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1) If a person drives with less care after purchasing auto insurance, this situation would
be an example of a(n):
A.Reverse wealth problem
B.Negative externality problem
C.Adverse selection problem
D.Moral hazard problem
2) The debate over income distribution focuses on the tradeoff between:
A.Unemployment and economic freedom
B.Equality and economic freedom
C.Economic efficiency and equality
D.Unemployment and economic growth
3)
Which of the following companies was not founded by immigrants?
A.eBay
B.Google
C.Intel
D.Apple
4)
Refer to the above graph. It shows short-run cost curves for a competitive firm. At what
price would the firm face the same profit or loss whether it chooses to produce or not?
A.P1
B.P2
C.P3
D.P4
5)
Refer to the above graph for a pure monopoly. If the government regulated the
monopoly and made it charge the socially optimal price, this price would be:
A.Higher than the profit-maximizing price
B.Higher than the fair-return price
C.Lower than both the fair-return price and the profit-maximizing price
D.Between the fair-return price and the profit-maximizing price
6) Economists would most likely suggest that advanced nations can best assist in the
economic development of developing nations by:
A.Increasing the amount of military aid to strengthen the government's role in providing
law and order
B.Increasing trade barriers so that less developed nations will become more
self-sufficient
C.Reducing trade barriers and increasing the amount of private and public capital
D.Decreasing the amounts of private capital or foreign aid to reduce the level of
neocolonialism
7)
Refer to the diagram. If this competitive firm produces output Q, it will:
A.suffer an economic loss.
B.earn a normal profit.
C.earn an economic profit.
D.achieve productive efficiency but not allocative efficiency.
8)
Refer to the diagram, where variable inputs of labor are being added to a constant
amount of property resources. Marginal cost will be at a minimum for this firm when it
is hiring:
A.Q3 workers.
B.Q2 workers.
C.Q1 workers.
D.more than Q3 workers.
9) Assume a pencil manufacturer is employing resources C and D in such quantities that
the MRPs of the last units hired are $80 and $50 respectively. The price of resource C is
$90 and the price of D is $35. This firm:
A.should hire less of C and more of D
B.should hire more of both C and D
C.should hire less of both C and D
D.is using the least-cost combination of C and D
10)
Refer to the diagram for athletic shoes. If the current output of shoes is Q3, then:
A.resources are being allocated efficiently to the production of shoes.
B.society would consider additional units of shoes to be more valuable than alternative
products.
C.society would consider additional units of shoes to be less valuable than alternative
products.
D.society would experience a net gain by producing more shoes.
11) If the prices received by farmers increased and the prices paid by farmers also
increased, the parity ratio:
A.will necessarily be unchanged.
B.may either increase or decrease.
C.will necessarily increase.
D.will necessarily decline.
12) Entitlement programs include:
A.Welfare programs only
B.Social insurance programs only
C.Both public assistance programs and social insurance programs
D.Welfare programs and public assistance programs
13)
The industry indicated by the graphs above would be a(n):
A.Increasing-cost industry
B.Decreasing-cost industry
C.Constant-cost industry
D.Monopoly industry
14) As a result of a decrease in the price of online streaming movies, consumers
download more movies online and buy fewer DVDs. This is an illustration of:
A.Consumer sovereignty
B.The income effect
C.The substitution effect
D.Diminishing marginal utility
15) A fishery is typically identified by:
A.location and size.
B.location and species.
C.species and size.
D.species and market value.
16) Parity prices for agricultural products are based on the relative purchasing power of
farm products during the period of:
A.1910-1914
B.1929-1939
C.1941-1945
D.1960-1970
17) In the table below are cost and demand data for a pure monopolist.
(a)What is the level of price, output, and amount of profit for an unregulated
monopolist?
(b)Using the data in the table, what are the price, output, and profit for a regulated
monopolist that sets price equal to marginal cost compared with an unregulated
monopolist?
(c)Using the data in the table, what are the price, output, and profit for a regulated
monopolist that charges a fair-return price compared with an unregulated monopolist?
(d)Analyze the effect of regulation on the allocation of resources. Which situation is
most efficient? Which situation is most likely to be chosen by government? Why?
18) A situation in which society may not be able to rank its preferences consistently
through paired-choice majority voting refers to:
A.logrolling.
B.the paradox of voting.
C.the median-voter model.
D.the special-interest effect.
