1) The presence of large and fast-growing populations in developing countries
contributes to lower per capita incomes.
2) Economic analysis would focus on the size of the government, in order to assess
whether or not it fosters economic efficiency.
3) Indifference curves are convex to the origin due to diminishing marginal rates of
substitution.
4) The higher a resource’s current price, the more extraction should be delayed to a later
period.
5) The pursuit through government of a transfer of wealth at society’s expense is called
“rent seeking.”
6) Japan is a nation that achieved a high standard of living despite having a very limited
supply of natural resources.
7) Price discrimination occurs whenever a firm sells a good for two different prices.
8) If currency speculators believe South Korea will have much lower inflation in the
future than the United States, then this event is most likely to cause the South Korean
won to:
A.Depreciate and the U.S. dollar to depreciate
B.Depreciate and the U.S. dollar to appreciate
C.Appreciate and the U.S. dollar to appreciate
D.Appreciate and the U.S. dollar to depreciate
9)
Refer to the above demand graph for a farm product. Which of the following will cause
the largest increase in total revenue for farmers?
A.A decrease in the price from PA to PC
B.A decrease in the price from PB to PC
C.An increase in the price from PC to PA
D.An increase in the price from PC to PB
10) If the short-run average variable costs of production for a firm are rising, then this
indicates that:
A.Average total costs are at a maximum
B.Average fixed costs are constant
C.Marginal costs are above average variable costs
D.Average variable costs are below average fixed costs
11) The government of a DVC may purposely cause inflation because:
A.a rapid rate of inflation attracts private foreign capital into a DVC.
B.there is conclusive evidence that inflation discourages people from having large
families.
C.this will strengthen the nation’s position in international markets.
D.inflation works like taxation in that it may release resources from consumption so
that they can be invested.
12) If turnips are an example of an inferior good, then a decrease in the demand for
turnips could be brought about by a(n):
A.Increase in consumer incomes
B.Decrease in consumer incomes
C.Increase in the price of turnips
D.Decrease in the price of some other product
13) According to behavioral economists, someone suffering from myopia is most likely
to:
A.spend too little on present consumption and save more than is necessary for the
future.
B.vote only for economic policies that serve his or her short- and long-term interests.
C.rely too much on System 2 of the brain.
D.spend too much on present consumption and not save enough for the future.
14) Which question is an example of a macroeconomic question?
A.What is the level of industrial concentration in the U.S. automobile industry?
B.What economic incentives can be used to reduce the cost of health care in the nation?
C.What policies would be recommended for stimulating national economic growth?
D.What market conditions are expected for milk in the nation this year?
15) The user cost of extracting a nonrenewable resource is:
A.inversely related to how much of the resource remains.
B.directly related to how much of the resource remains.
C.unrelated to how much of the resource remains.
D.inversely related to the expected future price of the resource.
16) Craft unions:
A.attempt to organize workers at all skill levels in a firm or industry.
B.have been declared illegal by federal legislation.
C.only organize workers who have a particular skill.
D.attempt to increase the supply of their particular type of labor.
17)
Refer to the diagram. Assuming equilibrium price P1, consumer surplus is represented
by areas:
A.a + b.
B.a + b + c + d.
C.c + d.
D.a + c.
18) In the short run:
A.TVC will increase for a time at a diminishing rate, but then beyond some point will
increase at an increasing rate.
B.TVC will increase for a time at an increasing rate, but then beyond some point will
increase at a diminishing rate.
C.TVC will increase by the same absolute amount for each additional unit of output
produced.
D.one cannot generalize concerning the behavior of TVC as output increases.
19)
Refer to the above production possibilities curves. Curve (a) is the initial curve for the
economy, and the nation is initially producing combination P. A shift from curve (a) to
curve (b) suggests that the economy can then increase its production of capital goods:
A.Only if it reduces its production of consumer goods
B.So as to produce the combination L
C.And consumer goods simultaneously
D.But will have to hold constant its production of consumer goods
20) Are consumer surplus and equilibrium price directly or inversely related? Explain
your answer.
21) Why is there a supply curve in pure competition but no supply curve in pure
monopoly?
22) What are the shortcomings or limitations of the four-firm concentration ratios?
23) How are monopolistically competitive industries identified with concentration
ratios?
24) The higher real wages earned by American workers primarily reflect the fact that
Americans have a greater inherent ability to produce goods and services than do foreign
workers. Evaluate.
25) Why is money not an economic resource? If it is not productive, then why do
businesses want to obtain or buy it?
26) Political logrolling solves the problem of inefficient outcomes in the provision of
public goods. Evaluate.