1) Conglomerate mergers are combinations of:
A.Many small firms
B.Firms producing the same product
C.Firms producing unrelated products
D.Firms operating at different stages in a given production process
2) Tariffs and import quotas would benefit the following groups, except:
A.Consumers of the product
B.Domestic producers of the product
C.Workers in domestic firms producing the product
D.The government of the importing country
3) Those without any health insurance in the U.S. tend to be the following groups,
except:
A.Those who are in excellent health and those with the poorest health
B.Workers in small firms
C.Minimum-wage workers
D.Those receiving Social Security payments
4) Industry Y is dominated by five large firms that hold market shares of 20, 20, 25, 25,
and 10. The Herfindahl index for this industry is:
A.1560
B.2150
C.2340
D.3500
5) Which of the following is a distinguishing feature of a command system?
A.Private ownership of all capital.
B.Central planning.
C.Heavy reliance on markets.
D.Widespread dispersion of economic power.
6)
Refer to the above supply and demand graph. In the graph, line S is the current supply
of this product, while line S1 is the optimal supply from the society’s perspective. One
solution to this externality problem is to:
A.Give consumers a subsidy of the amount FG per unit
B.Give producers a subsidy of the amount AB per unit
C.Tax producers by the amount DE per unit
D.Tax consumers by the amount EF per unit
7)
Refer to the above table. The average total cost of producing 20 units of output is:
A.$4.00
B.$4.50
C.$6.50
D.$8.50
8)
Refer to the above table. A surplus of 500 units will occur when the price is:
A.$10 per unit
B.$15 per unit
C.$20 per unit
D.$30 per unit
9)
Refer to the diagram. If the budget line shifts from ab to ac, the:
A.consumer’s level of total utility will increase.
B.consumer will purchase more of both J and K.
C.consumer will purchase less of both J and K.
D.consumer will purchase more of J and less of K.
10) All of the following statements describe a market economy except:
A.Government prescribes the market prices for goods and services
B.Prices provide important signals to buyers and sellers
C.The allocation of resources is determined by their prices
D.The actions of buyers and sellers establish a product’s price
11) Natural monopolies result from:
A.Patents and copyrights
B.Pricing strategies
C.Extensive economies of scale in production
D.Control over an essential natural resource
12) Answer the question on the basis of the following production possibilities tables for
two countries, Latalia and Trombonia:
The given data indicate that production in:
A.both Latalia and Trombonia is subject to constant opportunity costs.
B.Trombonia is subject to decreasing costs, but production in Latalia occurs under
increasing opportunity costs.
C.Latalia is subject to increasing costs, but production in Trombonia occurs under
constant opportunity costs.
D.both Latalia and Trombonia are subject to the law of increasing opportunity costs.
13)
Refer to the diagram and assume that price increases from $2 to $10. The coefficient of
price elasticity of demand (midpoint formula) relating to this change in price is about:
A..25 and demand is inelastic.
B.1.5 and demand is elastic.
C.1 and demand is unit elastic.
D..67 and demand is inelastic.
14) A profit-maximizing firm will use additional units of resources for production until:
A.Total, average, and marginal cost are equal
B.Total, average, and marginal revenue are equal
C.The marginal revenue product equals the marginal resource cost
D.The marginal revenue product is greater than the marginal resource cost
15) Plant sizes get larger as you move from ATC-1 to ATC-4.
Refer to the above table. In the long run the firm should use plant size ATC-3 for what
level of output?
A.Less than 3000
B.3000 to 3500
C.4000 to 4500
D.5000 to 5500
16)
Refer to the above graph of cost curves. Total fixed cost at output level Q2 is measured
by:
A.0B
B.AC
C.CD
D.DE
17) Nominal monthly wages increase from $1,500 to $1,800 while the price level
increases by 4 percent. The percentage change in real monthly wages is about:
A.10 percent
B.12 percent
C.14 percent
D.16 percent
18) If the price of a variable resource increased for the typical firm, there would be:
A.A downward shift in the AVC curve
B.An upward shift in the AFC curve
C.A downward shift in the AFC curve
D.An upward shift in the MC curve