1) Suppose that Alpha’s real output rose from $400 billion in year 1 to $428 billion in
year 2. Its growth rate for this period was:
A.14 percent.
B.12 percent.
C.9 percent.
D.7 percent.
2) When a nation is under-allocating resources to the production of a good, then the:
A.Marginal benefit is greater than the marginal cost of the good
B.Marginal benefit is less than the marginal cost of the good
C.Marginal cost of producing the good is decreasing
D.Marginal benefit of producing the good is increasing
3)
Refer to the given data. If the market wage rate is $8 and the firm hires its
profit-maximizing number of workers, the firm’s total wage bill (payment) will be:
A.$16.
B.$24.
C.$32.
D.$48.
4) In the inverted-U theory of R&D, which of the following industry concentration
ratios would be most conducive to R&D (as a percentage of firm sales)?
A.1 percent.
B.10 percent.
C.50 percent.
D.70 percent.
5) For most products, purchases tend to fall with decreases in buyers’ incomes. Such
products are known as:
A.Inferior goods
B.Direct goods
C.Average goods
D.Normal goods
6) The following table shows the marginal utilities derived from current consumption
levels of three new products, A, B, and C, that are now being sold in the market at the
prices listed below.
The consumer can immediately gain the most extra total utility by switching spending
from:
A.A to B
B.B to A
C.C to B
D.B to C
7) Since 1980, labor union membership in the United States has been:
A.increasing absolutely and as a percentage of the labor force.
B.increasing absolutely but declining as a percentage of the labor force.
C.decreasing absolutely and as a percentage of the labor force.
D.decreasing absolutely but increasing as a percentage of the labor force.
8) Which of the following is most likely to increase the Herfindahl index of a particular
industry?
A.A horizontal merger between two of the industry’s largest firms.
B.A vertical merger between one of an industry’s largest firms and one of the many
input suppliers in the resource market.
C.A conglomerate merger involving one of the industry’s major firms.
D.An agreement by all the industry firms to divide up the market among them.
9) At a price of $4 per unit, Gadgets Inc. is willing to supply 20,000 gadgets, while
United Gadgets is willing to supply 10,000 gadgets. If the price were to rise to $8 per
unit, their respective quantities supplied would rise to 45,000 and 25,000. If these are
the only two firms supplying gadgets, what is the elasticity of supply in the market for
gadgets?
A.1.2
B.1.0
C..833
D..80
10) Any point inside the production possibilities curve indicates:
A.the presence of technological change.
B.that resources are imperfectly substitutable among alternative uses.
C.the presence of inflationary pressures.
D.that more output could be produced with the available resources.
11) In which of the following U.S. occupations is the rate of unionization the highest?
A.Protective services.
B.Sales workers.
C.Managers.
D.Transportation workers.
12) Irving Tiller exclusively grew wheat in each of the past three years. Under the Food,
Conservation, and Energy Act of 2008, Tiller:
A.must grow wheat in the current year in order to receive direct payments from the
federal government.
B.can grow whatever crop he wants to in the current year but will only receive direct
payments from the federal government if the price of wheat falls below a targeted price.
C.can grow whatever crop he wants in the current year and will still receive direct
payments from the federal government based on his previously grown wheat crops.
D.must grow something other than wheat to qualify for direct payments from the
federal government.
13) Farm programs such as those of the United States and the European Union:
A.encourage the United States and the European Union to use tariffs and quotas to
restrict agricultural imports.
B.cause U.S. and EU farmers to produce less than domestic consumers want to
purchase.
C.increase world market prices for agricultural products.
D.raise farm output in developing nations.
14) Suppose Gina and Henry play two rounds of the ultimatum game. In the first round
they play for $10; in the second round they play for $1,000. In the first round Gina
suggests an 80/20 split ($8 to Gina, $2 to Henry), but Henry quickly rejects the offer as
unfair. If in the second round Gina offers the same split ($800 to Gina, $200 to Henry),
research by behavioral economists suggests that Henry will:
A.accept the offer because the dollar amount he would forgo by rejecting is substantial.
B.counteroffer with a more even split.
C.weigh the offer much more carefully because of the dollar amounts involved but
ultimately reject the offer.
D.exhibit a stronger negative reaction than the first time and ultimately reject the offer.
15) Capital flight refers to:
A.the tendency of large corporations of IACs to build new plants in the DVCs because
labor is cheaper.
B.DVC citizens accumulating or investing their savings in the IACs.
C.the high international mobility of speculative funds caused by variations in exchange
rates.
D.the tendency of DVCs to overinvest in commercial aircraft.
16) Draw a graph that illustrates the dilemma of regulation for a natural monopoly. On
the graph, show the: (a) socially optimal price; (b) fair-return price; and (c)
profit-maximizing price for the unregulated monopolist.
17) According to some supporters of the minimum wage, it has very small or even
nonexistent negative employment effects because:
A.the demand for minimum wage labor is highly elastic.
B.it reduces turnover among minimum wage workers, prompts employers to use them
more efficiently, and thus raises their average productivity.
C.it encourages teenagers to stay in school.
D.employers substitute lower fringe benefits for higher pay, keeping their compensation
costs the same.
18) At the equilibrium price:
A.quantity supplied may exceed quantity demanded or vice versa.
B.there are no pressures on price to either rise or fall.
C.there are forces that cause price to rise.
D.there are forces that cause price to fall.
19) Which of the following is a major reason for the growing income inequality in the
United States since 1975?
A.Higher marginal tax rates
B.Unemployment benefits
C.Rising number of skilled workers
D.Import competition