1) The ability to impose fines, revoke licenses, and put people into jail allows the
government to:
A.Ensure positive profits for its agencies
B.Maximize revenues from its operations
C.Enforce involuntary transactions
D.Set market prices for goods and services
2) Cash expenditures a firm makes to pay for resources are called:
A.Implicit costs
B.Explicit costs
C.Normal profit
D.Opportunity costs
3) Which of the U.S. industries below has not seen major shutdowns and layoffs
because of free foreign trade?
A.Textiles.
B.Financial services.
C.Steel.
D.Apparel.
4)
Assumptions: (1) The demand for labor in Alphania and Betania are as shown by DA
and DB, respectively; (2) Alphania’s native labor force is F and that of Betania is g; (3)
wage L in Alphania is equal to wage m in Betania; and (4) full employment exists in
both countries.
Refer to the given diagram and assumptions. We would expect a flow of remittances
from migrants to:
A.decrease the national income loss in Betania.
B.increase the national income gain in Betania.
C.decrease the national income loss in Alphania.
D.decrease the national income gains in both countries.
5) A negative income elasticity of demand coefficient indicates that:
A.The product is an inferior good
B.The product follows the law of demand
C.The product is a complementary good
D.The product is a substitute good
6)
Refer to the figure above, which shows four different Lorenz curves (I, II, III, and IV).
The greatest increase in income inequality would occur with a shift in a Lorenz curve
from:
A.II to III
B.II to IV
C.IV to III
D.IV to I
7) A higher price reduces the quantity demanded for a product because:
A.The purchasing power of individuals increases
B.The financial assets of individuals increase
C.Individuals will buy more of the product and less of its substitutes
D.Individuals can afford less of the product and will switch to substitutes
8) In a capitalist system, the decisions and actions of millions of consumers and firms
are highly coordinated by:
A.The state and government
B.Markets and prices
C.A central planning agency
D.An international organization
9) The market economy is regarded as “efficient” in that:
A.It achieves the lowest rate of unemployment
B.It leads to the lowest level of poverty in the society
C.It directs resources towards products that the society wants most
D.It puts the best people in government positions
10)
Assumptions: (1) The demand for labor in Alphania and Betania are as shown by DA
and DB, respectively; (2) Alphania’s native labor force is F and that of Betania is g; (3)
wage L in Alphania is equal to wage m in Betania; and (4) full employment exists in
both countries.
Refer to the given diagram and assumptions. If unemployment, rather than full
employment, had initially existed in Alphania:
A.then Betania’s loss of output would have been greater.
B.then Betania’s gain of output would have been less.
C.its loss of output would have been less.
D.its loss of output would have been greater.
11) In which of the following cases will total revenue increase?
A.Price falls and demand is inelastic.
B.Price falls and supply is elastic.
C.Price rises and demand is inelastic.
D.Price rises and demand is elastic.
12) One basic difference between “labor” and “entrepreneur” is that:
A.Labor is hired by a firm whereas the entrepreneur owns the firm
B.An entrepreneurs has high-level skills whereas labor does not
C.Labor performs manual work whereas an entrepreneur performs mental work
D.Education is important for an entrepreneur but not for labor