1) Answer the question on the basis of the following information about the cost ratios
for two productsfish (F) and chicken (C)in countries Singsong and Harmony. Assume
that production occurs under conditions of constant costs and these are the only two
nations in the world.
Singsong: 1F = 2C
Harmony: 1F = 4C
Refer to the given information. If these two nations specialize based on comparative
advantage:
A.Singsong will both produce chicken and catch fish.
B.Harmony will both produce chicken and catch fish.
C.Harmony will produce chicken and Singsong will catch fish.
D.Singsong will produce chicken and Harmony will catch fish.
2) The fundamental problem associated with the U.S. health care system is that:
A.the financing of health care through insurance has resulted in the underallocation of
resources to the health care industry.
B.frivolous malpractice suits have increased malpractice insurance premiums for
doctors.
C.at the margin, the value of health care services may be less than the value of
alternative goods and services.
D.there are too many general practitioners and not enough specialists.
3)
Refer to the above graph of the representative firm in monopolistic competition. Point b
indicates:
A.A situation where the firm is earning economic profits
B.The price-output combination that yields maximum profits
C.A point that cannot be the long-run equilibrium point
D.The lowest possible cost of the firm’s product
4) A high tariff on imported good X might reduce domestic employment in industry Y
if:
A.X is an input used domestically in producing Y.
B.X and Y are substitute goods.
C.X is an inferior good.
D.Y is an inferior good.
5) When near-monopolies like Google in Internet search and Amazon in online
shopping start infringing on each other’s turf, what kind of competition results?
A.Pure competition
B.Monopolistic competition
C.Oligopolistic competition
D.Legislated competition
6) Economic analysis of a monopolistically competitive industry is more complicated
than that of pure competition because:
A.of product differentiation and consequent product promotion activities.
B.monopolistically competitive firms cannot realize an economic profit in the long run.
C.the number of firms in the industry is larger.
D.monopolistically competitive producers use strategic pricing strategies to combat
rivals.
7) Google and Amazon have enjoyed barriers to entry in their respective markets due to
the following, except:
A.Network effects among users
B.Economies of scale in operations
C.Loyalty and familiarity of consumers
D.Government licensing and regulation
8)
Refer to the above table. The resource demand data indicate that the firm is:
A.Buying its resource in an imperfectly competitive market
B.Buying its resource in a perfectly competitive market
C.Selling its product in a perfectly competitive market
D.Selling its product in an imperfectly competitive market
9) The United States, Germany, Japan, Britain, France, Italy, Canada, and Russia are:
A.G-8 nations
B.Adjustable peg nations
C.Gold standard nations
D.Nations using the Bretton Woods System
10) Under the Food, Conservation, and Energy Act of 2008, if the target price for a
bushel of corn is $2.63 and the price of corn falls to $2.25, then a farmer will receive:
A.A marketing loan
B.A transition payment
C.An acreage allotment
D.A countercyclical payment
11) Insurance tends to drive up health care costs by encouraging greater use of health
care resources. Why has this occurred in the United States but not in Canada or the
United Kingdom?
A.There is no health care insurance in Canada or the United Kingdom.
B.Canada and the United Kingdom use nonprice rationing to contain costs.
C.Canada and the United Kingdom have better health care technology that allows them
to achieve lower costs than the United States.
D.Only private insurance creates an incentive to overuse health care resources.
12)
In a market with supply and demand curves as shown above, a price ceiling of $2.50
will result in:
A.A surplus of 10 units
B.A shortage of 10 units
C.No shortage or surplus
D.A black market price greater than $2.50
13) Are the pricing schemes below examples of price discrimination? Explain.
(a)Sending out coupons in the local newspaper.
(b)Charging the same price for a train ticket, regardless of how far the customer is
travelling.
(c)Offering a senior citizen discount at a restaurant.
(d)Sunday newspapers, which include additional coupons and comics, often are more
expensive than the weekly version.
14) The next four questions refer to the below supply and demand graph for a product
on which the government imposes an excise tax.
(a)What is the amount of the tax per unit?
(b)What is the total amount of the excise tax paid by the consumer? By the producer?
(c)What is the total tax revenue for government?
(d)What is the efficiency loss of the tax?
15) If Congress decreases the amount of government insurance on bank deposits, then
this action would:
A.Create a moral hazard problem
B.Reduce a moral hazard problem
C.Create an adverse selection problem
D.Reduce an adverse selection problem
16) Given a linear demand curve, at which combination of price and marginal revenue
(P, MR) is the price elasticity of demand greater than 1?
A.P = 15, MR = 8
B.P = 12, MR = 0
C.P = 8, MR = -2
D.P = 4, MR = -4