1) Which of the following would be an example of a moral hazard problem?
A.A person in poor health who purchases life insurance
B.A person who is taxed on the purchase of a carton of cigarettes
C.A person who purchases auto insurance and then drives more recklessly
D.A person who receives a subsidy from the Federal government to insulate a home
2) The following table contains hypothetical data for the 2012 U.S. balance of
payments. Answer the question on the basis of this information. All figures are in
billions of dollars.
Refer to the given data. The United States’ balance of capital and financial account is a:
A.surplus of $5.
B.deficit of $10.
C.surplus of $25.
D.deficit of $5.
3) Joe sold gold coins for $1,000 that he bought a year ago for $1,000. He says, “At
least I didn’t lose any money on my financial investment.” His economist friend points
out that in effect he did lose money because he could have received a 3 percent return
on the $1,000 if he had bought a bank certificate of deposit instead of the coins. The
economist’s analysis in this case incorporates the idea of:
A.opportunity costs.
B.marginal benefits that exceed marginal costs.
C.imperfect information.
D.normative economics.
4)
Refer to the diagram. The combination of computers and bicycles shown by point F:
A.is unattainable given currently available resources and technology.
B.is attainable but implies that the economy is not using all its resources.
C.is irrelevant because it is inconsistent with consumer preferences.
D.suggests that opportunity costs are constant.
5) Concentration ratios measure the:
A.geographic location of the largest corporations in each industry.
B.degree to which product price exceeds marginal cost in various industries.
C.percentage of total industry sales accounted for by the largest firms in the industry.
D.number of firms in an industry.
6) At long-run equilibrium in monopolistic competition, there is:
A.Allocative efficiency
B.Productive efficiency
C.Both allocative and productive efficiency
D.Neither allocative nor productive efficiency
7) If the demand for steak (a normal good) shifts to the left, the most likely reason is
that:
A.consumer incomes have fallen.
B.cattle production has declined.
C.the price of steak has risen.
D.the price of cattle feed has gone up.
8) The production possibilities curve has:
A.a positive slope that increases as we move along it from left to right.
B.a negative slope that increases as we move along it from left to right.
C.a negative slope that decreases as we move along it from left to right.
D.a negative slope that is constant as we move along it from left to right.
9)
Refer to the two diagrams for individual firms. In Figure 1 line B represents the firm’s:
A.demand and marginal revenue curves.
B.demand curve only.
C.marginal revenue curve only.
D.average revenue curve only.
10) When economists say that the demand for a product has decreased, they mean that:
A.The demand curve has shifted to the right
B.The product has become particularly scarce for some reason
C.The product has become more expensive and thus consumers are buying less of it
D.Consumers are now willing and able to buy less of this product at each possible price
11) Competitive pricing has not developed in the health care industry due to the
following factors, except:
A.The government bans competitive pricing in health care
B.Consumers rarely shop around for health care providers
C.Insurance covers most consumers’ cost of health care
D.Consumers are often wary of low prices in health care
12) According to the concept of present value, a $50 barrel of oil today is worth:
A.less than a $50 barrel in 2 years.
B.more than a $50 barrel in 2 years.
C.the same as a $50 barrel in 2 years.
D.the same as a $50 barrel in 2 years, but only if there is no inflation during those 2
years.
13) Suppose Steve Stone takes a job with Zemo Manufacturing, whose labor contract
with its unions has an agency shop clause (30 days). Steve:
A.must join the union within 30 days.
B.can decide against joining the union and place the union dues in a retirement account.
C.can decide against joining the union but then will not receive any union-negotiated
wage increases.
D.can decide against joining the union but nevertheless will have to pay union dues or
donate an equivalent amount to an approved charity.
14)
Consider the diagram above, where E is the consumer’s original equilibrium position.
We know good X is not a normal good if, as income increases, the consumer’s new
equilibrium position is at point:
A.A
B.B
C.C
D.D
15) Answer the question on the basis of the following four tax schedules for the given
base of taxable income.
Which of the above tax schedules is a regressive tax schedule throughout?
A.A
B.B
C.C
D.None of the schedules
16) Other things equal, an increase in the productivity of capital goods will:
A.increase the demand for loanable funds and decrease the equilibrium interest rate.
B.increase the demand for loanable funds and increase the equilibrium interest rate.
C.increase the supply of loanable funds and decrease the equilibrium interest rate.
D.increase the supply of loanable funds and increase the equilibrium interest rate.
17) Past costs that are not affected by new decisions are known as:
A.variable costs.
B.fixed costs.
C.marginal costs.
D.sunk costs.
18) The plus items below are “export-type” entries and the minus items are
“import-type” entries in the balance of payments for the hypothetical country of Zippo.
Refer to the given information. Zippo has:
A.a current account surplus.
B.a financial account deficit.
C.a trade surplus on goods and services.
D.neither a balance of payments deficit nor a surplus.
19) Assume real per capita income in an industrially advanced country is $37,665 per
year and $523 per year in a low-income developing country.
(a)What is the gap in the standards of living?
(b)If real per capita income were to grow at a rate of 2% during a year in both the
industrially advanced and the developing country, what would happen to the standard of
living in each country and the gap in the standard of living?
20) We would expect an industry to expand if firms in that industry are:
A.earning normal profits.
B.earning economic profits.
C.breaking even.
D.earning accounting profits.