1) Suppose that a union successfully negotiated a 10 percent wage increase and the
quantity of labor demanded decreased by 10 percent. Given a fixed labor demand curve,
we can conclude that:
A.the labor demand curve is upsloping.
B.labor demand is elastic.
C.labor demand is unit-elastic.
D.the coefficient of elasticity of labor demand is less than 1.
2) Which of the following countries had the worst score in the Corruption Perception
Index in 2012?
A.Italy
B.China
C.Mexico
D.Russia
3) Making blackmail, extortion, and other forms of private coercion illegal is one way
that government:
A.Reduces private-sector economic risk
B.Increases private-sector economic risk
C.Reduces the market’s economic efficiency
D.Increases the economy’s deadweight losses
4)
Assumptions: These two graphs show two sectors of the labor market for a particular
kind of labor. Relevant product markets are competitive. The two labor demand curves
are identical and initially the quantities of labor employed in the two sectors are L1 and
L’1 and the wage rate in each sector is Wn.
Refer to the diagrams and assumptions. The change in employment in sector 1 to which
a Wn to Wu union wage increase gives rise will cause output in that sector to:
A.decrease by A + B
B.decrease by B + C + D
C.decrease by C + D
D.increase by A + B
5) The price of product X is reduced from $100 to $90 and, as a result, the quantity
demanded increases from 50 to 60 units. Therefore, demand for X in this price range:
A.has declined.
B.is of unit elasticity.
C.is inelastic.
D.is elastic.
6) Salary smoothing, automatic payroll deductions, and early withdrawal penalties are
all examples of:
A.mechanisms imposed by companies to extract more from their workers and
customers.
B.policies that do not fundamentally alter decisions because they do not change the
benefits or costs of an action.
C.precommitments.
D.hardwired heuristics.
7) The main determinant of elasticity of supply is the:
A.number of close substitutes for the product available to consumers.
B.amount of time the producer has to adjust inputs in response to a price change.
C.urgency of consumer wants for the product.
D.number of uses for the product.
8)
Refer to the above graph. If the MRC being horizontal means that:
A.The firm could hire addition labor without changing the wage rate
B.The firm is selling its product in a purely competitive market
C.The firm has a constant total cost of production
D.The firm has perfectly elastic labor demand
9) Since its inception in 1996, the Temporary Assistance for Needy Families (TANF)
program has:
A.increased, rather than reduced, the number of people on welfare.
B.reduced the number of people on welfare by more than one-half.
C.aided the poor by automatically increasing welfare payments when inflation occurs.
D.greatly increased the unemployment rate.
10) Most of the flow of foreign aid goes to:
A.The poorest of developing countries (DVCs)
B.The most affluent of the developing country populations
C.The smallest developing countries
D.About 70% of the world’s poorest people
11) If a purely competitive firm shuts down in the short run:
A.its loss will be zero.
B.it will realize a loss equal to its total variable costs.
C.it will realize a loss equal to its total fixed costs.
D.it will realize a loss equal to its explicit costs.
12)
Refer to the above graph for an industry. If the industry were served by a pure
monopoly, the price and output quantity would be:
A.P3, Q1
B.P1, Q3
C.P2, Q2
D.P1, Q1
13) The situation where politicians make decisions that will raise their chances of
reelection, even if those decisions are detrimental to the general public, is referred to as
the:
A.Moral hazard problem
B.Principal-agent problem
C.Adverse selection problem
D.Common good problem
14)
If immigration increases the productivity of domestic workers, then it:
A.Decreases the return on capital
B.Means that immigrant workers and domestic workers are substitutes
C.Means that immigrant workers are entering low-wage occupations
D.Increases the return on capital
15) The production possibilities curve is a graph of:
A.The maximum amounts of labor and capital resources available for production
B.Various combinations of goods and services among which consumers are indifferent
C.The maximum combinations of products that can be produced
D.The maximum amount of capital and labor that the economy can employ
16) Which is most likely to be observed in a community where legal ceilings are
imposed on residential rents?
A.Poor people will be able to find adequate housing
B.Homeowners will reduce their own use of housing space, making more available to
others
C.Those whose needs for housing are most urgent will be able to obtain the space they
want
D.People moving into the community will have difficulty locating residential space to
rent
17) Data on per capita energy use in the United States since 1950 show that it has:
A.Continually increased
B.Continually decreased
C.Increased and then leveled off
D.Decreased and then leveled off
18) With flexible exchange rates, an increase in U.S. interest rates can be expected to:
A.Adversely affect U.S. exporters
B.Encourage investment spending by U.S. firms
C.Lower the foreign exchange value of the dollar
D.Cause a net outflow of foreign capital from the United States
19) Which of the following is the best example of oligopoly?
A.Women’s dress manufacturing.
B.Automobile manufacturing.
C.Restaurants.
D.Cotton farming.
20) Nation Alpha can produce employing all its available resources either 800 units of
chemicals or 1,600 units of clothing. Nation Beta can produce either 200 units of
chemicals or 800 units of clothing:
A.Nation Alpha has a comparative advantage in producing clothing
B.Nation Beta has a comparative advantage in producing chemicals
C.Nation Alpha has a comparative advantage in producing chemicals
D.Nation Beta is the high-cost producer of clothing