1) When the total product is at its maximum level, the marginal product is zero.
2) System 1 is the part of the brain that carefully weighs the benefits and costs when
making decisions.
3) Although sleeping in on a work day or school day has an opportunity cost, sleeping
late on the weekend does not.
4) A nation’s export supply curve is downsloping and its import demand curve is
upsloping.
5) The marginal tax rate is the tax rate that applies to additional income.
6) The parity ratio:
A.compares worker productivity in the farm and nonfarm sectors.
B.is the ratio of per capita farm income to per capita nonfarm income.
C.is the ratio of prices received by farmers to prices paid by farmers.
D.is the ratio of prices paid by farmers to prices received by farmers.
7) Economic profits:
A.Are identical to accounting profits
B.Must be earned by every firm which continues to produce in the long run
C.Serve no useful economic purpose and should never occur in a competitive economy
D.Serve in the short run as an incentive to guide production decisions, but indicate the
existence of barriers to entry in the long run
8) If an increase in the supply of a product in the market results in a decrease in price,
but no change in the quantity traded, then:
A.The price elasticity of supply is zero
B.The price elasticity of supply is infinite
C.The price elasticity of demand is unitary
D.The price elasticity of demand is zero
9) In anonymous surveys, on average people rate themselves as “above average” with
regard to characteristics such as intelligence, perceptiveness, and driving ability.
According to behavioral economics, this contradictory result would most likely be
caused by the:
A.overconfidence effect.
B.self-serving bias.
C.confirmation bias.
D.hindsight bias.
10) Suppose that Mick and Cher are the only two members of society and are willing to
pay $10 and $8, respectively, for the third unit of a public good. Also, assume that the
marginal cost of the third unit is $17. We can conclude that:
A.the third unit should not be produced.
B.the third unit should be produced.
C.zero units should be produced.
D.4 units should be produced.
11) Government purchases of goods and services are:
A.Nonexhaustive because they do not directly absorb resources and account for
production
B.Exhaustive because they directly absorb or employ resources and account for
production
C.Both exhaustive and nonexhaustive because in some cases they do directly absorb
resources or account for production and in other cases they do not
D.Neither exhaustive or nonexhaustive because of the tax revenues that finance these
purchases
12) If a 10 percent increase in the price of one good A results in an increase of 5 percent
in the quantity demanded of another good B, then it can be concluded that the two
goods A and B are:
A.Complementary goods
B.Substitute goods
C.Independent goods
D.Normal goods
13) The minimum acceptable price for a product that producer Sam is willing to receive
is $15. The price he could get for the product in the market is $18. How much is Sam’s
producer surplus?
A.$3
B.$33
C.$45
D.$270
14) Marginal utility can be:
A.positive, but not negative.
B.positive or negative, but not zero.
C.positive, negative, or zero.
D.decreasing, but not negative.
15) Governments try to smooth business cycles by using these policies, except:
A.Tax policies
B.Interest rate policies
C.Wage rate policies
D.Government-spending policies
16)
Refer to the above graph. It shows the supply curve for a product before tax (S0) and
after an excise tax is imposed (S1). If 500 units of the product are sold after the tax is
imposed, the amount of the tax borne by the consumer is:
A.$125
B.$250
C.$375
D.$500
17) The population growth rate in IACs (industrially advanced countries) in 2000-2010
averaged 0.7% per year. This compares to what percentage growth per year in
low-income DVCs (developing countries)?
A.1.1%
B.2.1%
C.4.0%
D.0.4%
18) In 1994, the world’s trading nations agreed to:
A.increase export subsidies to reduce world surpluses of farm products.
B.reduce agricultural subsidies and tariffs on agricultural imports.
C.eliminate all price supports for farm products.
D.create an international farm price support system to replace the price support systems
of individual countries.
19) The income elasticity of demand for jewelry is +2. Other things equal, a 10 percent
increase in consumer income will:
A.Decrease the quantity of jewelry purchased by 20 percent
B.Increase the quantity of jewelry purchased by 5 percent
C.Decrease the quantity of jewelry purchased by 5 percent
D.Increase the quantity of jewelry purchased by 20 percent
20) If the price of labor or some other variable resource decreased, the:
A.AVC curve would shift upward
B.AFC curve would shift downward
C.AFC curve would shift upward
D.MC curve would shift downward
21) In presenting the idea of a demand curve, economists presume the most important
variable in determining the quantity demanded is:
A.the price of the product itself.
B.consumer income.
C.the prices of related goods.
D.consumer tastes.
22) What factors explain why there has been a decline in the political support for
agricultural subsidies in recent years?
23) What is minimum efficient scale? What insights would it give about the size of
firms in an industry?
24) In what ways do entrepreneurs differ from other innovators? In what types of
businesses do entrepreneurs and innovators tend to work? How do past successes affect
these types of individuals?
25) The city government recently implemented a price ceiling on the amount landlords
can charge for rent. Your friend then complains This will decrease the quantity of
apartments supplied. Evaluate this statement.
26) In a recent recession the losses sustained by the developing countries through a
decline in raw-material prices by far outweighed any foreign aid given over several
years. Explain.