1) The reason that the supply curve for labor in a purely competitive market slopes
upward is because:
A.The wage rate paid to workers falls as more are hired
B.The marginal product of labor falls as output increases
C.Marginal resource cost rises as productivity increases
D.Higher wages must be paid to bid workers away from other opportunities
2) If a price-discriminating monopolist sells the same product in two markets but
charges a higher price in market X and a lower price in market Y, the pricing difference
indicates that demand is:
A.More elastic in market X than market Y
B.Less elastic in market X than market Y
C.Less elastic in market Y than market X
D.The same in both market X and Y
3) Resource demand has grown over time:
A.because of population growth only.
B.because of increased consumption per person only.
C.because of both increased population and greater consumption per person.
D.despite decreases in population and consumption per person.
4) Illustrate the following by drawing a supply and demand graph in the appropriate
graph spaces below: (a) the economic effects of exclusive or craft unionism; (b) the
economic effects of increasing the demand for labor; (c) wage determination in a
monopsonistic labor market; (d) wage determination in a bilateral monopoly.
5) Compared to younger people, those who are 65 and older tend to consume roughly:
A.Twice as much health care
B.About the same amount of health care
C.Three-and-a-half times as much health care
D.10% less health care
6) A firm decides to make a $20 million expenditure on research and development that
will create a new product. This product is expected to increase the firm’s revenues by a
total of $24 million in the next year. The firm also estimates that the production cost of
the new product will be $22 million. If the firm has to take out a loan to finance the
project, what is the highest interest rate it will pay and still do the project among the
choices given?
A.8.3 percent
B.9.1 percent
C.10 percent
D.20 percent
7) Heuristics:
A.are rules of thumb that generate decisions that generally maximize net benefits.
B.take a long time to develop and are therefore avoided by rational decision makers.
C.are shortcuts that save time and energy in decision making.
D.always waste mental resources by leading people to suboptimal outcomes.
8) Present consumption supported by large trade deficits may come at the expense of:
A.permanent debt to foreign interests.
B.permanent foreign ownership of formerly U.S.-owned assets.
C.large sacrifices of future consumption.
D.all of these.
9) In an oligopolistic market there is likely to be:
A.Little consideration of the actions of rival firms
B.Price taking behavior on the part of firms
C.Homogeneous but not differentiated products
D.Neither allocative nor productive efficiency
10)
Refer to the diagram of the market for product X. Curve St embodies all costs
(including externalities) and Dt embodies all benefits (including externalities)
associated with the production and consumption of X. Assuming the market equilibrium
output is Q1, we can conclude that the existence of external:
A.costs has resulted in an overallocation of resources to X.
B.benefits has resulted in an overallocation of resources to X.
C.costs has resulted in an underallocation of resources to X.
D.benefits has resulted in an underallocation of resources to X.
11) The following question is based on the demand and cost data for a pure monopolist
given in the table below.
Refer to the above table for a monopolist. A non-discriminating monopolist would earn
maximum profits of:
A.$600
B.$500
C.$250
D.$100