1)
Refer to the diagrams. In which case would the coefficient of income elasticity be
negative?
A.A
B.B
C.C
D.D
2) Assume that the short-run cost and demand data given in the table below confront a
monopolistic competitor selling a given product and engaged in a given amount of
product promotion. Compute the marginal cost and marginal revenue of each unit of
output and enter these figures in the table.
(a)At what output level and at what price will the firm produce in the short run? What
will be the total profit?
(b)What will happen to demand, price, and profit in the long run?
3) Use the data from the table in the previous question and the two graphs below for
this problem. On the first graph: (a) plot the demand curve; and (b) indicate the elastic,
unitary, and inelastic portions of the demand curve. On the second graph: (a) plot the
total revenue on the vertical axis and the quantity demanded on the horizontal axis; (b)
indicate the elastic, unitary, and inelastic portions of the demand and total revenue
curves. (Note: The scale for quantity demanded that you plot on horizontal axis of each
graph should be the same on both graphs.)
4) The levels of national income per capita among developing countries (DVCs) are:
A.All within a narrow range
B.Widely varied
C.All growing rapidly
D.About half of those of industrially advanced countries (IACs)
5) The marginal revenue product (MRP) of land declines as more land is brought into
production because:
A.land is a “free and nonreproducible gift of nature.”
B.of diminishing returns.
C.land rent has no incentive function.
D.the supply of land is fixed.
6) Official reserves used to achieve a balance of payments between nations engaging in
international trade are held by:
A.Private businesses engaging in trade
B.Central banks of the nations engaged in trade
C.Commercial banks which make loans to businesses engaging in trade
D.Commercial banks which make loans to governments which engage in trade
7) A competitive employer is using labor in such an amount that labor’s MRP is $10 and
its wage rate is $8. This firm:
A.should hire more labor because this will increase profits.
B.should hire more labor, although this may either increase or decrease profits.
C.is currently hiring the profit-maximizing amount of labor.
D.is selling its product in an imperfectly competitive market.
8) Which of the following transactions represents a credit on the financial account of
the U.S. balance of payments?
A.Oil is imported from Venezuela
B.United States firms pay dividends to foreigners
C.United States citizens purchase foreign securities
D.A Canadian firm increases its direct investment in its U.S. branch
9) The marginal tax rate is:
A.the difference between the total tax rate and the average tax rate.
B.the percentage of total income paid as taxes.
C.change in taxes/change in taxable income.
D.total taxes/total taxable income.
10) If a firm can sell 3,000 units of product A at $10 per unit and 5,000 at $8, then:
A.the price elasticity of demand is 0.44
B.A is a complementary good.
C.the price elasticity of demand is 2.25
D.A is an inferior good.
11) A firm that hires labor and sells its product both in purely competitive markets will:
A.Have a horizontal demand curve for labor
B.Face a downward-sloping demand curve for its product
C.Have a downward-sloping demand curve for labor
D.Have a horizontal supply curve for its product
12)
Refer to the table above. If the price starts falling from $5, at what price range does
demand become inelastic?
A.From $2 to $1
B.From $3 to $2
C.From $4 to $3
D.From $5 to $4
13)
Refer to the table, in which the values for columns (2) through (5) are in acres. Positive
land rent will occur if the relevant columns are:
A.(1), (2), and (3) only.
B.(1), (2), and (3) and (1), (2), and (5).
C.(1), (2), and (4) and (1), (2), and (5).
D.(1), (2), and (3) and (1), (2), and (4).
14) An increase in the price of product B leads to an increase in the demand for product
C. This indicates that products B and C are:
A.Complementary goods
B.Substitute goods
C.Inferior goods
D.Normal goods