1) What are the relative values of price, ATC, and AVC when a monopolist experiences:
a) a profit
b) a loss but continues to produce
c) a loss but ceases production
2)
refer to the above data. if your taxable income increases from $4000 to $5000, you will
encounter a marginal tax rate of:
a.40 percent.
b.25 percent.
c.15 percent.
d.10 percent.
3) A private closed economy will expand when:
A.actual GDP is less than potential GDP.
B.unplanned decreases in inventories occur.
C.aggregate expenditures are less than GDP.
D.unplanned increases in inventories occur.
4) The basic policy-making body in the U.S. banking system is the:
A.Federal Open Market Committee (FOMC).
B.Board of Governors of the Federal Reserve.
C.Federal Monetary Authority.
D.Council of Economic Advisers.
5) The total demand for money curve will shift to the right as a result of:
A.an increase in nominal GDP.
B.an increase in the interest rate.
C.a decline in the interest rate.
D.a decline in nominal GDP.
6) assume the price of product y (the quantity of which is plotted on the vertical axis) is
initially $15 and the price of x (the quantity of which is plotted on the horizontal axis) is
initially $3. assume money income is initially $60. if the prices of y and x now increase
to $30 and $6 respectively and money income increases to $120, then the budget line
will:
a.shift rightward and become steeper.
b.shift rightward and become flatter.
c.shift rightward, but its slope will not change.
d.be unchanged.
7) which of the following is correct?
a.both purely competitive and monopolistic firms are “price takers.”
b.both purely competitive and monopolistic firms are “price makers.”
c.a purely competitive firm is a “price taker,” while a monopolist is a “price maker.”
d.a purely competitive firm is a “price maker,” while a monopolist is a “price taker.”
8)
Refer to the above diagrams, in which AD1 and AS1 are the “before” curves and AD2
and AS2 are the “after” curves. Other things equal, a decline in net exports caused by a
change in incomes abroad is depicted by:
A.panel (A) only.
B.panel (B) only.
C.panel (C) only.
D.panels (B) and (C).
9) Which of the following is the best example of a market failure that would lead a firm
to extract resources at a rate that is faster than the rate that would maximize its
long-term stream of profits?
A.The market price of the resource rises.
B.Weak property rights create fears that firms will not be allowed to extract in the
future.
C.An increase in market interest rates.
D.New information suggests that the demand for the resource will be greater in the
future.
10) Compensating differences in wages:
A.compensate workers for differences in their human capital.
B.are wage differences that compensate for differences in the desirability of jobs.
C.describe the tendency for the wages of all occupations to adjust to the median level.
D.do not exist if jobs have different nonmonetary characteristics.
11)
Refer to the above diagram. Assuming no union or relevant minimum wage, the firm
represented will hire:
A.Q2 workers and pay a W4 wage rate.
B.Q2 workers and pay a W1 wage rate.
C.Q3 workers and pay a W2 wage rate.
D.Q4 workers and pay a W1 wage rate.