1) The “dictator game” and “ultimatum game” are experiments that have provided field
evidence for:
A.The invisible hand
B.Fairness
C.Self-interest
D.Cognitive biases
2)
As the firm in the diagram expands from plant size #3 to plant size #5, it experiences:
A.increasing returns.
B.economies of scale.
C.diseconomies of scale.
D.constant costs.
3) Which of the following best describes the short-run problem faced by farms?
A.New technology has increased the productivity of farmers and therefore resulted in
declining farm prices and low farm incomes.
B.The highly inelastic nature of agricultural demand, together with fluctuations in
exports of farm goods, has caused small year-to-year fluctuations in farm output to
result in highly unstable farm incomes.
C.The supply of farm products has increased relative to the demand for them, and
because demand is inelastic, prices of farm output and farm income have therefore
declined.
D.The demand for farm products has increased relative to their supply, but the elastic
nature of agricultural demand has caused these shifts to result in declining farm
incomes.
4)
Refer to the diagram. Diseconomies of scale:
A.begin at output Q1
B.occur over the Q1Q3 range of output.
C.begin at output Q3
D.are in evidence at all output levels.
5) The government of Southland wants to improve resource allocation in the country.
Which of the following actions by the Southland government is most likely to
accomplish this?
A.Weakening enforcement of laws and contracts.
B.Promising to cover every risk of loss for private firms.
C.Coercing all firms to innovate and invest.
D.Taxing polluters and subsidizing firms that are creating significant positive
externalities.
6) Differences in the applications of antitrust laws are in part rooted on the issue of how
broadly antitrust authorities should define the relevant:
A.Market
B.Product
C.Price
D.Firm
7)
Refer to the diagrams that show identical marginal utility from income curves for
Singer and Catalano. The marginal utility from income curves are drawn on the
assumption that:
A.Singer buys more inferior goods than does Catalano.
B.Singer and Catalano have identical capacities to enjoy income.
C.Catalano has a greater capacity to enjoy income than does Singer.
D.Singer has a greater capacity to enjoy income than does Catalano.
8) The practice of price discrimination is associated with pure monopoly because:
A.it can be practiced whenever a firm’s demand curve is downsloping.
B.monopolists have considerable ability to control output and price.
C.monopolists usually realize economies of scale.
D.most monopolists sell differentiated products.
9)
Refer to the above graphs. Which graph shows an increase in the prices of X and Y, but
no change in the buyer’s budget?
A.Graph A
B.Graph B
C.Graph C
D.Graph D
10) Buyers will opt out of markets in which:
A.there are significant negative externalities.
B.standardized products are being produced.
C.there is inadequate information about sellers and their products.
D.there are only foreign sellers.
11)
Refer to the diagram for the corn market. As the result of a supported corn price of B:
A.a surplus of LG will result.
B.a surplus of LH will result.
C.a surplus of HG will result.
D.a shortage of LG will result.
12) Assume a purely competitive, increasing-cost industry is in long-run equilibrium. If
a decline in demand occurs, firms will:
A.leave the industry, price will decrease, and quantity produced will increase.
B.enter the industry and price and quantity will both increase.
C.leave the industry and price and output will both increase.
D.leave the industry and price and output will both decline.
13) The threat of rejection in market transactions:
A.leads to better products for consumers.
B.leads to lower prices for consumers.
C.leads to greater cooperation between buyers and sellers.
D.does all of these.
14) If a legal ceiling price is set above the equilibrium price:
A.a shortage of the product will occur.
B.a surplus of the product will occur.
C.a black market will evolve.
D.neither the equilibrium price nor the equilibrium quantity will be affected.
15) A decrease in the supply curve of nurses could be accounted for by all of the
following except a(n):
A.Increase in the rewards available in other comparable occupations
B.Increase in the training requirements for nurses
C.Reduction in the number of nursing schools
D.Cut in the wages of nurses
16) If 100 shirts are sold when unit price is $10, while 75 shirts are sold when the unit
price is $15, one can conclude that in this price range:
A.Demand for the shirts is elastic
B.Demand for the shirts is inelastic
C.Demand for the shirts has shifted to the right
D.Consumers are quite sensitive to changes in the price of the shirt