1) If a country has a total fertility rate of 1.8, then all else equal we would expect:
A.population in that country to rise over time.
B.population in that country to fall over time.
C.the replacement rate to also equal 1.8.
D.the population to remain stable over time.
2) Upon buying a car with airbags, Indy begins to drive recklessly. This is an example
of the:
A.principal-agent problem.
B.adverse selection problem.
C.moral hazard problem.
D.free-rider problem.
3) Suppose that a more efficient way to produce a good is discovered, thus lowering
production costs for the good. This will cause a(n):
A.Increase in supply
B.Decrease in supply
C.Increase in quantity supplied
D.Decrease in quantity supplied
4) If the price elasticity of demand for a product is equal to 0.5, then a 10 percent
decrease in price will increase quantity demanded by:
A.20 percent
B.0.5 percent
C.5 percent
D.0.05 percent
5) The problem of asymmetric information is that:
A.neither health care buyers nor providers are well-informed.
B.health care providers are well-informed, but buyers are not.
C.the outcomes of many complex medical procedures cannot be predicted.
D.insurance companies are well-informed, but policy purchasers are not.
6) Which of the following statements is true about the relationship between take-home
pay and fringe benefits for U.S. middle-class workers over the past several decades?
A.The ratio of take-home pay to fringe benefits has remained relatively constant.
B.The ratio of take-home pay to fringe benefits has risen significantly.
C.The ratio of take-home pay to fringe benefits has fallen significantly.
D.Both have declined steadily.
7) Equilibrium price differentials for productive resources:
A.Tend to be self-eliminating
B.May be caused by differences in the quality of those resources
C.Are eliminated when the allocation of resources is in a state of equilibrium
D.Are unrelated to differences in nonmonetary benefits
8) If an industry evolves from monopolistic competition to oligopoly, we would expect:
A.the four-firm concentration ratio to decrease.
B.the four-firm concentration ratio to increase.
C.the four-firm concentration ratio to remain the same.
D.barriers to entry to weaken.
9) A 2000 ruling by a Federal court found that Microsoft:
A.Controlled 95 percent of the PC operating market and thus was an illegal monopoly
B.Used anticompetitive practices to maintain and broaden its monopoly power
C.Illegally lobbied members of Congress to obtain monopoly patents
D.Conspired to fix prices on its Windows-operating software
10) In economists’ models, technological advance occurs in:
A.the very long run.
B.either the short run, long run, or very long run.
C.manufacturing industries but not in service industries.
D.pure competition but not in monopolistic competition, oligopoly, and pure monopoly.
11) Mary says, “You would have to pay me $50 to attend that pro wrestling event.” For
Mary, the marginal utility of the event is:
A.zero.
B.positive, but declines rapidly.
C.negative.
D.positive, but less than the ticket price.
12) The table below shows the utility schedule for a consumer of candy bars.
Refer to the above table. Marginal utility becomes negative with the consumption of
the:
A.Not shown in the table; marginal utility remains positive throughout
B.Fifth candy bar
C.Sixth candy bar
D.Seventh candy bar
13)
Refer to the diagram. The profit-maximizing output:
A.is n.
B.is k.
C.is h.
D.cannot be determined from the information given.
14) A dilemma of regulation is that:
A.the regulated price that achieves allocative efficiency is also likely to result in
persistent economic profits.
B.the regulated price that results in a “fair return” restricts output by more than would
unregulated monopoly.
C.regulated pricing always conflicts with the “due process” provision of the
Constitution.
D.the regulated price that achieves allocative efficiency is also likely to result in losses.
15)
Refer to the data. If all the firms in the industry merged into a single firm, the
Herfindahl index would become:
A.100
B.1,000
C.10,000
D.100,000
16) The invisible hand promotes society’s interests because:
A.individuals pursuing their self-interest will try to produce goods and services that
people in society want and are willing to purchase.
B.individuals will produce goods for others out of concern for their fellow human
beings.
C.it makes sure that everyone wins from competition in the market.
D.government regulation pushes business into producing the right mix of goods and
services.
17)
Refer to the market graph shown above. A black market where the price is $2.00 could
result from price:
A.Ceiling set at $2.50
B.Ceiling set at $1.50
C.Floor set at $1.50
D.Floor set at $2.00
18) Which of the following seems to be the most acute institutional problem that needs
to be resolved by many DVCs?
A.The use of capital-saving technology
B.Development of natural resources
C.Widespread political corruption
D.An increase in foreign aid
19) The main focus of the vignette “Slicing the Pizza” is the:
A.equality-efficiency trade-off.
B.principal-agent problem.
C.impact of market power on economic efficiency.
D.the highly unequal distribution of U.S. wealth.