1) Public choice theorists contend that:
A.government can efficiently correct instances of market system failure.
B.the existence of cost-benefit analysis has brought about the efficient use of resources
in the public sector.
C.public bureaucracies are inherently more efficient than private enterprises.
D.public bureaucracies are inherently less efficient than private enterprises.
2) If a rational consumer is in equilibrium, which of the following conditions will hold
true?
A.MUa = MUb = MUc = . . . = MUn.
B.The marginal utility of each good purchased will be zero.
C.The marginal utility of the last dollar spent on each good purchased will be the same.
D.The total utility obtained from each good purchased will be the same.
3) Roughly what portion of U.S. total health spending is paid for by private and public
insurance?
A.One-tenth.
B.One-fourth.
C.Four-fifths.
D.One-half.
4) The pure monopolist’s demand curve is relatively elastic:
A.in the price range where total revenue is declining.
B.at all points where the demand curve lies above the horizontal axis.
C.in the price range where marginal revenue is negative.
D.in the price range where marginal revenue is positive.
5) Diseconomies of scale arise primarily because:
A.the short-run average total cost curve rises when marginal product is increasing.
B.of the difficulties involved in managing and coordinating a large business enterprise.
C.firms must be large both absolutely and relative to the market to employ the most
efficient productive techniques available.
D.beyond some point marginal product declines as additional units of a variable
resource (labor) are added to a fixed resource (capital).
6) An extraordinarily small crop of farm products due to drought causes:
A.a large increase in the price of farm products because the demand for farm products is
price inelastic.
B.only a slight increase in the price of farm products because the demand for farm
products is income elastic.
C.only a slight increase in the price of farm products because the demand for farm
products is income inelastic.
D.a large increase in the price of farm products because the demand for farm products is
price elastic.
7) Use the following table to answer the question below for Country Y. Column 1 is the
price of a product. Column 2 is the quantity demanded domestically (Qdd) and Column
3 is the quantity supplied domestically (Qsd).
Refer to the table above. If the world price of the product is $6, then Country Y will:
A.Export 100 units of the product
B.Import 100 units of the product
C.Exports of 300 units of the product
D.Imports of 400 units of the product
8) Differences in the interpretation and the enforcement of antitrust laws are in part
rooted on the issue of focus. One such issue pertains to question of whether the policy
focus should be on:
A.Domestic firms versus multinationals
B.Intra-state trade versus inter-state trade
C.Monopoly output versus monopoly pricing
D.Monopoly behavior versus monopoly structure
9) Which of the following employers is the most prejudiced? Employer:
A.A, whose d is $0.
B.B, whose d is $2.
C.C, whose d is $4.
D.D, whose d is $6.
10) Answer the question on the basis of the following demand schedule:
Refer to the data. The price elasticity of demand is relatively elastic:
A.in the $6-$4 price range.
B.over the entire $6-$1 price range.
C.in the $3-$1 price range.
D.in the $6-$5 price range only.
11) Which is a feature of a purely competitive market?
A.Price differences between firms producing the same product
B.Significant barriers to entry into the industry
C.The industry’s demand curve is perfectly elastic
D.Products are standardized or homogeneous
12) 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. If the market price of sockeye salmon is $15 per ton,
and Kara and Kyle both catch their quota, their combined profit will be:
A.$6,000.
B.$14,000.
C.$20,000.
D.$30,000.
13) The economizing problem is essentially one of deciding how to make the best use
of:
A.Limited resources to satisfy limited economic wants
B.Unlimited resources to satisfy unlimited economic wants
C.Unlimited resources to satisfy limited economic wants
D.Limited resources to satisfy unlimited economic wants
14) Answer the question on the basis of the following five schedules, all of which
represent income tax schedules for an economy. All figures are in billions of dollars.
Which of the schedules represent(s) a progressive tax?
A.V only.
B.III and V.
C.II and III.
D.III only.
15) According to behavioral economists, the human brain frequently employs heuristics
because:
A.people have consciously trained their brains to do so.
B.these shortcuts minimize errors in decision making.
C.they produce more optimal outcomes than do rational calculations of benefits and
costs.
D.they save energy and time in decision making.
16) The representative firm in a purely competitive industry:
A.Will always earn a profit in the short run
B.May earn either an economic profit or a loss in the long run
C.Will always earn an economic profit in the long run
D.Will earn zero economic profit in the long run
17) A product market is in equilibrium:
A.whenever there is no surplus of the product.
B.whenever there is no shortage of the product.
C.when consumers want to buy more of the product than producers offer for sale.
D.where the demand and supply curves intersect.
18) An increase in the present value of the profit that can be obtained by delaying
resource extraction will lead profit-maximizing firms to:
A.reduce extraction in the present.
B.increase the current rate of extraction.
C.invest in less extraction equipment.
D.hire more workers to support current production.
19) The aggregate economic rent received by a productive resource will decrease,
ceterisparibus, whenever the:
A.Demand for the resource increases
B.Price of the resource decreases
C.Demand for the resource decreases
D.Supply curve shifts to the right