1)
Refer to the diagram. At the profit-maximizing level of output, total cost will be:
A.NM times 0M.
B.0AJE.
C.0CGC.
D.0BHE.
2) Mutual interdependence means that:
A.A firm’s behavior is affected by other firms’ actions
B.A firm’s profits are affected by other firms’ entry or exit
C.A firm’s costs are affected by other firms’ costs
D.A firm’s revenues are affected by other firms’ demand for its product
3) From an economic perspective, when consumers leave a fast-food restaurant because
the lines to be served are too long, they have concluded that the:
A.Marginal cost of waiting is less than the marginal benefit of being served
B.Marginal cost of waiting is greater than the marginal benefit of being served
C.Management is exhibiting irrational behavior by not maximizing profits
D.Management is making an assumption that other things are equal
4) Suppose there are two economies, Alpha and Beta, which have the same production
possibilities curves. If Beta devotes more resources to produce capital goods than
consumer goods as compared to Alpha, then in the future:
A.Alpha will experience greater economic growth than Beta
B.Beta will experience greater economic growth than Alpha
C.Alpha will not be able to achieve full employment or productive efficiency
D.Beta will not be able to achieve full employment or productive efficiency
5) Major complaints about the official income data used in measuring poverty include
the following, except:
A.The income and poverty data are not frequently measured and released
B.The income data do not aptly measure purchasing power especially in major
metropolitan areas
C.The income data do not adequately measure households’ consumption levels
D.The income data do not account for non-cash transfers and benefits
6) The next four questions refer to the graph below. (Assume that the premigration
labor force in country A is a and that it is h in country B.) Explain your answers with
reference to areas in the graph (1, 2, etc.) or to letters (a, b, c, etc.).
(a)What will happen to wage rates in country A and country B because of the migration
of labor from country B to country A?
(b)What will happen to domestic output in country A and country B after immigration?
(c)What will happen to world output given the experience in these two nations?
(d)What will happen to income shares for workers and business in each country?
7) Fill in the following table on the total and marginal utilities of a certain product A.
Use your results to answer the following questions.
(a)Graph both the total utility and marginal utility curves together on the same graph.
(b)Explain the shape of both of the curves.
(c)Identify the point where utility is maximized on both curves. Discuss the reasoning
behind each value.
8) Which of the following statements is true about U.S. firms?
A.Over half are bankrupt within the first two years after starting up.
B.Over half are bankrupt within the first five years after starting up.
C.Nearly 65 percent last 10 years or more.
D.The life expectancy of a U.S. firm is approximately 22 years.
9)
Refer to the graph. Which of the following statements is correct?
A.Quantity demanded and quantity supplied are independent of price.
B.Price and quantity demanded are directly related.
C.Price and quantity supplied are directly related.
D.Price and quantity supplied are inversely related.
10) Answer the question on the basis of the following cost data:
Refer to the data. Total fixed cost is:
A.$6.25.
B.$100.00.
C.$150.00.
D.$50.00.
11) The role of an assumption in an economic theory is to:
A.Add realism
B.Prove the theory
C.Cover special cases
D.Simplify the complex reality
12)
13) In industrially advanced countries, estimates suggest the income elasticity of
demand for health care is about:
A.+3
B.+6
C. 2
D.+1
14) If we say that two variables are inversely related, this means that:
A.the two graph as an upsloping line.
B.an increase in one variable is associated with a decrease in the other.
C.an increase in one variable is associated with an increase in the other.
D.the resulting relationship can be portrayed by a straight line parallel to the horizontal
axis.
15) Assume the XYZ Corporation is producing 20 units of output. It is selling this
output in a purely competitive market at $10 per unit. Its total fixed costs are $100 and
its average variable cost is $3 at 20 units of output. This corporation:
A.should close down in the short run.
B.is maximizing its profits.
C.is realizing a loss of $60.
D.is realizing an economic profit of $40.
16) If you purchase a gift worth $25 for your sister, but your sister would be willing to
pay only $10 is she bought the item for herself, then the:
A.Total utility of the gift is $35
B.Total utility of the gift is $15
C.Marginal utility of the gift is $15
D.Loss of value in the gift is $15
17) Examples of command economies are:
A.the United States and Japan.
B.Sweden and Norway.
C.Mexico and Brazil.
D.Cuba and North Korea.
18)
Refer to the above supply and demand graph for a public good. Point c on the graph
shows where the:
A.Total benefit equals the total cost of the public good
B.Marginal benefit equals the marginal cost of the public good
C.Average benefit equals the average cost of the public good
D.Total benefit of the public good is at the maximum
19) A caption that can serve as a retort to opponents of social regulation would be:
A.”There is no free lunch”
B.”You can’t push on a string”
C.”Less government is not always better”
D.”Restraints of trade must be outlawed”