1) A perfectly elastic demand curve implies that the firm:
A.must lower price to sell more output.
B.can sell as much output as it chooses at the existing price.
C.realizes an increase in total revenue that is less than product price when it sells an
extra unit.
D.is selling a differentiated (heterogeneous) product.
2) The “brain drain” problem in the DVCs refers to the fact that the best-educated
workers:
A.are concentrated in the public, rather than the private, sector.
B.are concentrated in the private, rather than the public, sector.
C.are concentrated in urban, rather than rural, areas.
D.have emigrated from the DVCs to the IACs.
3)
Refer to the diagram where the numerical data show profits in millions of dollars. Beta’s
profits are shown in the northeast corner and Alpha’s profits in the southwest corner of
each cell. If Alpha and Beta agree to a high-price policy through collusion, the
temptation to cheat on that agreement is demonstrated by the fact that:
A.Beta can increase its profit by lowering its price.
B.Beta can increase its profit by increasing its price still further.
C.Both Alpha and Beta can earn even more profits if both agree to a low-price policy.
D.Alpha can increase its profit by reducing its production costs.
4) Revenues flowing to the government from government-run or government-sponsored
businesses, such as public utilities and state lotteries, are known as:
A.proprietary income.
B.transfer payments.
C.tax revenue.
D.subsidies.
5) In 2007 British Airlines and Korean Air were charged with which antitrust violation?
A.Monopoly structure
B.Price fixing
C.Tying contracts
D.Dividing up the market
6) Economic efficiency is the primary guide in answering which of the fundamental
questions in a market economy?
A.What will be produced?
B.How is the output to be produced?
C.How can the system accommodate change?
D.Who is to receive the output?
7)
Refer to the cost table above. If price of the product were $30 per unit, the firm would:
A.Produce 5 units and incur a loss of $50
B.Produce 6 units and incur a loss of $30
C.Produce 7 units and realize a loss of $32
D.Shut down in the short run
8) Answer the question based on the following payoff matrix for a duopoly in which the
numbers indicate the profit from either opening a coffee shop in a small town or not
opening the coffee shop.
Refer to the above table. If both firms choose their strategies simultaneously, then
A.There is no Nash equilibrium for this game.
B.Firm A’s dominant strategy is to open a coffee shop.
C.Firm B’s dominant strategy is to not open a coffee shop.
D.Both firms have a dominant strategy to not open a coffee shop.
9)
Illegal immigrants make up about what percent of all construction workers?
A.17%
B.5%
C.32%
D.53%
10) If the interest rate is 15%, what is the future of value of $10,000 two years from
now?
A.$13,225
B.$225
C.$13,000
D.$7,576
11) Suppose the United States and Brazil produce coffee. Answer the questions based
on the graphs below.
(a)What is the equilibrium price in the United States? Brazil?
(b)What is the equilibrium quantity in United States? Brazil?
(c)Suppose the countries decide to trade. Use the third graph to determine the world
price. Determine which country will export, import, and the quantity that will be traded.
12) All of the following contribute to low investment spending in DVCs except:
A.low rates of saving.
B.inadequacy of public capital goods (infrastructure).
C.political instability.
D.expensive labor.
13) In the case of extraction of a nonrenewable resource, when user costs decrease, then
it implies that expected future profits:
A.Decrease, while the amount of current extraction increases
B.Decrease, and the amount of current extraction decreases
C.Increase, and the amount of current extraction increases
D.Increase, while the amount of current extraction decreases
14) If the provision of medical insurance encourages people to take more health risks
because they know they can receive treatment, then health insurance:
A.Produces an asymmetric information problem
B.Leads to a universal access problem
C.Causes a defensive medicine problem
D.Creates a moral hazard problem
15) The phrase “don’t cry over spilt milk” could be rephrased in economic terms by
saying:
A.”Sunk costs are irrelevant to a decision.”
B.”Real resources have opportunity costs.”
C.”There are economies and diseconomies of scale.”
D.”The law of diminishing returns applies to everything.”