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A barrier to entry that significantly contributes to the establishment of a monopoly
would be:
A. patents.
B. X-inefficiency.
C. price-taking behavior.
D. diseconomies of scale.
Refer to the above table. When the firm produces three units of output, it makes an
economic:
A. profit of $3.
B. loss of $3.
C. profit of $9.
D. loss of $9.
Skeptics of the recent productivity acceleration say that:
A. it is too early to predict whether recent boosts in U.S. productivity are permanent or
transitory.
B. global capitalism is a media fiction, not an economic reality.
C. the growth of service productivity is severely understated.
D. many of the factors that slowed productivity in the 1973-1995 period have now
reversed themselves.
The law of supply:
A. reflects the amounts that producers want to offer at each price in a series of prices.
B. is reflected in a downsloping supply curve.
C. shows that the relationship between producer revenue and quantity supplied is
negative.
D. reflects the income and substitution effects of a price change.
In an aggregate demand and aggregate supply graph, a contractionary fiscal policy can
be best illustrated by a:
A. leftward shift in the aggregate demand curve.
B. rightward shift in the aggregate demand curve.
C. rightward shift in the aggregate supply curve.
D. movement along an existing aggregate supply curve.
Which statement about the distribution of poverty is correct?
A. About 30 percent of households headed by females live in poverty.
B. About 33 percent of households headed by whites live in poverty.
C. About 50 percent of children under the age of 18 live in poverty.
D. About 50 percent of the elderly (65 or older) live in poverty.
In a market where there are external or spillover costs associated with consumption and
production, the equilibrium will not be efficient because:
A.price will be greater than MC.
B.firms will shut down until costs are reduced.
C.costs of production will, on average, be too high.
D.too many resources will be allocated to production of the good.
If the dollar price of the yen rises, then:
A. the yen price of dollars also rises.
B. the dollar depreciates relative to the yen.
C. the yen depreciates relative to the dollar.
D. the dollar will buy fewer U.S. goods.
A major goal of the World Trade Organization is to:
A. increase the protection of producers against foreign trade competition.
B. encourage bilateral trade agreements between nations.
C. liberalize international trade among nations.
D. maximize tariff revenue for governments.
The greater relative scarcity of heart surgeons as compared with clerical workers could
be partly accounted for by all of the following except:
A. a heart surgeon's job requires more specialized skill.
B. a heart surgeon derives a greater level of job satisfaction.
C. a heart surgeon's entry to the medical profession is more restricted.
D. heart surgeons have more education.
An inferior good is best defined as a product for which the:
A. price elasticity of demand is negative.
B. income elasticity of demand is negative.
C. price elasticity of demand is zero.
D. income elasticity of demand is zero.
If the U.S. dollar appreciates in value relative to foreign currencies, then this will:
A. increase aggregate demand and aggregate supply.
B. decrease aggregate demand and aggregate supply.
C. decrease aggregate demand and increase aggregate supply.
D. increase aggregate demand and decrease aggregate supply.
The United States is experiencing recession, so Congress adopts an expansionary fiscal
policy. State governments face a budget shortfall and raise taxes to balance their
budgets. The actions of state governments would:
A. slightly increase aggregate supply.
B. slightly increase aggregate demand.
C. partially reinforce the fiscal policy.
D. partially offset the fiscal policy.
Which of the following provides public assistance to those who are blind and otherwise
disabled?
A. Medicare
B. Supplemental Security Income (SSI)
C. Medicaid
D. SNAP
Waybelow Normal University has found it necessary to institute a crime-control
program on its campus to deal with the high costs of theft and vandalism. The
university is now considering several alternative levels of crime control. This table
shows the expected annual costs and benefits of these alternatives.
Refer to the above information. The marginal benefits of crime control for Level Two
are:
A.$20,000.
B.$40,000.
C.$60,000.
D.$140,000.
The crowding-out effect arises when:
A. government borrows in the money market, thus increasing interest rates and net
investment spending in the economy.
B. government borrows in the money market, thus increasing interest rates and
decreasing net investment spending.
C. the progressivity of the tax system increases, thus decreasing interest rates and
increasing net investment spending.
D. the progressivity of the tax system decreases, thus decreasing interest rates and net
investment spending.
Complete income equality using the Gini ratio would be reflected by a value of:
A. 3.
B. 2.
C. 1.
D. 0.
If a price-discriminating monopolist sells the same product in two markets but charges a
lower price in market X and a higher price in market Y, the pricing difference indicates
that demand is:
A. more elastic in market X than market Y.
B. less elastic in market X than market Y.
C. more elastic in market Y than market X.
D. the same in both markets X and Y.
The combination of food and clothing shown by point G on the above graph:
A. is not attainable, given society's available resources and technology.
B. can be attained only if some of society's resources are unemployed.
C. suggests that the law of increasing relative costs is not operating in this case.
D. results only because society allocates its resources inefficiently.
If some activity creates positive externalities as well as private benefits, then economic
theory suggests that the activity ought to be:
A.taxed.
B.prohibited.
C.subsidized.
D.left alone under the idea of laissez faire.
Pure competition produces a socially optimal allocation of resources in the long run
because:
A. marginal cost equals marginal revenue.
B. marginal cost equals average total cost.
C. marginal revenue equals price.
D. marginal cost equals price.
Refer to the above graphs. The formation of an exclusive or craft union, with no change
in demand, is depicted by situation:
A. A.
B. B.
C. C.
D. D.
If an activity results in a spillover benefit, then in a pure market economy the:
A.quantity produced is too low.
B.quantity produced is too high.
C.market supply is too low.
D.market supply is too high.
One reason that the quantity demanded of a good increases when its price falls is that
the:
A. price decline shifts the supply curve to the left.
B. lower price shifts the demand curve to the left.
C. lower price shifts the demand curve to the right.
D. lower price increases the real incomes of buyers, enabling them to buy more.
Refer to the above graph. The Gini ratio would be 0 for which curve?
A. a
B. b
C. c
D. d
What is the term that refers to increases in the value of a product to each user, including
existing users, as the total number of users increases?
A. Income transfer
B. Price discrimination
C. Simultaneous consumption
D. Network effects
Refer to the graph above. Over the $5-$6 range, supply is:
A. one.
B. zero.
C. elastic.
D. inelastic.
Private firms cannot profitably produce a public good because of:
A.liability rules and lawsuits.
B.inflation and unemployment.
C.nonrivalry and nonexcludability.
D.positive and negative externalities.
If the GDP gap is negative, then:
A. the inflation rate is rising.
B. the unemployment rate is falling.
C. potential GDP is less than actual GDP.
D. actual GDP is less than potential GDP.
Which is a valid counterargument to the infant industry argument for protective tariffs?
A. It results in too many benefits for domestic firms that export goods and services.
B. It is difficult to determine which infant industries will become mature industries with
a comparative advantage.
C. The objective would be better achieved through strategic trade policy.
D. The objective would be better achieved by import quotas and nontariff barriers.
