1) If the world price of a product rises relative to the domestic price in a trading nation,
then for that product:
A.Exports and imports will increase
B.Exports and imports will decrease
C.Exports will increase and imports will decrease
D.Imports will increase and exports will decrease
2)
Refer to the diagram. Line (2) reflects the long-run supply curve for:
A.a constant-cost industry.
B.a decreasing-cost industry.
C.an increasing-cost industry.
D.a technologically progressive industry.
3) According to the Coase Theorem, externality problems:
A.Do not exist in reality, because all costs and benefits are internal to firms
B.Can be solved through private negotiations without the need for government
intervention
C.Must only be resolved by government action, through either taxes or subsidies
D.Can never be resolved adequately because one party always gains while the other
loses
4) Below is a demand schedule facing an individual firm. Complete the table by
computing average revenue, total revenue, and marginal revenue. Then answer the
following two questions: (a) How can you tell whether a firm is operating in a market
that is purely competitive? (b) What relationship exists between average revenue and
marginal revenue?
5) A market in which the money of one nation is exchanged for the money of another
nation is a:
A.resource market.
B.bond market.
C.stock market.
D.foreign exchange market.
6) The Patient Protection and Affordable Care Act (PPACA) bans the previous practice
of insurance companies to deny coverage based on preexisting conditions.
7) If economies of scale in an industry are so extensive that a single firm could serve
the entire market at a lower cost than if the market was split between two or more firms,
this industry is called a(n):
A.Conglomerate
B.Natural monopoly
C.Oligopoly
D.Restraint of trade
8) Suppose a firm sells its product at a price lower than the opportunity cost of the
inputs used to produce it. Which of the following statements is definitely true?
A.The firm will earn positive accounting and economic profits
B.The firm will face accounting and economic losses
C.The firm will face an accounting loss, but earn positive economic profits
D.The firm may earn positive accounting profits, but will face economic losses
9) Suppose that tacos and pizza are substitutes, and that soda and pizza are
complements. We would expect an increase in the price of pizza to:
A.reduce the demand for tacos and increase the demand for soda.
B.reduce the demand for soda and increase the demand for tacos.
C.increase the demand for both soda and tacos.
D.reduce the demand for both soda and tacos.
10) Suppose that a firm’s legal staff concludes that a new product that the firm is
developing is patentable. Graphically, this new information would shift the firm’s
expected-rate-of-return curve on R&D to the:
A.right and reduce its optimal amount of R&D.
B.right and increase its optimal amount of R&D.
C.left and increase its optimal amount of R&D.
11) Utility refers to the:
A.satisfaction that a consumer derives from a good or service.
B.rate of decline in a product demand curve.
C.relative scarcity of a product.
D.usefulness of a product.
12) Suppose there are two identical labor markets in the economy. The supply of
workers and the demand for workers in each of these markets are shown in the table
below. Answer the next three questions.
(a)What would the equilibrium wage rate be if each of the two labor markets were a
competitive labor market? How many workers would be employed?
(b)If in one market a union was formed that imposed a $100 daily wage rate, what
would happen to employment in the unionized market and output produced by workers?
(c)If workers displaced by the union in the first market all entered the second market
and found employment in that competitive and nonunion market, what will happen to
the wage rate, employment, and output?
13)
Refer to the labor market diagrams. The tactics of exclusive unionism are portrayed in
Figure:
A.4
B.3
C.2
D.1
14) A person should consume more of something when its marginal:
A.benefit exceeds its marginal cost.
B.cost exceeds its marginal benefit.
C.cost equals its marginal benefit.
D.benefit is still better.
15) In a market system:
A.firm owners and employees share business risk more or less equally.
B.a firm’s employees and suppliers are largely shielded from risk.
C.employees and suppliers face the greatest risks because firms can shut down without
notice and leave them unpaid.
D.a firm’s owners are largely shielded from risk because they can walk away from the
business at any time.
16) Answer the question based on the following payoff matrix for a duopoly in which
the numbers indicate the profit in millions of dollars for each firm:
Refer to the above payoff matrix. If the two firms collude to maximize joint profits, the
total profits for the two firms will be:
A.$350 million
B.$400 million
C.$500 million
D.$525 million