1) Since 1960, real hourly compensation in the United States has approximately:
A.remained the same.
B.risen by 40 percent.
C.doubled.
D.tripled.
2) Which of the following is most likely to be a natural monopoly?
A.Aircraft manufacturing
B.Auto manufacturing
C.Electric utilities
D.Steel production
3) An oligopoly producing a homogeneous product is comprised of three firms that act
like a cartel. Assume that these three firms have identical cost schedules. Assume also
that if any one of these firms sets a price for the product, the other two firms charge the
same price. As long as they all charge the same price they will share the market equally;
and the quantity demanded of each will be the same.
Below are the total-cost schedule of one of these firms and the demand schedule that
confronts it when the other firms charge the same price as this firm. Complete the
marginal-cost and marginal-revenue schedules facing the firm.
(a)What price would be charged, what output would be produced, and what profit
would be made by this firm?
(b)If the firms collude to maximize joint profits, what would be the industry price,
output, and profit?
4) The taste-for-discrimination model examines an employer’s prejudice and
discrimination in hiring by using tools of:
A.Demand theory
B.Theory of costs
C.Production theory
D.Profit theory
5) Which of the following statements best reflects behavioral economists’ views on
self-interest versus the interests of others?
A.Self-interest dominates human behavior; even seemingly selfless behavior is driven
by self-interest.
B.Most people care so deeply about others that self-interest is a minor consideration in
their decision making.
C.The system is most efficient when people focus solely on their self-interest and allow
the invisible hand to work out what is best for society.
D.People are always self-interested to a degree, but their behavior is also affected by
moral and ethical considerations.
6) A firm hiring labor in a perfectly competitive labor market faces a:
A.downsloping labor supply curve and upsloping labor demand curve.
B.upsloping labor supply curve and downsloping labor demand curve.
C.upsloping labor supply curve and horizontal labor demand curve.
D.horizontal competitive wage curve and downsloping labor demand curve.
7) Which of the following terms best characterizes the demand for health care?
A.Price elastic
B.Price inelastic
C.Income inelastic
D.Negative cross elasticity
8) A firm can sell as much as it wants at a constant price. Demand is thus:
A.perfectly inelastic.
B.perfectly elastic.
C.relatively inelastic.
D.relatively elastic.
9) The number of Americans without health insurance (as of 2011) is approximately:
A.20 million, or about 7 percent of the population.
B.29 million, or about 10 percent of the population.
C.49 million, or about 16 percent of the population.
D.72 million, or about 25 percent of the population.
10) Monopolistic competition is characterized by a:
A.few dominant firms and low entry barriers.
B.large number of firms and substantial entry barriers.
C.large number of firms and low entry barriers.
D.few dominant firms and substantial entry barriers.
11) Assuming a competitive resource market, a firm is hiring resources in the
profit-maximizing amounts when the:
A.firm’s total outlay on resources is minimized.
B.marginal revenue product of each resource is equal to its price.
C.price of each resource employed is the same.
D.marginal revenue product of the last unit of each resource hired is the same.
12) What is a likely explanation for why the budget of a government agency might
increase beyond its optimal size?
A.The paradox of voting
B.The influence of the median voter
C.The power of special-interest groups
D.The allocative efficiency of government