1) It is possible for a competitive firm that is maximizing profits in the short run to
make its profits even bigger in the long run by expanding its plant.
2) Labor’s share of income earned by Americans is smaller than the share of capital.
3) An example of a monopsonist is a labor union whose members include all the
workers in a particular industry.
4) Placement of goods in grocery and other retail stores is often done with the objective
of encouraging impulse buying.
5) If the price of British pounds, measured in terms of U.S. dollars, is rising, then the
price of U.S. dollars, measured in terms of British pounds, is also rising.
6) The World Bank is the organization to which DVCs turn as a “last-resort” lending
agency for projects that private institutions will not fund.
7) Statistical discrimination occurs when employers base hiring decisions on individual
workers’ previous employment records and statistics.
8) Average fixed costs diminish continuously as output increases.
9) Answer the question on the basis of the following information. Assume that by
devoting all its resources to the production of X, nation Alpha can produce 40 units of
X. By devoting all its resources to Y, Alpha can produce 60Y. Comparable figures for
nation Beta are 60X and 40Y.
Refer to the given information. The terms of trade will be at or within the 1X = 1Y to
1X = 2/3Y range.
10) Which would indicate that a firm is operating under conditions of pure competition
and is being productively efficient?
A.It is making economic profits in the long run
B.Marginal cost equals average variable cost
C.It produces at the minimum average total cost
D.Its marginal revenue is less than average revenue
11) An efficiency loss (or deadweight loss):
A.is measured as the combined loss of consumer surplus and producer surplus.
B.results from producing a unit of output for which the maximum willingness to pay
exceeds the minimum acceptable price.
C.can result from underproduction, but not from overproduction.
D.can result from overproduction, but not from underproduction.
12) Studies show that the demand for gasoline is:
A.price inelastic in the short run but elastic in the long run.
B.price inelastic in both the short and long run.
C.price elastic in the short run but inelastic in the long run.
D.price elastic in both the short and long run.
13) If for a firm P = minimum ATC = MC, then:
A.neither allocative efficiency nor productive efficiency is being achieved.
B.productive efficiency is being achieved, but allocative efficiency is not.
C.both allocative efficiency and productive efficiency are being achieved.
D.allocative efficiency is being achieved, but productive efficiency is not.
14) Assume that your nominal wage was fixed at $15 an hour, and the price index rose
from 100 to 105. In this case, your real wage has:
A.Decreased to $10
B.Increased to $15.75
C.Decreased to $14.29
D.Increased to $20
15) Economists:
A.always put the independent variable on the horizontal axis and the dependent variable
on the vertical axis.
B.always put the dependent variable on the horizontal axis and the independent variable
on the vertical axis.
C.are somewhat arbitrary in assigning independent and dependent variables to the
horizontal and vertical axes.
D.measure the slope of a line differently than do mathematicians.
16) Suppose in some economy there are 100 million workers; 8 million of those
workers work in retail trade, and 2 million of the retail workers belong to unions. Total
union membership in this economy is 30 million. The rate of unionization in the
economy is:
A.30 percent and the rate of unionization in retail trade in 20 percent.
B.8 percent and the rate of unionization in retail trade is 2 percent.
C.30 percent and the rate of unionization in retail trade is 25 percent.
D.20 percent and the rate of unionization in retail trade is 25 percent.
17)
The diagram concerns supply adjustments to an increase in demand (D1 to D2) in the
immediate market period, the short run, and the long run. In the immediate market
period, the increase in demand will:
A.have no effect on either equilibrium price or quantity.
B.increase equilibrium price but not equilibrium quantity.
C.increase equilibrium quantity but not equilibrium price.
D.increase both equilibrium price and quantity.
18) Suppose that Marlen Fisher has legal protection against anyone producing and
selling a fishing lure identical to his unique-action “MarFish” lure, whatever the
competitor might name the lure. This legal protection is most likely to be a:
A.trademark.
B.restraining order.
C.patent.
D.copyright.
19) Which of the following statements is correct?
A.When marginal utility is decreasing, an increase in the quantity consumed will
decrease total utility
B.When marginal utility is positive, an increase in the quantity consumed will decrease
total utility
C.When marginal utility is positive, an increase in the quantity consumed will increase
total utility
D.When marginal utility is zero, an increase in the quantity consumed will make total
utility zero
20) In 2000, McDonald’s introduced its McSalad Shaker, which failed to catch on with
the public and was subsequently dropped from the menu. This failure illustrates the idea
of:
A.consumer sovereignty.
B.technological change.
C.downsloping demand.
D.specialization.
21) What are two main economic objections to the PPACA?
22) What factors explain economies of scale?
23) In the following table are five levels of taxable income and the amount that would
be paid at each of the five levels under three tax laws: X, Y, and Z. Compute for each of
the three tax laws the average rate of taxation at each of the four remaining income
levels and indicate whether the tax is regressive, proportional, or progressive.
24) Why is there a significant difference in the pay of physicians and construction
workers?
25) What is a bilateral monopoly? What is the economic outcome from a bilateral
monopoly? Is a bilateral monopoly a bad situation for society?
26) A marketing firm has done a study of market demand for DVDs of three different
movies. Calculate the total revenue for each movie in columns 3, 5, and 7 .
Without calculating the price elasticity of demand, indicate whether demand for each
movie is elastic, inelastic or unit-elastic. For which movie would a reduction in price
produce the greatest increase in revenue?
27) How does the politics of farm policy explain why costly and expensive farm
programs have persisted in the United States despite a decline in the farm population
and in the political power of the farm vote?
28) Which is more effective in blocking imports, a tariff or a quota?
29) What are the basic purposes of antitrust policy?