1)
Refer to the diagram. Rent controls are best illustrated by:
A.price A
B.quantity E
C.price C
D.price B
2) Which of the following would be the best example of regulatory capture?
A.Starbucks buys up all the available supplies of coffee beans.
B.Nike executives influence the rules for track and field events.
C.Federal law makers write and pass legislation that protects domestic companies from
foreign competition.
D.Executives from the Ford, General Motors, and Chrysler companies write the rules
regulating automobile safety and fuel requirements.
3) The following data relate to the supply schedule of a product.
Over which price range is the elasticity of supply greater than 1?
A.$10 to $15
B.$15 to $20
C.$20 to $25
D.$25 to $30
4) The reason why socialists favor the nationalization of land is that:
A.Land is a scarce resource
B.The rent received by landowners does not represent anything they produced
C.There is a fixed total supply of land
D.Land is not a productive resource
5)
Which of the above shows the correct relationship between demand and marginal
revenue?
A.A
B.B
C.C
D.D
6) Under which market structure are profit rewards most likely to be quickly taken
away by existing firms or new firms entering the industry?
A.Oligopoly
B.Pure monopoly
C.Pure competition
D.Monopolistic competition
7) If a firm is confronted with economic losses in the short run, it will decide whether
or not to produce by comparing:
A.marginal revenue and marginal cost.
B.price and minimum average variable cost.
C.total revenue and total cost.
D.total revenue and total fixed cost.
8) Demand and marginal revenue curves are downsloping for monopolistically
competitive firms because:
A.Each firm has to take the market price as given
B.Product differentiation allows each firm some degree of monopoly power
C.There are a few large firms in the industry and they each act as a monopolist
D.Mutual interdependence among all firms in the industry leads to collusion
9) Neoclassical economics assumes the following as major motivators of decisions and
actions, except:
A.Utility maximization
B.Loss minimization
C.Sense of fairness
D.Self-interest
10) When real interest rates in other countries rise relative to that in the U.S., other
things being equal, we would expect the U.S. dollar to:
A.Appreciate
B.Depreciate
C.Inflate
D.Deflate
11) Which of the following is one of the simplifying assumptions made in constructing
a production possibilities curve?
A.The state of technology is constantly changing
B.A wide variety of products are produced
C.Resources are fully employed and are used in least-cost methods of production
D.Quantities of available resources in the economy vary from one point to another
12) In long-run equilibrium, monopolistic competition entails:
A.an efficient allocation of resources.
B.an overallocation of resources due to inadequate capacity.
C.an underallocation of resources due to excess capacity.
D.production at the minimum attainable average total cost.
13) Which expression is used to calculate the present value of an amount of money?
A.Future Value x (1 + interest rate)time
B.Future Value/(1 + interest rate)time
C.Future Value x (1 + time)interest rate
D.(1 + interest rate)time/Future Value
14) Suppose that Scoobania, which has full employment, can obtain 1 unit of capital
goods by sacrificing 2 units of consumer goods domestically but can obtain 1 unit of
capital goods from another country by trading 1 unit of consumer goods for it. This
reality illustrates:
A.a rightward (outward) shift of the production possibilities curve.
B.increasing opportunity costs.
C.achieving points beyond the production possibilities curve through international
specialization and trade.
D.productive efficiency.
15) Tying contracts, which is prohibited under the Clayton Act, refers to the situation
where a producer requires that a buyer:
A.Can resell the product but only at a higher price than the original purchase price
B.Cannot buy a similar product from other producers if that buyer wants to continue
buying its product
C.Buy another of its products as a condition for buying the desired product
D.Cannot ever resell the product bought
16) According to the purchasing power parity theory of exchange rates:
A.a dollar, when converted to other currencies at the prevailing floating exchange rate,
has the same purchasing power in various countries.
B.in equilibrium, national currencies have equal value in terms of gold.
C.the higher a nation’s price level in terms of its own currency, the greater is the amount
of foreign exchange it can obtain for a unit of its currency.
D.nominal currency values will tend to equalize (become 1 = 1) in the long run.