1) Average revenue and marginal revenue are equal at each output level in:
A.Pure competition
B.Monopolistic competition
C.Monopoly
D.Oligopoly
2) The perceived central economic problem associated with the U.S. health care system
is:
A.too many frivolous malpractice lawsuits.
B.an overabundance of scanning machines.
C.an overallocation of resources to the system.
D.that workers lose their insurance when they lose their jobs.
3)
Refer to the above graph. If the output level is Q2, then there will be:
A.Allocative efficiency
B.Maximum deadweight losses
C.Maximum consumer surplus
D.Greater marginal benefits than marginal costs of the product
4)
Consider the parallel demand curves in the figure above. Which curve is relatively more
elastic at P1?
A.AA
B.BB
C.Cannot be determined
D.Both have the same slope; therefore both have the same elasticity
5) Which of the following statements is correct?
A.Average total cost is the difference between average variable cost and average fixed
cost.
B.Marginal cost measures the cost per unit of output associated with any level of
production.
C.When marginal product rises, marginal cost must also rise.
D.Marginal cost is the price or cost of an extra variable input (for example, an
additional worker or machine) divided by its marginal product.
6) Economists distinguish among the immediate market period, the short run, and the
long run by noting that:
A.Supply is most elastic in the short run, and least elastic in the immediate market
period
B.Demand is most elastic in the long run, and least elastic in the immediate market
period
C.Supply is most elastic in the long run, and least elastic in the immediate market
period
D.Supply is most elastic in the short run, and least elastic in the long run
7) The primary purpose of Social Security is to:
A.subsidize families in need.
B.offset the progressiveness of the personal income tax.
C.provide income for workers who are temporarily unemployed.
D.provide income for retired and disabled workers.
8) When economists say that people act rationally in their self-interest, they mean that
individuals:
A.look for and pursue opportunities to increase their utility.
B.generally disregard the interests of others.
C.are mainly creatures of habit.
D.are usually impulsive and unpredictable.
9) A characteristic of the market system is:
A.Extensive use of direct methods of production
B.A focus on labor, as opposed to capital resources
C.Reliance on the use of capital goods to expand total output
D.Avoidance of producing goods that do not satisfy consumer wants directly
10) Most people do not steal because:
A.stolen goods are subject to the law of diminishing marginal utility.
B.the marginal utilities of stolen goods are negative.
C.their marginal costs, including guilt costs, are too high.
D.stolen goods can only be sold at deep discounts.
11) The demand for loanable funds is downsloping:
A.because businesses find that more investments are profitable at low interest rates than
at high interest rates.
B.because households are willing to save more at high interest rates than at low interest
rates.
C.only when the nominal interest rate exceeds the real interest rate.
D.because the amount of profitable business investment varies directly with the interest
rate.