1) The minimum efficient scale of a firm:
A.is realized somewhere in the range of diseconomies of scale.
B.occurs where marginal product becomes zero.
C.is in the middle of the range of constant returns to scale.
D.is the smallest level of output at which long-run average total cost is minimized.
2) If the production possibilities curve is a straight line:
A.the two products will sell at the same market prices.
B.economic resources are perfectly substitutable between the production of the two
products.
C.the two products are equally important to consumers.
D.equal quantities of the two products will be produced at each possible point on the
curve.
3) A major goal of the World Trade Organization is to:
A.Increase the protection of producers against foreign trade competition
B.Encourage bilateral trade agreements between nations
C.Liberalize international trade among nations
D.Maximize tariff revenue for governments
4) Street entertainers face the free-rider problem when they perform because of the:
A.Law of Demand
B.Diminishing marginal utility
C.Nonexcludability characteristic
D.Rivalry characteristic
5) The “Buy American” policy is equivalent to a(n):
A.Tariff
B.Quota
C.Export subsidy
D.Voluntary export restriction
6) Bucky and Satchel are offered identical jobs, each paying $80,000 per year.
According to behavioral economics:
A.they should feel equally good about the job offer.
B.how each will feel about the job offer will depend on their current positions and
incomes.
C.if Bucky’s current income is $60,000 per year, and Satchel’s is $70,000 per year, we
would expect Bucky to receive twice as much additional utility from taking the job as
Satchel would.
D.if the jobs will not change their income, they are more likely to switch jobs than
remain with the status quo.
7)
Refer to the graph above which shows the import demand and export supply curves for
two nations that produce a certain product. In this two-nation model, the equilibrium
world price and quantity will be:
A.A and Q2
B.B and Q4
C.C and Q2
D.D and Q4
8) Which of these pairs of concepts can be positively, as well as negatively, related?
A.The income of consumers and the demand for a product
B.The price of a product and the quantity of that product demanded
C.The price of a product and the demand for a complementary product
D.The cost of resources required to make a product and its supply
9) A nondiscriminating profit-maximizing monopolist:
A.will never produce in the output range where marginal revenue is positive.
B.will never produce in the output range where demand is inelastic.
C.will never produce in the output range where demand is elastic.
D.may produce where demand is either elastic or inelastic, depending on the level of
production costs.
10) Assume that a restaurant is hiring labor in an amount such that the MRC of the last
worker is $16 and her MRP is $12. On the basis of this information, we can say that:
A.profits will be increased by hiring additional workers.
B.profits will be increased by hiring fewer workers.
C.marginal revenue product must exceed average revenue product.
D.the restaurant is maximizing profits.