrease the supply of loanable funds and increase the equilibrium interest rate.
D.increase the real interest rate but not the nominal interest rate.
3) An excise tax on an imported good that is not produced domestically is called a:
A.protective tariff.
B.import quota.
C.revenue tariff.
D.voluntary export restriction.
4) When economists say that money serves as a unit of account, they mean that it is:
A.a way to keep wealth in a readily spendable form for future use.
B.a means of payment.
C.a monetary unit for measuring and comparing the relative values of goods.
D.declared as legal tender by the government.
5)
refer to the above diagram for a pure monopolist. if a regulatory commission sets price
to achieve the most efficient allocation of resources, it will have to:
a.tax the monopolist p3p1 per unit to prevent the monopolist from realizing an
economic profit.
b.subsidize the monopolist or the monopolist will go bankrupt in the long run.
c.subsidize the monopolist p1p4 per unit to allow the monopolist to break even.
d.tax the monopolist p1p2 per unit to prevent the monopolist from realizing an
economic profit.
6)
Refer to the above diagram, where Sd and Dd are the domestic supply and demand for a
product and Pc is the world price of that product. Sd + Q is the product supply curve
after an import quota is imposed. The effect of the import quota on domestic price and
domestic consumption is:
A.the same as that of a tariff of PcPt.
B.the same as that of a tariff of PtPa.
C.the same as that of a tariff of PcPa.
D.to raise price by more and reduce consumption less than a tariff of PcPt.
7) In the table below are data on five different industries and the market shares for each
of the firms in the industry. Assume that there is no foreign competition, entry into the
industry is difficult, and that no firm in each industry is on the verge of bankruptcy. In
the column to the right of the table, calculate the Herfindahl index.
(a)Which industry has the most monopoly power and which industry has the least
monopoly power?
(b)If the sixth firm in Industry Alpha sought to merge with the fifth firm in that
industry, would the government be likely to challenge the merger?
(c)Would a conglomerate merger between the fourth firm in Industry Beta and the sixth
firm in Industry Epsilon likely be challenged by the government?
8) Melanie and Oli are competing Pacific Halibut fishers. Both have been allocated
ITQs that limit their catch to 1,000 tons of Pacific Halibut each. Melanie’s cost per ton
is $20; Oli’s cost per ton is $28.
Refer to the information above. If the market price of Pacific Halibut is $40 per ton,
what is the minimum amount Melanie would have to offer Oli to convince him to sell
Melanie his ITQs?
A.$8.
B.$10.
C.$20.
D.$12.
9) The marginal productivity theory of income distribution has been criticized because:
A.the resulting distribution of income is likely to be too equal to maintain production
incentives.
B.income from inherited property is inconsistent with the theory.
C.purely competitive conditions characterize most resource markets.
D.it fails to recognize that resource demand is derived from product demand.
10) according to economists, economic self-interest:
a.is a reality that underlies economic behavior.
b.has the same meaning as selfishness.
c.is more characteristic of men than of women.
d.is usually self-defeating.
11)
Refer to the above data for a private closed economy. If gross investment is $12 billion,
the equilibrium level of GDP will be:
A.$380.
B.$370.
C.$360.
D.$350.
12) The immediate primary cause of the swing from Federal budget surpluses between
1998 and 2001 to a budget deficit in 2002 was:
A.the tax cuts of 2001.
B.spending increases relating to the war in Afghanistan.
C.the recession of 2001.
D.the acceleration of inflation in 2001 and 2002.
13) The international agency that lends money to DVCs for economic development
projects is the:
A.World Bank.
B.International Monetary Fund (IMF).
C.World Trade Organization (WTO).
D.World Credit Union.
14) Which of the following is a true statement?
A.Under normal conditions there is a short-run tradeoff between inflation and
unemployment.
B.There is a long-run tradeoff between inflation and unemployment.
C.The short-run Phillips Curve is vertical.
D.The long-run Phillips Curve is horizontal.
15) increases in the value of a product to each user, including existing users, as the total
number of users rises are called:
a.information cascades.
b.learning effects.
c.network effects.
d.scale economies.
16) in the short run:
a.tvc will increase for a time at a diminishing rate, but then beyond some point will
increase at an increasing rate.
b.tvc will increase for a time at an increasing rate, but then beyond some point will
increase at a diminishing rate.
c.tvc will increase by the same absolute amount for each additional unit of output
produced.
d.one cannot generalize concerning the behavior of tvc as output increases.