1)
Refer to the diagram for a nondiscriminating monopolist. At output R economic profits
will be zero.
2) Studies by economists indicate that economic growth and rising living standards are
good for the environment because as societies get richer, they tend to spend more on
things that improve environmental quality.
3) Political logrolling, or vote-trading, can turn a potentially inefficient voting outcome
into an efficient one.
4) A total fertility rate of 1.0 is necessary to keep the population constant over time.
5) Even if prices are fixed and competition is restricted by the government, the
“invisible hand” will still work in the economy and lead to economic efficiency.
6) Automatic payroll deductions help people to fight their time inconsistency problem
with regards to saving.
7) The cornerstone of antitrust policy in the United States is generally considered to be
the Sherman Antitrust Act of 1890.
8) The flow of payments for purchases and sale of financial assets is included in the
current account balance of a nation.
9) The government’s ability to force people to do things can increase economic
efficiency.
10) Entrepreneurs often form new small firms called ‘spin-off firms”.
11) Government and private efforts to promote the production of “gasohol” using
corn-based ethanol is an attempt to:
A.Increase the supply of certain farm products
B.Increase the demand for certain farm products
C.Decrease the demand for certain farm products
D.Decrease the supply of certain farm products
12)
Assumptions: (1) The demand for labor in Alphania and Betania are as shown by DA
and DB, respectively; (2) Alphania’s native labor force is F and that of Betania is g; (3)
wage L in Alphania is equal to wage m in Betania; and (4) full employment exists in
both countries.
Refer to the given diagram and assumptions. If migration is costless and unimpeded:
A.migration will cause the average level of wages to fall in Alphania.
B.no migration will occur.
C.fg workers will move from Betania to Alphania.
D.GF workers will move from Alphania to Betania.
13)
Assumptions: (1) the labor force is comprised of 9 million men and 9 million women
workers; (2) the economy has 3 occupations, X, Y, and Z, each having identical demand
curves for labor; (3) men and women workers are homogeneous with respect to their
labor-market capabilities; (4) women are discriminated against by being excluded from
occupations X and Y and are confined to Z; and (5) aside from discrimination, the
economy is competitive, and workers seek to maximize their earnings.
Refer to the diagram and list of assumptions. If discrimination is ended, women:
A.and men will both receive a wage rate of $4.
B.and men will both receive a wage rate of $5.
C.and men will both receive a wage rate of $6.
D.will receive a wage rate of $4 and men will receive a wage rate of $5.
14) Effectively removing all illegal immigrants from U.S. labor markets would:
A.reduce wages in the United States.
B.increase employment of domestic-born workers, but by a lesser amount than the
number of jobs lost by illegal workers.
C.increase employment of domestic-born workers at a rate of one-for-one with the jobs
lost by illegal workers.
D.increase employment of domestic-born workers by an amount greater than the
number of jobs lost by illegal workers.
15) Supply curves tend to be:
A.perfectly elastic in the long run because consumer demand will have sufficient time
to adjust fully to changes in supply.
B.more elastic in the long run because there is time for firms to enter or leave the
industry.
C.perfectly inelastic in the long run because the law of scarcity imposes absolute limits
on production.
D.less elastic in the long run because there is time for firms to enter or leave an
industry.
16) Answer the question based on the following supply and demand schedules in units
per week for a product.
Refer to the above table. If demand increased by 100 units at each price level, and the
government set a price ceiling of $40, then there will be:
A.A shortage
B.A surplus
C.No shortage or surplus
D.Decrease in supply
17) If you know that with 8 units of output, average fixed cost is $12.50 and average
variable cost is $81.25, then total cost at this output level is:
A.$93.75
B.$97.78
C.$750
D.$880
18) Labor unions are restrained in their wage demands because:
A.legislation limits annual increases in nominal wages to 6 percent.
B.the labor demand curve is downsloping.
C.marginal wage cost curves lie above labor supply curves in most labor markets.
D.most unions deal with monopsonists who have superior bargaining power.
19) Which of the following companies was not fined in 2011 for attempting to run an
international cartel and fix prices?
A.Intel.
B.Danfoss.
C.Panasonic.
D.Whirlpool.
20) If in a certain year the indices of prices received and paid by farmers were 115 and
142 respectively, the parity ratio (in percentage terms) would be:
A.123
B.81
C.69
D.27
21) If two variables are inversely related, then as the value of one variable:
A.increases, the value of the other may either increase or decrease.
B.decreases, the value of the other decreases.
C.increases, the value of the other decreases.
D.increases, the value of the other increases.
22) According to the Coase theorem:
A.government should levy excise taxes on firms that generate spillover or external
costs.
B.taxes should be levied such that they change private behavior as little as possible.
C.private individuals can often negotiate their own resolution of externality problems,
without the need for government intervention.
D.private firms should not provide public goods.
23) Which is true of a purely competitive firm in the long-run equilibrium?
A.Average fixed cost equals price
B.Marginal cost equals marginal product
C.Price equals marginal cost
D.Average variable cost equals marginal cost
24) Suppose three roommates cannot agree on the size of a pizza to order. Domino
argues for a medium pizza, Godfather contends a large pizza will be needed, and Little
Caesar wants a super-large pizza. Assuming no paradox of voting, majority voting will
result in a decision to order:
A.a medium pizza.
B.a large pizza.
C.a super-large pizza.
D.two medium pizzas.
25) The study of economics is primarily concerned with:
A.keeping private businesses from losing money.
B.demonstrating that capitalistic economies are superior to socialistic economies.
C.choices that are made in seeking the best use of resources.
D.determining the most equitable distribution of society’s output.
26) What is the concept of creative destruction? Describe two industry examples and
how it has worked over time.
27) Describe the health care industry.
28) Describe the Tragedy of the Commons and how it relates to public grazing plots.
29) What, if any, is the relationship between the mobility of a particular type of labor
and the supply of labor?
30) What factors might cause the interest rates to differ? Explain.