1) Answer the question on the basis of the following information. Suppose the members
of population A, consisting of Al, Bob, Curt, Doris, and Ellie, receive annual incomes
of $5,000, $2,500, $1,250, $750, and $500, respectively.
Refer to the given information. What percentage of total income is received by the
richest quintile?
A.50
B.5
C.25
D.20
2) The point on the production possibilities curve that is most desirable can be found
by:
A.estimating the marginal costs of both products in real or physical terms.
B.comparing marginal benefits and marginal costs.
C.determining where least-cost production occurs.
D.calculating where economic growth will be greatest.
3) Suppose that surplus labor in a Pakistani village is used to build a medical clinic and
dig several wells. This is an illustration of:
A.foreign aid.
B.capital-saving investment.
C.in-kind investment.
D.technological advance.
4) For people that use commitment contracts to motivate achievement of a goal, people
have the choice of their penalty money (from failing to reach the goal) to go to either
charities they like or charities they hate (anti-charities). From a behavioral economics
perspective:
A.designating an anti-charity should be more effective because loss aversion will
provide additional motivation.
B.designating a charity (versus an anti-charity) should be more effective because it
avoids all potential for loss.
C.it shouldn’t matter whether one designates a charity or an anti-charity.
D.self-interest biases generally keep people from choosing the anti-charity.
5)
Refer to the diagram for a monopolistically competitive firm in short-run equilibrium.
This firm will realize an economic:
A.loss of $320.
B.profit of $480.
C.profit of $280.
D.profit of $600.
6) Suppose the United States eliminates high tariffs on German bicycles. As a result, we
would expect:
A.the price of German bicycles to increase in the United States.
B.employment to decrease in the German bicycle industry.
C.employment to decrease in the U.S. bicycle industry.
D.profits to rise in the U.S. bicycle industry.
7) At what point does marginal product equal average product?
A.Where average product is equal to its minimum value
B.Where average product is equal to its maximum value
C.Where marginal product is equal to its minimum value
D.Where marginal product is equal to its maximum value
8) According to the Office of Immigration Statistics, approximately what percentage of
legal immigrants in 2011 were parents, children, siblings, or other qualified relatives of
legal permanent U.S. residents?
A.13 percent.
B.57 percent.
C.65 percent.
D.81 percent.
9) Which phrase would be most characteristic of pure monopoly?
A.Close substitutes
B.Efficient advertiser
C.Price taker
D.Sole seller
10) Answer the questions below on the basis of the diagram.
(a)How can you tell if these cost curves are for the short run or the long run?
(b)What does the graph indicate about:
(1) AVC at 6000 units of output?
(2) ATC at 6000 units of output?
(3) AFC at 6000 units of output?
(4) TVC at 6000 units of output?
(5) TFC at all levels of output?
(6) TC at 10,000 units of output?
(7) When diminishing returns set in?
11) Because government price supports cause surplus production, government policies
have been designed to:
A.increase demand and decrease supply of farm products.
B.decrease demand and increase supply of farm products.
C.increase demand and increase supply of farm products.
D.decrease demand and decrease supply of farm products.
12) The market supply curve for labor is upsloping because:
A.of diminishing returns.
B.employers as a group must pay higher wage rates to obtain more workers.
C.of declining MRC.
D.each employer is a “wage taker.”
13) A function of the Federal Trade Commission is to:
A.investigate instances of faulty and misleading advertising.
B.establish railway rates for interstate railroads.
C.ban or recall unsafe consumer products.
D.prevent insider trading in securities markets.
14) At an output level of 50 units per day a firm has average total costs of $60 and
average variable costs of $35. Its total fixed costs are:
A.$925
B.$1,250
C.$1,750
D.$3,000
15) In monopolistic competition, which of the following would make an individual
firm’s demand curve less elastic?
A.The purchase of more efficient machinery
B.An increase in the price of the firm’s product
C.Increased brand loyalty toward the firm’s product
D.An increase in the number of rival firms
16) When a purely competitive firm is in long-run equilibrium, it is said to achieve
allocative efficiency because:
A.Total revenue is at a maximum
B.Marginal cost equals marginal revenue
C.Average cost equals marginal cost
D.Average cost is at a minimum
17) Suppose that a 10 percent increase in the price of normal good Y causes a 20
percent increase in the quantity demanded of normal good X. The coefficient of cross
elasticity of demand is:
A.negative and therefore these goods are substitutes.
B.negative and therefore these goods are complements.
C.positive and therefore these goods are substitutes.
D.positive and therefore these goods are complements.
18) Critics of industrial regulation say that such regulation:
A.benefits small firms at the expense of large firms.
B.perpetuates monopoly long after new technology has eroded natural monopoly.
C.creates insurmountable principal-agent problems.
D.has resulted mainly from the paradox of voting.