1) Managed-care organizations attempt to control their enrolled members’ use of health
care as a way of containing costs.
2) Granting property rights to forest land tends to increase the rate at which the land is
deforested.
3) The overall tax structure of the United States is proportional or slightly regressive.
4) In a purely competitive labor market, an individual firm must pay a rising price for
labor if it wants to acquire more labor.
5) The state and local tax structure is largely progressive.
6) In order to maximize profits, the monopolist will produce the output level where MR
= MC and charge a price equal to MR and MC.
7) At zero units of output a firm’s variable costs are zero.
8) The Temporary Assistance for Needy Families (TANF) expanded welfare benefits
and has no limit on the number of years for receiving welfare benefits.
9) A product that is very successfully advertised and has very loyal consumers would
have a low price-elasticity coefficient.
10) In making sure that laws are uniformly enforced and applied, one consequence is
that government creates inflexibility.
11)
Refer to the diagram. The movement from curve a to curve b could be explained by an
increase in the quantity and/or quality of society’s productive resources.
12) The availability heuristic refers to people purchasing what is most easily accessible.
13) In maximizing profit, a firm will always produce that output where total revenues
are at a maximum.
14) The key to optimally managing renewable and nonrenewable resources is to design
incentive structures that:
A.Reduce the costs of production to the lowest possible level
B.Increase the benefits from production to the highest possible level
C.Weigh the net benefits of current use with the net benefits of future use
D.Add the net benefits of current use to the net benefits of future use
15) In the simple circular flow model:
A.households are buyers of resources.
B.businesses are sellers of final products.
C.households are sellers of final products.
D.there are real flows of goods, services, and resources, but not money flows.
16) An oil producer discovers an oil supply in Texas that can be pumped for a profit of
$50 per barrel now, $60 per barrel in three years, $80 per barrel in five years, or $90 a
barrel in seven years. The current market rate of interest is 3 percent. When should the
oil producer extract the oil to obtain the most profit per barrel in present value terms?
A.Today
B.Three years
C.Five years
D.Seven years
17) The use of present value calculations in valuing natural resources is important
because it:
A.Ensures that net benefits are minimized over time
B.Permits greater extraction of resources in the future
C.Permits greater extraction of resources in the present
D.Ensures resources are allocated to their best use over time
18) The construction of a production possibilities curve assumes:
A.the quantities of all resources are unlimited.
B.technology is fixed.
C.some resources are unemployed.
D.there is no inflation in the economy.
19) If a firm is hiring inputs under purely competitive conditions, then any level of
output will be produced with the least-cost combination of resources A and B when:
A.MU of A/price of A = MU of B/price of B
B.MRP of A = MRP of B
C.The price of A equals the price of B
D.MP of A/price of A = MP of B/price of B
20)
Refer to the diagram where curves (a) through (e) are for five different countries. The
Gini ratio is lowest in country:
A.a.
B.b.
C.c.
D.e.
21) The equality-efficiency tradeoff would be most closely associated with which one
of the following statements?
A.The rich get richer and the poor get poorer
B.The only way to create income equality is to take from the rich and give to the poor
C.If cutting the income pie in more equal slices tends to shrink the pie, what amount of
shrinkage will society tolerate?
D.People are less concerned with the larger question of income distribution than they
are with the more specific issue of income inadequacy
22) Which of the following is not a DVC policy likely to increase DVC economic
growth?
A.Encouraging direct foreign investment.
B.Opening economics to world trade.
C.Establishing independent central banks.
D.Encouraging emigration of highly skilled workers.
23) Consider the following payoff matrix in which the numbers indicate the profit in
millions of dollars for a duopoly based either on a high-price or a low-price strategy.
(a)What will be the result when each firm chooses a high-price strategy?
(b)What will be the result when Firm A chooses a low-price strategy while Firm B
maintains a high-price strategy?
(c)What will be the result when Firm B chooses a low-price strategy while Firm A
maintains a high-price strategy?
(d)What will be the result when each firm chooses a low-price strategy?
(e)What two conclusions can you draw about collusion?
24) An exception to the advice “go to college, stay in college, and earn a degree” occurs
when:
A.tuition expenses are high and rising.
B.the opportunity cost of attending college is extraordinarily high.
C.the price of textbooks is high and rising.
D.the economy is growing rapidly and jobs are plentiful.
25) Which of the following taxes is least likely to be shifted?
A.A state excise tax on the sellers of football tickets.
B.A personal income tax.
C.A general sales tax on retailers who sell foodstuffs and clothing.
D.A federal excise tax on the producers of whiskey.
26) The demand for health care in the U.S. is quite price-inelastic because of the
following reasons, except:
A.People consider health care as a luxury
B.There are only a few, or no, substitutes
C.Most consumers do not shop around, preferring a long-term relationship with their
doctors
D.Most patients have insurance, effectively removing their budget constraint for health
care
27) Given the following maximum-output alternatives for Brazil and Poland, it can be
seen that if the two nations open up trade with each other, then:
A.Brazil will specialize in producing machines, and import wine
B.Poland will specialize in producing machines, and import wine
C.Poland will export wine
D.Brazil will not gain from specializing and trading, but Poland will gain
28)
Assumptions: (1) Employers in this market are willing and able to ignore minimum
wage laws; (2) Sd represents the supply of domestic-born (and legal immigrant)
workers; (3) St represents the total supply of workers in this labor market (Sd plus
illegal immigrants); and (4) unless otherwise stated, illegal immigration is not
effectively blocked by the government.
Refer to the given figure and assumptions. Assume initially that government does not
effectively block illegal immigration. If the government then finds a way to prevent all
illegal immigrants from working in this labor market:
A.100,000 domestic-born workers will gain employment at the expense of 200,000
illegal immigrants.
B.200,000 domestic-born workers will gain employment at the expense of 200,000
illegal immigrants.
C.100,000 domestic-born workers will gain employment at the expense of 250,000
illegal immigrants.
D.100,000 domestic-born workers will gain employment at the expense of 100,000
illegal immigrants.
29) Other things equal, the optimal number of immigrants will be greater, the:
A.greater the education and skill level of immigrants.
B.lower the education and skill level of immigrants.
C.higher the unemployment rate of the destination nation.
D.greater the fiscal burden of each immigrant.
30) All markets involve the following elements, except:
A.Demand or buyers
B.Face-to-face negotiation
C.Prices of goods and services
D.Supply or sellers
31) Which of the following countries has the smallest percentage of its labor force
employed in agriculture?
A.China.
B.France.
C.Brazil.
D.United States.
32) Define fishery and describe the resource problem with fisheries.
33) Why cant an individual firm raise its price by reducing output or lower its price to
increase sales volume in a purely competitive market?
34) Explain the circumstances under which a firm might encounter a rather extended
range of output over which long-run average costs are relatively constant.
35) Describe how business risk affects employees.
36) Describe the three major virtues of a market system.