The statistical analysis of economic data is referred to as:
A. microeconomics.
B. econometrics.
C. deductive reasoning.
D. calculus.
Answer:
Demand for single occupancy apartments is Qd = 400,000 – 250 P. Supply is given by
Qs = 200,000 + 250 P. Price of an apartment is measured in hundreds of dollars and
quantity is measured in thousands of apartments. What is equilibrium rent and quantity
of apartments rented?
A. $400 and 300,000 apartments respectively
B. $800 and 200,000 apartments respectively
C. $800 and 400,000 apartments respectively
D. $1,200 and 500,000 apartments respectively
Answer:
Refer to the graph shown. If hamburger dinners are produced by a perfectly competitive
industry with a market demand D, in long-run equilibrium the price will be:
A. $6, and 100 will be sold.
B. $4, and 200 will be sold.
C. $5, and 150 will be sold.
D. $4, and 100 will be sold.
Answer:
For government to correct for the failure of market outcome, it must do all of the
following except:
A. recognize the problem.
B. act only if the marginal costs exceed the marginal benefits.
C. have the will to do something positive about the problem.
D. have the ability to do something positive about the problem.
Answer:
An increase in the tax rate can cause total tax collections to fall if:
A. higher taxes cause individuals to substitute leisure for labor.
B. higher taxes cause individuals to substitute labor for leisure.
C. the tax is regressive.
D. the tax is progressive.
Answer:
A strategy that is preferred by an individual regardless of an opponent’s decision is
called:
A. a Nash equilibrium.
B. a Vickrey position.
C. a framing strategy.
D. a dominant strategy.
Answer:
The price mechanism is:
A. not affected by social and political forces.
B. affected by social but not political forces.
C. affected by political but not social forces.
D. affected by both political and social forces.
Answer:
The fact that people are willing to take a pay cut to work at home suggests that:
A. when it comes to work, people often are not rational.
B. people have no choice but to work at home.
C. some people get benefits called “psychic income” from working conditions they like.
D. people are being paid efficiency wages when they aren’t working at home.
Answer:
In the Standard Oil and American Tobacco Company antitrust cases in 1911, the Court
ruled that:
A. the two companies had a monopolistic structure and therefore should be broken up.
B. the two companies were guilty of unfair business practices and therefore should be
broken up.
C. the Sherman Antitrust Act did not apply.
D. the two companies had to be disbanded.
Answer:
The growing popularity of the Atkins (low-carb) Diet caused:
A. an increase in the demand for bread.
B. a decrease in the demand for bread.
C. a movement down and to the right along the demand for bread curve.
D. a movement up and to the left along the demand for bread curve.
Answer:
Through ___ models, all types of allocating and coordinating mechanisms come under
the purview of modern economics.
A. butterfly effect
B. path-dependent
C. regression
D. shadow price
Answer:
Refer to the graphs shown, which depict a perfectly competitive market and firm. If
market demand increases from D0 to D1, output in the market will:
A. rise to Q2 in the long run if this is a decreasing-cost industry.
B. rise to Q2 in the long run if this is a constant-cost industry.
C. rise to Q2 in the long run if this is an increasing-cost industry.
D. return to Q0 in the long run.
Answer:
A single union that supplies all the labor in a particular market is an example of:
A. a monopsony.
B. a monopoly.
C. a bilateral monopoly.
D. an oligopoly.
Answer:
Refer to the graph shown. At which point is elasticity zero?
A. A
B. B
C. C
D. D
Answer:
Refer to the graph shown. If the price of this product fell from $5.00 to $2.50 (because
of a price ceiling or a shift in demand), producer surplus would fall from:
A. 2,000 to 500.
B. 1,000 to 500.
C. 1,000 to 250.
D. 500 to 250.
Answer:
Refer to the graph shown. Calculate the approximate elasticity of demand for the line
segment BD:
A. 3.
B. 2.
C. ½.
D. 3/2.
Answer:
Trade adjustment assistance is:
A. difficult to implement because the adjustment costs of international trade are
generally greater than the gains from trade.
B. difficult to implement because claims of injury are easy to make and may be
politically difficult to reject.
C. easy to implement because the adjustment costs of international trade are typically
less than the gains from trade.
D. easy to implement because it is easy to identify the few industries genuinely injured
by international trade.
