1) Which statement about oligopoly is false?
A.Oligopolistic firms recognize their interdependence
B.Prices in oligopoly are predicted to fluctuate widely and frequently
C.A few firms play an important role in the sale of a product
D.One firm’s behavior is a function of what its rivals do
2) Owners of defective used cars have more information about the condition of their
vehicles than potential buyers of those used cars. This is an example of:
A.the moral hazard problem.
B.a spillover cost.
C.a positive externality.
D.asymmetric information.
3) Which of the following lists includes only capital resources (and therefore no labor
or land resources)?
A.An ice arena; a professional hockey player; hockey uniforms.
B.The owner of a new startup firm; a chemistry lab; a researcher.
C.A hydroelectric dam; water behind the dam; power lines.
D.Autos owned by a car rental firm; computers at the car rental agency; the vans that
shuttle rental customers to and from the airport.
4) As a percentage of GDP, U.S. health care spending is:
A.higher than that for Germany and Japan but lower than that of the United Kingdom
and Sweden.
B.higher than for any other major industrial country.
C.lower than that for Canada.
D.nearly identical to that of the other major industrial nations.
5)
Refer to the figure. An increase in the number of highly motivated and skilled potential
immigrants will:
A.reduce MB and increase MC, lowering the optimal quantity of immigrants.
B.increase MB and reduce MC, raising the optimal quantity of immigrants.
C.increase both MB and MC, and the effect on the optimal quantity is uncertain.
D.reduce both MB and MC, and the effect on the optimal quantity is uncertain.
6) When the monopsony model is combined with the inclusive union model the result is
a case of:
A.Occupational licensing
B.Noncompeting groups
C.Bilateral monopoly
D.Institutional immobilities
7) Which of the following does not aptly describe innovation?
A.First commercial use of a new production process
B.Discovery of a new production method
C.Creation of a new form of business enterprise
D.Commercial introduction of a new product
8) People’s incomes are relatively low when they are young, reach a peak in middle age,
and then decline. This fact helps explain:
A.the wide variations of Gini ratios among nations.
B.the equality-efficiency trade-off.
C.why the lifetime distribution of income is more equal than the distribution in any
given year.
D.why the lifetime distribution of income is less equal than the distribution in any given
year.
9) Answer the question on the basis of the following data:
Refer to the given data. If the prices of labor and capital are $9 and $15 respectively,
and labor and capital are the only inputs, at the profit-maximizing level of output, the
firm’s total costs will be:
A.$106.
B.$126.
C.$47.
D.$90.
10) There is a shortage in a market for a product when:
A.The current price is higher than the equilibrium price
B.Supply is less than demand
C.Quantity demanded is less than quantity supplied
D.Quantity demanded is greater than quantity supplied
11) The following table illustrates alternative production techniques for producing 18
widgets that can be sold for $1 each for a total revenue of $18.
Based on the data given in the table above, the most economically efficient production
technique is:
A.A
B.B
C.C
D.D
12) Which country is the United States’ largest trading partner in terms of volume of
trade?
A.Mexico
B.Japan
C.China
D.Canada
13)
Refer to the diagram. At the profit-maximizing output, total profit is:
A.efbc.
B.fgab.
C.egac.
D.0fbn.
14) A point inside the production possibilities curve is ____ while a point outside the
curve is ____.
A.Attainable; unattainable
B.Unattainable; attainable
C.Below the maximum possible; the maximum possible
D.The maximum possible; below the maximum possible
15) Other things being equal, an increase in the U.S. rate of inflation is likely to cause
an increase in the:
A.Quantity of U.S. exports
B.Quantity of U.S. imports
C.Demand for U.S. dollars
D.International value of the U.S. dollar
16) The political tendency to favor spending priorities with immediate benefits but
deferred costs results in:
A.chronic budget deficits.
B.misdirection of stabilization policy.
C.unfunded liabilities.
D.all of these.
17) Which of the following is an example of a market failure?
A.There are not enough tickets available to concerts of extremely popular performers
and artists
B.The price of medical care has risen dramatically as a result of the introduction of
sophisticated equipment and procedures
C.Successful public schools provide benefits to the students who attend them, as well as
to the community as a whole including those who don’t go to those public schools
D.Extensive decreases in the prices of electronic equipment resulted in large numbers
of bankruptcies in the computer industry
18)
Refer to the table above for a certain product’s market in Econland. If the world price of
the product were $6 and an import quota of 400 units were imposed on the product,
then the equilibrium price in Econland would be:
A.$6 and the total quantity available in Econland would be 2,200 units
B.$6 and the total quantity available in Econland would be 1,800 units
C.$7 and the total quantity available in Econland would be 2,000 units
D.$7 and the total quantity available in Econland would be 1,800 units
19) Many states in the U.S. acquire significant amounts of funds from the following,
except:
A.State-run lotteries
B.Grants from the Federal government
C.Personal income taxes
D.Property taxes