1) Consumers will buy a new product instead of an old one that they are used to buying,
if the MU of the new product is larger than the MU of the old product.
2) A firm should reduce its employment of a resource whose marginal resource cost
exceeds its marginal revenue product.
3) An important aspect of the market system is that producers and consumers always
have to consider the public interest in making production and consumption decisions.
4) The law of diminishing returns explains why short-run marginal cost curves are
upsloping.
5) Time inconsistency refers to the phenomenon where your present self misjudges
what your future self will do.
6) Increases in incomes usually result in more than proportionate increases in the
demand for agricultural products in a growing economy.
7) The employer mandate of the PPACA requires that:
A.every firm must purchase health insurance for their full-time employees or pay a
$2,000 fine per employee.
B.every firm with 50 or more full-time employees must purchase health insurance for
their full-time employees or pay a $2,000 fine per employee.
C.every firm with fewer than 50 full-time employees must purchase health insurance
for their full-time employees or pay a $2,000 fine per employee.
D.every firm with 500 or more employees must establish their own on-site medical
facilities to provide employees with basic medical care.
8) Which of the following countries has the largest number of immigrants, as a
percentage of the labor force (as of 2007)?
A.Austria.
B.New Zealand.
C.United States.
D.Australia.
9) Wealth:
A.is a flow concept.
B.refers to accumulated financial assets only.
C.refers to accumulated real assets only.
D.refers to accumulated financial and real assets.
10) The Clayton Act of 1914:
A.outlawed price discrimination, tying contracts, acquisition of stocks of competing
corporations, and interlocking directorates that lessen competition.
B.prohibited unfair or deceptive acts or practices in commerce that tend to reduce
competition.
C.outlawed vertical and conglomerate mergers.
D.prohibited one firm from acquiring the assets of another when the effect was to limit
competition.
11) The Federal payroll (Social Security) tax:
A.Increases the progressivity of the Federal tax system
B.Offsets some of the progressivity of the Federal tax system
C.Offsets some of the regressivity of the Federal tax system
D.Decreases the proportionality of the Federal tax system
12) It is the custom for paper mills located alongside the Layzee River to discharge
waste products into the river. As a result, operators of hydroelectric power-generating
plants downstream along the river find that they must clean up the river’s water before it
flows through their equipment.
If the government intervenes and corrects the externality in the situation described
above, we would expect:
A.The output of the paper mills to increase
B.The price of paper from the mills to decrease
C.Production of the hydroelectric power plants to decrease
D.Production in the paper mills to decrease
13) If the variable costs of a profit-maximizing pure monopolist decline, the firm
should:
A.produce more output and charge a higher price.
B.produce more output and charge a lower price.
C.reduce both output and price.
D.raise both output and price.
14) A given level of consumer demand will support a large number of producers in an
industry if:
A.Minimum efficient scale (MES) is very large
B.The long-run ATC curve decreases as output levels increase
C.Diseconomies of scale are already encountered even at low levels of output
D.Exclusive patents and high government license fees are prevalent in the industry
15)
Refer to the above graphs. (Assume that the pre-migration labor force in Country A is 100
and that it is 150 in country B.) After immigration occurs, total business income in country
B:
A.Increases by $475M
B.Increases by $50M
C.Decreases by $50M
D.Decreases by $475M
16)
Recent proposals for immigration reform that have drawn intense political fire include the
following, except:
A.Increase fines for employers who knowingly hire illegal immigrants
B.Implement a new amnesty program for illegal immigrants
C.Shift immigration quotas away from family ties toward education-level and skills
D.Create a guest-worker program with a tight cap
17) Which would contribute most to a firm experiencing “economies of scale”?
A.Rising long-run average costs
B.The law of diminishing marginal returns
C.Specialization of production within a firm
D.Deterioration of information and control within a firm
18) Answer the question on the basis of the information given in the following table:
Refer to the given data. This firm is:
A.selling its product in a purely competitive market.
B.selling its product in an imperfectly competitive market.
C.hiring workers in a purely competitive market.
D.hiring workers in an imperfectly competitive market.
19)
AA is Al’s indifference curve and BB is Betty’s. Al and Betty have the same budget line,
LL. This information implies that:
A.Al’s demand for X is greater than Betty’s.
B.Al’s demand for Y is greater than Betty’s.
C.Al and Betty have the same demand for both products.
D.Al will buy some of X, but Betty will not.
20) Answer the question on the basis of the following cost data for a firm that is selling
in a purely competitive market:
Refer to the data. If the market price for the firm’s product is $28, the competitive firm
will:
A.produce 4 units at a loss of $17.40.
B.produce 7 units at a loss of $14.00.
C.shut down in the short run.
D.produce 6 units at a loss of $23.80.
21) The table shows an indifference schedule for several combinations of X and Y.
Refer to the above table. How much of X is the consumer willing to give up to obtain
the fourth unit of Y?
A.1
B.2
C.3
D.4
22) According to estimates, what percentage of cleaning workers in the United States
are illegal immigrants?
A.12
B.19
C.25
D.50
23)
Refer to the graphs above for a purely competitive market in the short run. The graphs
suggest that in the long run, assuming no changes in the given information, the market:
A.Supply curve will shift to the left
B.Supply curve will shift to the right
C.Demand curve will shift to the left
D.Demand curve will shift to the right
24)
Refer to the above graph showing the marginal product (MPL) and the average product
of labor (APL). At which quantity of labor employed is marginal product equal to
average product?
A.A
B.B
C.C
D.D
25) Under conditions of imperfect competition in the labor market, union efforts to
increase wages:
A.Will necessarily cause unemployment
B.Will necessarily reduce unemployment
C.Will strengthen the monopoly power of management
D.May either increase or decrease the level of employment
26) List and briefly explain three supply factors affecting rising health care costs.
27) Explain how network effects have helped Google gain a monopoly over internet
searches.
28) Describe the elasticity of supply for college education. What effect does this have
on price and quantity as demand for college increases?
29) What mechanism will be established for the PPACA so that individuals can buy
health insurance?
30) The government can improve economic efficiency by forcing individuals and firms
to participate in the market. Explain two situations when government intervention is
beneficial.