1) Suppose that Katie and Kelly each expects to receive $500 worth of marginal
benefits from a proposed new recreation center, whereas Kerry expects to receive only
$100 worth. If the proposed tax levied on each for the center would be $400, a majority
vote will:
A.defeat this project and resources will be underallocated to it.
B.pass this project and resources will be efficiently allocated.
C.pass this project and resources will be underallocated to it.
D.pass this project and resources will be overallocated to it.
2) Consider the case of Eastover Coal Mining Company, operating its mine in the small,
isolated town of Eastover, Kentucky. The following data describe the firm, where MPL
= marginal product of labor and MRCL = marginal resource cost of labor. If the firm
sells its coal in a purely competitive market for $10 per ton, how many laborers should
it hire?
A.2
B.3
C.4
D.5
3)
The diagram portrays:
A.pure competition.
B.collusive oligopoly.
C.noncollusive oligopoly.
D.pure monopoly.
4) In the table below, a monopsonist has the marginal-revenue-product schedule for
labor given in columns 1 and 2, and the supply schedule for labor is given by columns 1
and 3.
Refer to the above table and information. What is the firm’s total labor costs if it hires 6
workers?
A.$33
B.$48
C.$65
D.$84
5) In a market economy, the incomes of consumers depend primarily upon:
A.Government policies in setting wages and interest rates
B.The quantity and prices of resources that they possess
C.The amount of savings that they have accumulated
D.How closely connected they are to government and business leaders
6) Behavioral economists put significant emphasis on using models to:
A.Predict decisions, but not so much to understand how those decisions are made
B.Predict decisions and also to understand how those decisions are made
C.Understand decision processes, but not the prediction of the decision itself
D.Understand people’s actions, but not what drive people to act in certain ways
7) Better technology means that more output in the U.S. economy can be produced:
A.With a greater amount of energy input
B.With the same amount of energy input
C.But it will lead to a fall in the standard of living
D.But it will lead to a rise in population growth
8)
Refer to the given diagram in which line AB is the U.S. production possibilities curve
and AC is its trading possibilities curve. We can conclude that the United States:
A.has chosen to specialize in the production of cheese.
B.has chosen to specialize in the production of beef.
C.has decided to trade beef for cheese.
D.is relatively more efficient than its trading partners in producing both cheese and
beef.
9) Use the table below to answer the question. The table shows the hypothetical demand
and supply schedule for health care
Refer to the above table. With insurance paying two-thirds the cost of health care, there
would be a resulting allocative:
A.Efficiency because at 500 units the marginal cost to society of $400 equals the
marginal benefit of $400
B.Efficiency because at 700 units the marginal cost to society is $200 and the marginal
benefit is $600
C.Inefficiency because at 700 units the marginal cost to society is $600 and the
marginal benefit is $200
D.Inefficiency because at 700 units the marginal cost to society is $400 and the
marginal benefit is $200
10) Which business practice is rarely challenged by the government under antitrust
laws?
A.Price fixing
B.Tying contracts
C.Price discrimination
D.Interlocking directorates