Answer:
Refer to the following graph.
Elasticity is greatest at point:
A. A.
B. B.
C. C.
D. It is the same everywhere along this supply curve.
Answer:
The difference between mercantilism and feudalism is that under mercantilism:
A. merchants played a more important political role than kings.
B. the invisible hand played a more important role than the government.
C. nation-states ruled by kings who coordinated the economic activity emerged.
D. economic rather than social and political forces made the central economic
decisions.
Answer:
A firm’s average cost increases as it increases its output by expanding its plant and
hiring additional workers (its only inputs to production). The firm’s owner blames the
increase in per-unit costs on the law of diminishing marginal productivity. The owner’s
reasoning is:
A. correct because some inputs are fixed in the long run.
B. incorrect because economies of scale are present.
C. correct because marginal productivity must decrease in the short run.
D. incorrect because all inputs are varied in the example.
Answer:
Refer to the graph shown. The profit-maximizing monopolist produces output:
A. Q1.
B. Q2.
C. Q3.
D. Q4.
Answer:
Rachel left her job as a graphic artist, where she earned $42,000 per year, to open her
own graphic arts firm. Her explicit costs for her new business include:
A. only the expenses incurred for office space, equipment, and supplies.
B. only her forgone salary of $42,000 per year.
C. both the expenses incurred for office space, equipment, and supplies and her forgone
salary of $42,000 per year.
D. neither the expenses incurred for office space, equipment, and supplies nor her
forgone salary of $42,000 per year.
Answer:
In the ALCOA antitrust case in 1945, the Court ruled that the:
A. company had a monopolistic structure and therefore should be broken up.
B. company was guilty of unfair business practices and therefore should be broken up.
C. Sherman Antitrust Act did not apply.
D. two companies had to be disbanded.
Answer:
Because the poor tend to use public transportation more than the rich do, a tax on the
Washington, D.C., metro probably would be:
A. progressive.
B. retroactive.
C. reactionary.
D. regressive.
Answer:
The following graph shows average fixed costs, average variable costs, average total
costs, and marginal costs of production.
Refer to the graph shown. Why does the distance between curves II and III get smaller
as quantity increases?
A. Marginal cost is increasing.
B. Average variable cost is increasing.
C. Average fixed cost is declining.
D. Average fixed cost is increasing.
Answer:
Refer to the graph shown depicting a perfectly competitive firm. If average variable
cost is $3 at quantity 450, points A through E represent the:
A. firm’s total cost curve.
B. firm’s total revenue curve.
C. demand for the firm’s product.
D. firm’s supply curve.
Answer:
When the electronics retailer Circuit City closed its stores, the market supply of
electronic goods:
A. decreased, causing the market price to fall.
B. decreased, causing the market price to rise.
C. increased, causing the market price to fall.
D. increased, causing the market price to rise.
Answer:
Healthy food and charitable giving are examples of:
A. merit goods or activities.
B. demerit goods or activities.
C. negative externalities.
D. public goods.
Answer:
Refer to the graph below.
Productive inefficiency occurs at what point?
A. A
B. B
C. C
D. D
Answer:
The voluntary export restraints on autos by Japan in the early 1980s were:
A. prohibited under the GATT treaty.
B. unlike an import quota and did not affect the quantity of cars imported.
C. unlike a tariff and did not affect the price of imports.
D. probably approved of by the Japanese car companies since it increased their profits.
Answer:
The perfectly competitive output level is Pareto optimal because at this output level:
A. the total cost to society equals the total benefit.
B. the marginal cost to society equals the marginal benefit.
C. the marginal cost to society is minimized.
D. the marginal benefit to society is maximized.
Answer:
Microsoft has a special version of its Windows operating system that it sells at a low
price in countries where cheap pirated software is widespread. The cost of producing
another copy of this software is the same as the cost of producing another copy of the
regular Windows product. Selling this ‘special edition” software at a low price in certain
countries is very similar to what economists call:
A. price discrimination.
B. natural monopoly.
C. a price taker.
D. welfare loss.
Answer:
Refer to the graphs shown. The discovery of a new supply of resources used only in the
production of guns can be shown by which movement?
A. From A to B to C to D in diagram a
B. From C to D to A to B in diagram a
C. From X to Y to X to Z in diagram b
D. From X to Z to X to Y in diagram b
Answer: