1) The marginal tax rate is:
A.less than the average tax rate when a tax is progressive.
B.calculated by dividing total taxes paid by one’s total taxable income.
C.the percentage of one’s total income that is paid in taxes.
D.the percentage of an increment of income that is paid in taxes.
2) The production possibilities for country X are either 6,000 bushels of soybeans or
10,000 bushels of wheat. The production possibilities for country Y are either 2,000
bushels of soybeans or 4,000 bushels of wheat. Which of the following is true?
A.Country Y should specialize in the growing of soybeans according to the principle of
comparative advantage
B.Country X is the least cost producer of wheat
C.The domestic opportunity cost of wheat production is lower in country Y
D.The high cost producer of soybeans is country X
3) A firm might choose to pay its employees a wage higher than that which would clear
the market because:
A.the higher wage raises the opportunity cost of shirking.
B.the higher wage may shift the labor demand curve to the left.
C.the firm will have higher turnover, allowing “new blood” to invigorate older workers,
who have a greater tendency to shirk.
D.this policy reduces the proportion of experienced to inexperienced workers, resulting
in a lower overall wage bill.
4) Which of the following is true under conditions of pure competition?
A.There are differentiated products
B.The market demand curve is perfectly elastic
C.No single firm can influence the market price by changing its output
D.Each individual firm has the ability to set its own price
5) In the context of analyzing economic efficiency, we can interpret the market supply
curve to be showing:
A.The average cost of producing the product at each output level
B.The marginal revenue from extra each unit of the product
C.The average variable cost of producing the product
D.The marginal opportunity cost to produce each unit of the product
6) Which of the following would be the best example of a ‘start-up”?
A.The formation of Imation by the 3Com Corporation
B.The founding of Apple by Jobs and Wozniak
C.The buyout of McCaw Communications by AT&T
D.The selling of a license by IBM to Dell computers
7) At the Amarillo Piano Company, the average product of labor stays constant at 5,
regardless of how much labor is employed. This implies that:
A.There are no fixed costs
B.This firm can never maximize its profits
C.The marginal product of labor is constant
D.Labor exhibits diminishing marginal returns
8)
Refer to the labor market diagrams. The case of bilateral monopoly is represented by
Figure:
A.5
B.4
C.2
D.1
9) The economizing problem faced by a society is:
A.To achieve a more equitable distribution of income in the society
B.A consequence of the fact that productive resources are scarce relative to economic
wants
C.To establish prices which are fair for both producers and consumers
D.That product prices often rise more rapidly than incomes of consumers
10) Farm programs such as those maintained by the European Union (EU) and the
United States:
A.Aid developing nations by creating a large market for agriculture
B.Decrease the incomes of farmers in EU nations and in the United States
C.Improve efficiency in the allocation of agricultural resources
D.Distort world trade in agricultural products
11) Venture capital refers to:
A.Equipment and factories
B.Financing for start-ups
C.Entrepreneurs who start businesses
D.Creative destruction in capitalism
12) If the short-run average variable cost of production for a firm is decreasing, then it
follows that:
A.Average variable cost must be above average fixed cost
B.Marginal cost must be below average variable cost
C.Average fixed cost must be constant
D.Marginal cost must be decreasing