1) “Informal payments” or “under-the table fees” are a common form of corruption.
2) Changes in tax rates are a form of monetary policy.
3) If the lumber companies are required to internalize the negative externalities of
deforestation, then we should expect the equilibrium price of wooden furniture to
decrease.
4) If an income tax is progressive, the average tax rate will increase as incomes
increase.
5) Optimal resource allocation involves considering current and future uses, benefits
and costs.
6) E-bay and Amazon provide ‘sellers’ ratings” information based on the experiences of
past buyers. This is to help resolve the adverse selection problem faced by potential
buyers.
7) The United States can be classified as an “open” economy in that foreign trade
accounts for more than 50% of its GDP.
8) Continued losses in an industry will cause some firms to reduce output or eventually
leave the industry.
9) Whenever there are supply-side market failures in the form of costs that suppliers do
not have to face, then there will be overproduction of the output.
10) With modernization, the world’s population will continue to decline even as many
countries experience declining death rates.
11) In long-run equilibrium, a competitive firm produces where P = MR = MC =
minimum ATC and the firm earns normal economic profits.
12) Other things equal, the less competitive the market in which a firm sells its product,
the less elastic will be its resource demand curve.
13) Neoclassical economics and behavioral economics both recognize that people make
errors in their decision making.
14) The consumer demand curve for a product is downsloping because marginal utility
is constant when price declines.
15) The demand curve of a monopolistically competitive producer is less elastic than
that of a purely competitive producer.
16)
Refer to the diagram. At output level Q total cost is:
A.0BEQ.
B.BCDE.
C.0BEQ + BCDE.
D.0AFQ + BCDE.
17) Economist John List has shown that the so-called “endowment effect” tends to be
lower among people who often:
A.Buy things for resale
B.Buy things for personal long-term use
C.Produce things for themselves
D.Value their possessions
18) Other things equal, interest rates are:
A.higher on large loans than on small loans.
B.higher on loans with tax-exempt interest payments.
C.lower on less risky loans than on riskier loans.
D.lower on short-term loans than on long-term loans.
19) Farm share of U.S. GDP has:
A.declined from about 12 percent in 1950 to 1 percent today.
B.declined from about 12 percent in 1950 to 7 percent today.
C.declined from about 7 percent in 1950 to 1 percent today.
D.remained relatively stable over the past 50 years.
20) The concept of opportunity cost:
A.is irrelevant in socialistic economies because of central planning.
B.suggests that the use of resources in any particular line of production means that
alternative outputs must be forgone.
C.is irrelevant if the production possibilities curve is shifting to the right.
D.suggests that insatiable wants can be fulfilled.
21) The average annual rate of population increase in the Philippines from 2000 to 2010
was about 2 percent. Based on this rate of growth, the population of the Philippines will
double in about:
A.7 years
B.11 years
C.35 years
D.46 years
22) To an individual firm or landowner, land rents do not appear to be a surplus
because:
A.Land is a productive resource, like the other resources
B.A given parcel of land has alternative uses, and rent represents a real cost of
production
C.They do not understand that the supply of land, in total, is perfectly inelastic
D.Landowners are, politically and economically, a powerful and well organized group
23)
Refer to the above graph of a representative firm in monopolistic competition. If curve
(2) represents ATC and line (3) represents demand, then curve (1) and line (4) would
be:
A.MC and TR, respectively
B.AVC and MR, respectively
C.MC and MR, respectively
D.TC and TR, respectively
24) In recent years, U.S. foreign aid has been:
A.less than 1 percent of its output.
B.about 2 percent of its output.
C.about 3 percent of its output.
D.about 5 percent of its output.
25) An economic hypothesis:
A.has the same meaning as an economic principle or economic law.
B.is usually a normative statement.
C.is a possible explanation of cause and effect.
D.is a stronger generalization than an economic law.
26) Which of the following describes the vicious circle of poverty?
A.Government spending for public goods is inflationary and this undermines incentives
to save and invest.
B.Higher incomes increase consumption at the expense of capital accumulation, which
causes income to fall.
C.Low per capita incomes cause low levels of saving and investment, which mean low
productivity and therefore low incomes.
D.A growing national income increases the demand for money, which increases the
interest rate and reduces investment.
27)
Refer to the diagrams. In which case would the coefficient of cross elasticity of demand
be positive?
A.A
B.B
C.C
D.D
28) Use the graph below to illustrate and explain what would happen in the labor
market if a minimum wage was established at a level above the equilibrium wage.
29) Why does a newspaper dispenser open to a stack of newspapers and essentially
trusts a consumer to take just one copy whereas a soft drink vending machine does not
trust consumers and dispenses one can for each purchase?
30) The invisible hand cannot fully work when government economic policies are in
place. Explain.
31) Discuss the history of governments investment decisions.
32) What is the significance of the slope on a two-product budget line? What effect
does a change in income have on the slope? A change in product price?