1) Demand-side market failures refer to those situations when there is a shortage in the
market because buyers want to buy more than what is available in the market.
2) If two nations specialize in their respective comparative advantage and then trade
with each other, both nations can consume output-combinations that are beyond their
production possibilities curves.
3) One reason why foreign aid is viewed as harmful is that it promotes dependency.
4) With a fixed money income, an increase in the price of one good and a decrease in
the price of the other will cause the new budget line to intersect the original budget line.
5) Heuristics generally help people to make decisions faster, but also to make more
errors.
6) In the case of conflict diamonds, the strict enforcement of property rights has lead to
too fast of a rate of extraction.
7) A monopolist, being the sole seller in a market, is assured of positive economic
profits.
8) Consumers who clip and redeem discount coupons:
A.Exhibit the same price elasticity of demand for a given product than consumers who
do not clip and redeem coupons
B.Exhibit a higher price elasticity of demand for a given product than consumers who
do not clip and redeem coupons
C.Exhibit a lower price elasticity of demand for a given product than consumers who do
not clip and redeem coupons
D.Cause total revenue to decrease for firms that issue coupons for their products
9) The incidence of taxation refers to:
A.Who in society actually pays the tax
B.The structure of basic income tax rates
C.Whether taxes are progressive or regressive
D.Whether or not the benefits-received principle applies
10) The problems of aggregate inflation and unemployment are:
A.major topics of macroeconomics.
B.not relevant to the U.S. economy.
C.major topics of microeconomics.
D.peculiar to command economies.
11) Other things being equal, which of the following is a necessary consequence of a
depreciation of the U.S. dollar against other currencies?
A.The terms of trade will move in favor of the United States
B.The United States will experience an increase in the volume of imports
C.International speculators will buy U.S. dollars and sell other currencies
D.U.S. exports will become cheaper relative to other nations’ products
12)
Refer to the above graphs. (Assume that the pre-migration labor force in Country A is 0d
and that it is 0u in country B.) What part of domestic output in country B is the total wage
bill or total wage income before and after the emigration?
A.Area 0vqtand area 0wrt, respectively
B.Area 0vqt and area 0wsu, respectively
C.Area 0wsu and area 0vqt, respectively
D.Area 0wsu and area 0wrt, respectively
13) Which of the following is not a social insurance program?
A.TANF (Temporary Assistance for Needy Families).
B.Medicaid.
C.Supplemental Security Income.
D.Unemployment compensation.
14) If population is expanding at the same rate as real output:
A.real per capita output will increase.
B.real per capita output will decrease.
C.real per capita output will remain unchanged.
D.living standards will increase.
15) Which of the following is a primary concern of social regulation?
A.Price fixing
B.Per se violation
C.Product design
D.Industry concentration
16) Which of the following goods will least likely suffer a decline in demand during a
recession?
A.Dinner at a nice restaurant
B.iPods
C.Toothpaste
D.Plasma screen and LCD TVs
17)
Refer to the diagram. Technological advance that is useful in producing consumer
goods but not in producing capital goods is shown by the shift of the production
possibilities curve from AB to:
A.CD.
B.EB.
C.AF.
D.GH.
18)
Refer to the above table for a certain product’s market in Econland. If the world price of
the product were $6 and a tariff of $1 per unit were applied to imports of the product,
then the tariff would generate government revenues of:
A.$600
B.$400
C.$800
D.$1,200
19) A perfectly inelastic demand schedule:
A.rises upward and to the right but has a constant slope.
B.can be represented by a line parallel to the vertical axis.
C.cannot be shown on a two-dimensional graph.
D.can be represented by a line parallel to the horizontal axis.
20) A nation can produce two products: tanks and autos. The table below is the nation’s
production possibilities:
Refer to the above table. If the nation produces more and more tanks, the opportunity
cost of each additional tank in terms of autos:
A.Remains constant
B.Falls
C.Increases
D.Cannot be measured
21)
Refer to the above table. What is the marginal resource cost if the firm employs a 12th
worker?
A.$16
B.$17
C.$18
D.$19
22) Creative destruction is not automatic because:
A.there are major obstacles to the entry of new innovative firms into concentrated
industries.
B.consumer tastes are highly unstable.
C.corporate takeovers increase dynamic competition.
D.large firms rarely are technologically progressive.
23) The labor supply curve facing a purely competitive employer is __________,
whereas the labor supply curve facing a monopsonist is ___________.
A.upsloping; horizontal
B.downsloping; vertical
C.vertical; upsloping
D.horizontal; upsloping
24) A nation can produce two products: tanks and autos. The table below is the nation’s
production possibilities:
Refer to the above table. According to the production possibilities schedule, a
combination of 4 tanks and 650 autos is:
A.Attainable, and involves an efficient use of society’s resources
B.Attainable, but would not be in the best interests of a strong national defense
C.Less than (or below) the maximum attainable output combination
D.Not attainable because the nation does not have sufficient resources
25) Introduction of the Verson Stamping Machine helped firms in the automobile
industry:
A.eliminate diminishing returns in production.
B.achieve greater economies of scale.
C.reach their minimum efficient scale at a lower level of production.
D.shift their AVC, ATC, and MC curves upward.
26) Which of the following statements about ticket scalping is correct?
A.On economic grounds, ticket scalping does more harm than good among those who
engage in it
B.Ticket scalping occurs when the event organizers set the formal price of the tickets
higher than the equilibrium price
C.The existence of a scalpers’ market could mean that the event sponsors/organizers are
getting lower sales revenues that what they could have gotten at equilibrium
D.Ticket scalping obviously benefits the sellers/scalpers, but is often harmful to the
ones buying the tickets
27) Using the below axes draw a supply and demand graph for land showing it as a free
good.
28) What have been the major outcomes from deregulation of industry? Give three
examples of changes in particular industries.
29) Discuss how wealth has changed since 1995. In particular, how did the 2007-2009
recession effect the median wealth in the United States.
30) How are flexible exchange rates used to eliminate a balance-of-payments deficit or
surplus?
31) Why might a business owner keep their business open but let it deteriorate, rather
than shut it down? Will this profitability last?
32) (Consider This) Suppose your friend is currently a nursing major. She decides she
wants to switch her major to economics, but she would lose many of the college credits
she has already earned. Explain to her why the past college credits should not be
figured into her marginal benefit and marginal cost calculation.