1) Which of the following is a distinguishing feature of laissez-faire capitalism?
A.Public ownership of all capital.
B.Central planning.
C.Minimal government intervention.
D.A circular flow of goods, resources, and money.
2) Which of the following statements is true?
A.Microeconomics focuses on specific decision-making units of the economy;
macroeconomics examines the economy as a whole.
B.Macroeconomics focuses on specific decision-making units of the economy;
microeconomics examines the economy as a whole.
C.Every topic in economics is either a microeconomic or a macroeconomic issue; a
topic cannot be both.
D.Topics in microeconomics have public policy implications; topics in macroeconomics
do not.
3) The following table applies to a purely competitive industry composed of 100
identical firms.
Refer to the table. The equilibrium price in this purely competitive market is:
A.$5
B.$4
C.$3
D.$2
4) Betty is maximizing her satisfaction from spending her budget on two items, movie
rentals and music downloads. If her marginal utility from the last movie rental is twice
that from the last music download, what is the price of a movie rental if the price of a
music download is $.80?
A.$0.40
B.$0.80
C.$1.20
D.$1.60
5) The degree of inequality in the distribution of income in an economy is depicted in
a(n):
A.Lorenz curve
B.Phillips curve
C.Engels curve
D.Indifference curve
6) In some markets consumers may buy many different brands of a product. Which of
the statements below best represents a situation where demand for a particular brand
would be very elastic?
A.”The different brands are almost identical. I always buy the cheapest”
B.”I use so little of that product that when I do buy it, I don’t pay much attention to the
price”
C.”The brand I buy is so superior to other available brands that I hardly consider the
others”
D.”I pinch pennies in buying other products, but like most people I feel I owe it to
myself to get the best brand of this product”
7) The economic perspective focuses largely on marginal analysis, which means
analyzing:
A.Peripheral elements of a given issue or action
B.The minor aspects of a given issue or decision
C.The changes in the situation that would result from a given action
D.Emotional and psychological facets of a given action
8) An example of a renewable resource would be:
A.Oil
B.Coal
C.Iron ore
D.Aquifers
9)
Refer to the graph above which shows the import demand and export supply curves for
two nations that produce a certain product. Lines 6 and 8 apply to one nation and
represent, respectively:
A.Import demand and export supply
B.Export supply and import demand
C.Domestic supply and domestic demand
D.Domestic demand and domestic supply
10) Which of the following will most likely cause backflows?
A.Poor information that leads a migrant to overestimate the net benefits of migration.
B.High moving costs.
C.Falling wages in a migrant’s origin nation.
D.High levels of skill transferability.
11) The Consider This box “Of Catfish and Art (and Other Things in Common)” lists
examples of recent antitrust cases involving:
A.monopolization.
B.tying contracts.
C.price-fixing.
D.horizontal mergers.
12) In a two-nation world, comparative advantage in the production of a particular
product means that one nation can produce:
A.The product with fewer inputs than the other nation
B.The product at lower average cost than the other nation
C.The product at a lower domestic opportunity cost than the other nation
D.More of the product than the other nation
13)
Refer to the cost table above. Now suppose that there are 600 identical firms in this
industry, each with the same cost data as the single firm discussed above. Suppose, too,
that the demand curve for this industry is as follows:
When the market is in equilibrium, each of the firms will be producing:
A.5 units
B.6 units
C.7 units
D.9 units
14) Which of the following statements about the so-called “hedonic treadmill” is not
true?
A.It is a consequence of the fact that our brains are wired to notice changes rather than
states
B.An increase in consumption level will give a permanent increase in happiness
C.It is the reason why people across a wide spectrum of incomes are found to be
equally happy
D.A one-shot increase in income will, in the long run, not affect people’s sense of
satisfaction