1) A market:
A.reflects upsloping demand and downsloping supply curves.
B.entails the exchange of goods, but not services.
C.is an institution that brings together buyers and sellers.
D.always requires face-to-face contact between buyer and seller.
2) Anti-competitive price discrimination, interlocking directorates, and tying contracts
were banned by the:
A.Federal Trade Commission Act
B.Clayton Act
C.Sherman Act
D.Celler-Kefauver Act
3) The decision on the DuPont cellophane case of 1956 dealt with the issue of:
A.Unfair advertising practices
B.Determining the relevant market for a particular product
C.DuPont’s ownership of General Motors stock
D.Price fixing in the chemical industry
4) 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. What is the marginal labor cost of the fourth
worker?
A.$13
B.$15
C.$17
D.$19
5) Violin strings made from sheep intestines were first called “catgut” because:
A.at the time it was thought to be extremely unlucky to kill sheep.
B.the inventor wanted to establish a legally protected brand name.
C.the inventor wanted to preserve his trade secret.
D.the inventor thought that “catgut” would sound less offensive to buyers than ‘sheep
intestines.”
6) The plus items below are “export-type” entries and the minus items are “import-type”
entries in the balance of payments for the hypothetical country of Zippo.
Refer to the given information. The financial account items for Zippo are:
A.1, 2, 3, and 4
B.1, 3, 4, 5, 7, and 9
C.6 and 8
D.1, 2, 4, 7, and 9
7)
Refer to the diagram, which relates to Firm X. Which of the following would illustrate
process innovation by X?
A.A downward shift in the total product curve from TP1 to TP2.
B.An upward shift in the total product curve from TP2 to TP1.
C.A move from a to b on TP1.
D.A move from c to d on TP2.
8) It is the custom for paper mills located alongside the Layzee River to discharge waste
products into the river. As a result, operators of hydroelectric power-generating plants
downstream along the river find that they must clean up the river’s water before it flows
through their equipment.
If the government intervenes and corrects the externality in the situation described
above, we would expect:
A.The supply of the output from the hydroelectric power plants to decrease
B.The supply of the output from the hydroelectric power plants to increase
C.The demand for the output from the hydroelectric power plants to decrease
D.The demand for the output from the hydroelectric power plants to increase
9) The tendency of people to overestimate the value of their possessions when, say,
considering such value for insurance purposes is known in prospect theory as the:
A.Anchoring effect
B.Endowment effect
C.Status quo bias
D.Confirmation bias
10)
Refer to the diagrams. At the profit-maximizing level of employment for this firm, the
amount available to pay to nonlabor resources:
A.is 0abc.
B.is 0Wbc.
C.is Wab.
D.cannot be determined.
11) Approximately what percentage of state spending goes to finance education?
A.36
B.44
C.47
D.53
12) A point outside (to the right of) the production possibilities curve of a nation:
A.Is not attainable for this nation
B.Is easily attainable for this nation
C.Implies that there are unemployed resources in this nation
D.Implies that this nation is using its resources fully
13) Suppose a firm anticipates that a particular R&D expenditure of $20 million will
result in a new product and thus create a one-time added profit of $22 million a year
later. The firm will:
A.not undertake the R&D expenditure if its interest-rate cost of borrowing is 8 percent.
B.undertake the R&D expenditure if its interest-rate cost of borrowing is 12 percent.
C.undertake the R&D expenditure if its interest-rate cost of borrowing is 20 percent.
D.undertake the R&D expenditure if its interest-rate cost of borrowing is 9 percent.
14) The following question is based on the demand and cost data for a pure monopolist
given in the table below.
Refer to the above table for a monopolist. If the monopolist perfectly
price-discriminated and sold each unit of the product at the maximum price the buyer of
that unit would be willing to pay, and if the monopolist sold 4 units, then total profits
would be:
A.$100
B.$900
C.$150
D.$400