1) If the quantity of X is measured on the horizontal axis and the quantity of Y on the
vertical, then the slope of the budget line is equal to the price of X divided by the price
of Y.
2) Over the range of positive, but diminishing, marginal returns for an input, the total
product curve increases at a decreasing rate.
3) About one-fifth of all U.S. households had incomes of $100,000 or more in 2011.
4) The U.S. is among the countries that have very low levels of political corruption, as
reported in the Global Corruption Barometer of 2010-11.
5) If the coefficient of cross elasticity of demand is positive, the two products are
complementary goods.
6) A state government seeking to increase its excise-tax revenues is more likely to
increase the tax rate on items with elastic demand.
7) In an unregulated monopoly at equilibrium, the output level is higher than the
economically efficient level.
8) In a competitive market economy, firms and resource suppliers seeking to further
their own self-interest will end up, as though guided by an “invisible hand,” promoting
the public interest.
9) In the short run, fixed costs are important in determining a firm’s optimal level of
output.
10) The Gini ratio or Gini coefficient is a measure of the:
A.Inflationary gap
B.Recessionary gap
C.Number of households that are classified as being poor
D.Degree of income inequality
11) Answer the question on the basis of the following table, which indicates the dollar
price of libras, the currency used in the hypothetical nation of Libra. Assume that a
system of freely floating exchange rates is in place.
Refer to the table. The equilibrium dollar price of libras is:
A.$5.
B.$4.
C.$3.
D.$2.
12) All of the following are long-run changes, except:
A.An industry expands as more firms enter it
B.A firm moves into larger production facilities to expand production
C.Some firms decide to leave an industry and the industry contracts
D.A firm produces more output by acquiring more raw materials for its existing factory
13) Which of the following is most likely to be a variable cost?
A.Fuel and power payments.
B.Interest on business loans.
C.Rental payments on IBM equipment.
D.Real estate taxes.
14)
Refer to the graph above. Which demand curve is relatively most elastic between P1
and P2?
A.D1
B.D2
C.D3
D.D4
15) Under the Food, Conservation, and Energy Act of 2008, subsidies to farmers based
on gaps between actual prices of crops and targeted prices are called:
A.direct payments.
B.price supports.
C.countercyclical payments.
D.price gap set-asides.
16) A profit-maximizing firm will:
A.expand employment if marginal revenue product equals marginal resource cost.
B.reduce employment if marginal revenue product equals marginal resource cost.
C.reduce employment if marginal revenue product is less than marginal resource cost.
D.expand employment if marginal revenue product is less than marginal resource cost.
17) Resources are efficiently allocated when production occurs where:
A.marginal cost equals average variable cost.
B.price is equal to average revenue.
C.price is equal to marginal cost.
D.price is equal to average variable cost.
18)
Which of the following groups does not fit in with the others?
A.Illegal immigrants
B.Undocumented workers
C.Green-card holders
D.Overstaying aliens
19) Which of the following statements is true about health care costs in the United
States?
A.Costs have risen because increases in the price of health care have more than offset
reductions in the quantity of health care provided.
B.Costs have risen because increases in the quantity of care provided have more than
offset price reductions realized through economies of scale.
C.Costs have risen because both the price of health care and the quantity provided have
risen.
D.Costs have remained relatively stable as price increases have been largely offset by
reductions in the quantity provided.
20) Which of the following statements about U.S. agriculture is true as it relates to the
past several decades?
A.The demand for farm products has declined, the supply of farm products has
increased, and the price of farm products has declined.
B.The demand for farm products has become both more income elastic and more price
elastic.
C.Minimum efficient scale has increased, the prices of farm products have declined,
and the number of farms has declined.
D.The prices of farm products have increased, minimum efficient scale has declined,
and the supply of farm products has been stagnant.
21) A consumer had been consuming product X for some time. This period, she buys
fewer X in order to try some units of a new product Y. She finds that her marginal
utility of X is 20 (at a price of $10 per unit), while the marginal utility of Y is 36 (at a
price of $12). The utility-maximizing rule suggests that this consumer should:
A.Increase consumption of product X because of its lower price
B.Increase consumption of product X because it is an old reliable product
C.Increase consumption of product Y because it has a higher MU/P
D.Increase consumption of product Y because it has a higher MU
22) Use the following data to answer the question. The letters A, B, and C designate
three successively larger plant sizes.
Refer to the data. In the long run the firm should use plant size “A” for:
A.all possible levels of output.
B.10 to 30 units of output.
C.30 to 60 units of output.
D.all outputs greater than or equal to 40.
23) For many years, the price of medical care in the United States has:
A.risen at the same rate as the overall price level.
B.risen at a faster rate than the overall price level.
C.risen, but at a slower rate than the overall price level.
D.fallen.
24) Which of the following increases in labor demand is due to a change in the product
demand?
A.Access to computers increases the productivity of mail order businesses, thus
increasing the demand for their workers
B.Tourism increases in popularity, increasing the demand for workers at tourist resorts
C.A decrease in the price of trucks decreases the cost of transporting goods, thus
increasing the demand for truckers
D.A change in work rules increases output per worker in the auto industry, thus
increasing the demand for auto workers
25) Migration to the United States will occur as long as wages are higher in the United
States than in the other country. Evaluate.
26) Why would a high-wage nation oppose immigration?
27) Discuss the evidence on whether economic growth is bad for the environment.
28) What insights about international trade came from Adam Smith and David Ricardo?
29) How do doctors add to rising health care costs?
30) Use the information in the table below to identify the type of cross elasticity
relationship between products X and Y in each of the following five cases, A to E.
31) Describe the relationship between raising the marginal cost of crime and the
quantity of crime committed. Explain the implications of this relationship as applied to
property crimes.
32) Explain how the Gini ratio is measured and what it means.