1) If the newspapers report that there is a shortage of strawberries, it must mean that the
current price of strawberries is below the equilibrium price.
2) Corporate income taxes contribute more to Federal tax revenues than do personal
income taxes.
3) As of 2012, more than half of the total debt of the U.S. government was owed to
foreigners.
4) Simultaneous consumption and network effects are sources of increasing returns and
economies of scale that promote productivity growth.
5) If the minimum efficient scale in an industry is smaller than the size of the market of
that industry, then we would have a natural-monopoly situation.
6) The tendency of people to underestimate the time required to complete a task is
called the:
A.Planning fallacy
B.Framing effect
C.Hindsight bias
D.Availability heuristic
7) At equilibrium in a market for a product, the total revenues received by sellers equal
the:
A.Market producer surplus
B.Total amount spent by buyers on the product
C.Total profits of sellers
D.Market consumer surplus
8) The situation where “the few who yell the loudest gets heard” is referred to as the:
A.Special-interest effect
B.Principal-agent problem
C.Moral hazard problem
D.Adverse selection effect
9) A monopolist sells 6 units of a product per day at a unit price of $15. If it lowers
price to $14, its total revenue increases by $22. This implies that its sales quantity
increases by:
A.4 units per day
B.3 units per day
C.2 units per day
D.1 unit per day
10)
The graph above represents a competitive market for a product where the government
now has introduced a price floor of 0C. Which area in the graph represents the
producers’ sales revenue after the imposition of the price floor?
A.0CFL
B.0CEJ
C.0BGK
D.0BHL
11) Loans of the Federal Reserve Banks to commercial banks are:
A.A liability of the Federal Reserve Banks and of the commercial banks
B.An asset of the Federal Reserve Banks and of the commercial banks
C.A liability of the Federal Reserve Banks and an asset for commercial banks
D.An asset of the Federal Reserve Banks and a liability for commercial banks
12) Natural disasters often cause shortages of critical supplies. What outcomes would
neoclassical and behavioral economics typically predict from these events?
A.Both would expect prices to rise significantly, whether from market forces or from
self-interest overwhelming any sense of compassion for others.
B.Both would expect sellers to keep prices unchanged, whether to keep customers
happy long-term or out of a sense of fairness.
C.Neoclassical economists would expect economic chaos and collapse, while
behavioral economists would expect everyone to act cooperatively.
D.Neoclassical economists would expect prices to rise dramatically as a natural result
of the greater scarcity, and behavioral economists would expect prices to increase less
or not at all as people try not to take advantage of the situation.
13)
Refer to the above diagram. If the production possibilities curve of an economy shifts
from AB to CD, it is most likely the result of what factor affecting economic growth?
A.A supply factor
B.A demand factor
C.An efficiency factor
D.An allocation factor
14) The role of government in fostering economic growth in DVCs has been criticized
because:
A.Most governments operate as dictatorships
B.There is often poor administration and corruption in government
C.Government is generally supportive of business at the expense of labor
D.Governments have adopted the unpopular method of forced savings to stimulate
investment
15) The initial proposed remedy for Microsoft violations of antitrust laws in the 2000
ruling from a Federal District Court was to:
A.Fine the company $100 million
B.Give software codes to Microsoft competitors
C.Split Microsoft into two companies
D.Apply the legal cartel theory of regulation to Microsoft
16) Which of the following is not an example of a socio-cultural impediment to
economic growth?
A.Tribal allegiances that take precedence over national unity
B.Religious beliefs and practices that severely limit economic activity
C.Migration of labor resources from agricultural to urban areas
D.The existence of a system for allocating jobs based on caste or tradition
17) In the table below, a monopsonist has the marginal-revenue-product schedule for
labor given in columns 1 and 2, and the supply schedule for labor is given by columns 1
and 3.
Refer to the above table and information. For maximum profits, how many labor-units
will the monopsonist hire and what will be the wage rate paid?
A.2 and $10
B.3 and $11
C.4 and $12
D.5 and $13
18) The stronger the product differentiation in monopolistic competition, the:
A.Less elastic the demand curve, and production will take place further to the left of
minimum average costs
B.Less elastic the demand curve, and production will take place further to the right of
minimum average costs
C.More elastic the demand curve, and production will take place further to the left of
minimum average costs
D.More elastic the demand curve, and production will take place further to the right of
minimum average costs
19) Answer the question based on the following information. Normal University has
found it necessary to institute a crime-control program on its campus to deal with the
high costs of theft and vandalism. The university is now considering several alternative
levels of crime control. This table shows the expected annual costs and benefits of these
alternatives.
Refer to the above information. The marginal benefits of crime control for
A.$10,000
B.$40,000
C.$50,000
D.$200,000
20) The ambitious plan to wean American agriculture from subsidies, as embodied in
the Freedom to Farm Act of 1996:
A.Became fully realized by 2000
B.Unraveled in 1998 and 1999 when farm prices fell
C.Was not approved by the President
D.Was extended in 2002
21) The following table contains hypothetical data for the U.S. balance of payments in a
year. Answer the following question on the basis of these data. All figures are in billions
of dollars.
U.S. goods exports +$390
U.S. goods imports -498
U.S. service exports +133
U.S. service imports -107
Net investment income +12
Net transfers -22
Capital account -5
Foreign purchases of U.S. assets +156
U.S. purchases of foreign assets -59
Refer to the table above. The balance on the financial account was a:
A.$92 billion surplus
B.$97 billion surplus
C.$92 billion deficit
D.$97 billion deficit
22) Describe the economic reasons why businesses use offshoring.
23) Use the graph below to illustrate and explain what would happen in the labor
market if a minimum wage was established at a level above the equilibrium wage.
24) Explain: “It is in the nature of all economic problems that absolute solutions are
denied us.”
25) Explain the main characteristics of a corporation.
26) Explain the circumstances under which a firm might encounter a rather extended
range of output over which long-run average costs are relatively constant.
27) Why is the distinction between fixed and variable cost important?
28) State the formula for the relationship between the purchasing power of the U.S.
dollar and the price level.
29) Can government raise birthrates?