A tariff is:
A. a tax that government places on imported goods.
B. a quantity limitation placed on imports
C. an all-out restriction on imports.
D. a government-imposed procedural rule limiting imports.
Answer:
The Mexican demand for American goods leads to:
A. the demand for Mexican pesos and the supply of U.S. dollars on the foreign
exchange market.
B. the demand for U.S. dollars and the demand for Mexican pesos on the foreign
exchange market.
C. the demand for U.S. dollars and the supply of Mexican pesos on the foreign
exchange market.
D. the demand for U.S. dollars and the supply of U.S. dollars on the foreign exchange
market.
Answer:
The production possibility curves of two countries are given below:
Refer to the production possibility curves of the two countries. If they specialized and
traded, which of the following is the largest bundle each country could have?
A. 15 chocolate and 15 textiles
B. 20 chocolate and 20 textiles
C. 30 chocolate and 30 textiles
D. 60 chocolate and 60 textiles
Answer:
How are goods manufactured in other countries creating jobs in the United States?
A. People whose jobs were outsourced are now discouraged workers.
B. U.S. firms are specializing in managing the trade of these goods.
C. Foreign countries are importing U.S. natural resources.
D. People who have lost jobs have more time to shop and therefore increase demand for
goods.
Answer:
When comparative advantage is based on transferable factors, the law of one price
tends to:
A. erode the advantage away.
B. amplify the advantage.
C. stabilize the advantage.
D. make the advantage into an inherent comparative advantage.
Answer:
The cost of repositioning an automobile gas tank for greater safety is $11 per vehicle for
12.5 million vehicles. It is expected that 180 deaths will occur if the gas tank location is
not redesigned. If a human life can be valued at $500,000, the expected benefit of
redesigning the location of the gas tank is:
A. $90,000,000.
B. $900,000,000.
C. $5,500,000.
D. $550,000,000.
Answer:
The typical average variable cost curve:
A. is U-shaped.
B. slopes down and to the right.
C. slopes up and to the right.
D. rises and then falls sharply.
Answer:
Behavioral economic policy is likely to:
A. lead to government intervention.
B. be based on the assumption of rationality.
C. assume that the way choices are presented doesn’t affect the decision made.
D. take into account people’s predictably irrational behavior.
Answer:
A monopolist engages in price discrimination to:
A. increase output beyond the profit-maximizing level.
B. further restrict output to increase its profits.
C. increase consumer surplus.
D. maximize profits.
Answer:
Refer to the graph shown depicting a monopolistically competitive firm. According to
the graph, economic profit is currently:
A. impossible to determine.
B. positive.
C. negative.
D. zero.
Answer:
The U.S. income tax is a:
A. progressive tax.
B. regressive tax.
C. proportional tax.
D. singular tax.
Answer:
If the market for tires is monopolistically competitive:
A. the demand curve for each seller’s product is perfectly elastic.
B. no seller can control the price of the product.
C. sellers can influence the market price of the product.
D. no firm has any monopoly power.
Answer:
Refer to the graph shown. In equilibrium, total surplus is equal to:
A. 600.
B. 1,200.
C. 1,400.
D. 2,000.
Answer:
Refer to the following table to answer the question. Which of the following statements
is true?
A. A and B are complements whereas A and C are substitutes.
B. A and C are complements whereas A and B are substitutes.
C. A and B are complements and A and C are complements.
D. A and B are substitutes and A and C are substitutes.
Answer:
Which of the following was one of Marx’s predictions?
A. Capitalism would evolve into feudalism.
B. Competition among capitalists would benefit workers.
C. Firms would become larger and larger.
D. Capitalism in its pure form was benevolent.
Answer:
If there were no barriers to entry:
A. natural monopolies would still exist.
B. patents could still be offered by the government.
C. “just” monopolies would still exist.
D. firms would compete away monopoly profits.
Answer:
If a production possibility curve representing a trade-off between a grade in English and
a grade in math has a negative slope, we know that:
A. there is a direct relationship between grades in English and grades in math.
B. there is no relationship between grades in English and grades in math.
C. there is an inverse relationship between grades in English and grades in math.
D. one can get better grades in English only if one gets better grades in math.
Answer:
Economics is primarily:
A. a normative science.
B. an observational science.
C. a laboratory science.
D. a natural science.
Answer:
Refer to the graph shown, which depicts a perfectly competitive firm. If the price of the
product is $3:
A. new firms will enter the industry.
B. the firm will just cover its opportunity cost of production.
C. the industry will be in long-run equilibrium.
D. the firm may continue to operate in the short run but will exit the industry in the long
run.
Answer:
Based on economic theory, most economists believe market incentive plans are:
A. equitable.
B. efficient.
C. inefficient.
D. unfair.
Answer:
Political forces:
A. affect the price mechanism through cultural norms.
B. affect the price mechanism through the legal system.
C. affect the price mechanism through scarcity.
D. do not affect the price mechanism.
Answer:
When hurricane Irene tore through the northeastern United States, destroying a
significant portion of the Hudson Valley apple crop:
A. apple prices rose, and quantity sold rose.
B. apple prices declined, and quantity sold fell.
C. apple prices rose, and quantity sold fell.
D. apple prices declined, and quantity sold rose.
Answer:
If the price in a market is above its equilibrium level, there will be a:
A. surplus and downward pressure on price.
B. surplus and upward pressure on price.
C. shortage and downward pressure on price.
D. shortage and upward pressure on price.
Answer:
The supply curve with the greatest elasticity is one with slope of:
A. 1/2.
B. 1.
C. 2.
D. impossible to say.
Answer:
A market in which there is only a single seller and a single buyer is a:
A. monopoly.
B. monopsony.
C. bilateral monopoly.
D. perfectly competitive market.
Answer:
Suppose an instructor takes off points for students coming late to class. He then finds
that the number of late arrivals has risen. This could have happened because:
A. the money price of late arrivals declined.
B. the shadow price of late arrivals rose.
C. the shadow price of late arrivals declined.
D. the teacher did not fine the students monetarily for arriving late.
Answer:
At one time, most of the cars produced in Mexico were sold in Mexico. Today,
however, Mexico both exports and imports cars. How can comparative advantage
explain these data?
A. It cannot; comparative advantage predicts that a country either exports a product or
imports it, not both.
B. The pattern is not due to comparative advantage but to government restrictions on
production.
C. Mexico has a comparative disadvantage in automobiles.
D. Mexico specializes in the production of high-end cars, which it exports, and imports
low-end cars that can be produced at lower cost elsewhere.
Answer:
The difference between a three-digit NAICS industry and a six-digit NAICS industry is
that:
A. the three-digit industry is more specifically defined than the six-digit code.
B. the six-digit industry is more specifically defined than the three-digit code.
C. three-digit codes apply to a different set of industries than six digit codes.
D. three-digit codes are used to classify industries whereas six-digit codes are used to
classify firms.
Answer:
A monopolistically competitive industry has:
A. a few firms producing identical products.
B. many firms producing differentiated products.
C. many firms producing identical products.
D. a few firms producing differentiated products.
Answer:
As a percentage of total imports, how have U.S. imports from China and India changed
in the last 15 years?
A. They have remained roughly the same.
B. They have risen.
C. They have fallen.
D. They rose initially and then dropped back to the original level.
Answer: