1) What is the best economic explanation for why a person would drop out of college to
take a job or start a business?
A.he has a good idea for starting a business
B.he has to pay a higher tuition to attend college
C.the expected future benefits from starting a business now are greater than the costs
D.the opportunity cost of starting a business is high now, but will be low later in life
2) As voters “vote with their feet” and move to political districts where the
median-voter’s preference is closer to their own, the median-voter’s preference will:
A.Strengthen
B.Weaken
C.Shift
D.Stagnate
3) The following data represent a personal income tax schedule. Answer the question on
the basis of this information.
Refer to the above table. As income increases, the average tax rate:
A.Increases
B.Decreases
C.Remains constant
D.Has no definite pattern
4) The critical feature of a monopsonistic labor market is that the employer:
A.has a perfectly elastic demand curve for labor.
B.can hire any number of workers it chooses at the going wage rate.
C.faces an upsloping labor supply curve.
D.faces a perfectly inelastic labor supply curve.
5) In the health care market:
A.demand has increased relative to supply.
B.supply has increased relative to demand.
C.neither demand nor supply has changed significantly in the past two decades.
D.the concepts of demand and supply are irrelevant.
6) The following diagram is a flexible exchange market for foreign currency:
Refer to the diagram. At the equilibrium exchange rate:
A.$8 will buy 1 euro.
B.0.8 euros will buy $1.
C.1.25 euros will buy $1.
D.$1 will buy 8 euros.
7) Given a downward-sloping linear demand curve, if total revenue decreases as
quantity rises, marginal revenue must be:
A.Positive and demand is elastic
B.Negative and demand is elastic
C.Positive and demand is inelastic
D.Negative and demand is inelastic
8) Susie buys two goods: rounds of golf and massages. Suppose that the price of a
round of golf is $20 and the price of a massage is $30. In a typical week, Susie will play
two rounds of golf, getting 20 units of satisfaction from the second round. She normally
buys three massages each week, with the third giving her 30 units of satisfaction. If she
were to buy a fourth massage in a week, it would give her 20 units of satisfaction. If the
price of massages is reduced to $15, which of the following outcomes might we expect
to occur?
A.Susie would leave her consumption choices unchanged because of diminishing
marginal utility in the consumption of massages.
B.Susie would buy more massages and fewer rounds of golf, as predicted by the income
effect.
C.Susie would buy more massages and more rounds of golf, as predicted by the
substitution effect.
D.Susie would buy more massages and fewer rounds of golf, as predicted by the
substitution effect.
9) The total fertility rate of a nation is the:
A.Total number of children a woman in the nation is capable of having during her
lifetime
B.Average number of children a woman in the nation is capable of having during her
lifetime
C.Average number of children a woman in the nation is expected to have during her
lifetime
D.Total number of women in the nation who are expected to have children during their
lifetime
10) A declining parity ratio implies that the:
A.Prices paid by farmers rose faster than the prices that farmers received
B.Prices received by farmers rose faster than the prices that farmers paid
C.Productivity of farmers is declining
D.Prices paid and received by farmers are both falling
11) The following table contains data for the U.S. balance of payments in a prior year.
Answer the question on the basis of this information. All figures are in billions of
dollars.
U.S. goods exports +$793
U.S. goods imports -1573
U.S. exports of service +280
U.S. imports of services -222
Net investment income +5
Net transfers -81
Capital account -5
Foreign purchases of assets in the U.S. +1198
U.S. purchases of foreign assets -395
Refer to the table above. There was a:
A.Trade deficit, but a current account surplus
B.Trade surplus, but a current account deficit
C.Trade surplus, and a current account surplus
D.Trade deficit, and a current account deficit
12) Which of the following is correct?
A.When total product is rising, both average product and marginal product must also be
rising.
B.When marginal product is falling, total product must be falling.
C.When marginal product is falling, average product must also be falling.
D.Marginal product rises faster than average product and also falls faster than average
product.
13) Economic systems differ from one another based on who own the factors of
production and:
A.How much resources are available in the economy and where they are located
B.Who make decisions regarding what to produce and how it is produced
C.What kinds of products are produced in the economy and how plentiful they are
D.How big the population is, and the makeup of the population
14) Comparing a pure monopoly and a purely competitive firm with identical costs, we
would find in long-run equilibrium that the pure monopolist’s:
A.price, output, and average total cost would all be higher.
B.price and average total cost would be higher, but output would be lower.
C.price, output, and average total cost would all be lower.
D.price and output would be lower, but average total cost would be higher.
15) The TANF program is designed to:
A.increase the minimum wage.
B.shift people from welfare to employment.
C.provide medical insurance to poverty level workers.
D.provide income to the blind and disabled.