1) Answer the question based on the following information. Normal University has
found it necessary to institute a crime-control program on its campus to deal with the
high costs of theft and vandalism. The university is now considering several alternative
levels of crime control. This table shows the expected annual costs and benefits of these
alternatives.
Refer to the above information. Based on cost-benefit analysis, Normal University
should undertake
A.Two
B.Three
C.Four
D.Five
2) Which is a valid counter-argument to the infant industry argument for protective
tariffs?
A.It results in too many benefits for domestic firms that export goods and services
B.It is difficult to determine which infant industries will become mature industries with
a comparative advantage
C.The objective would be better achieved through strategic trade policy
D.The objective would be better achieved by import quotas and nontariff barriers
3)
Refer to the above table, which shows the ranked preferences of voters for three
alternative projects, with “1” being the top preference. In a paired-choice vote between
a stadium and a park:
A.A majority of the voters would favor the park, 2-to-1
B.A majority of the voters would favor the stadium, 2-to-1
C.A majority of the voters would favor the park, 3-to-0
D.A majority of the voters would favor the stadium, 3-to-0
4) Which would be an implicit cost for a firm? The cost:
A.Of worker wages and salaries for the firm
B.Paid for leasing a building for the firm
C.Paid for production supplies for the firm
D.Of wages foregone by the owner of the firm
5) The two basic markets shown by the simple circular flow model are:
A.capital goods and consumer goods.
B.free and controlled.
C.product and resource.
D.household and business.
6) A required element for specialization to lead to an increase in the satisfaction of
society’s wants is:
A.A capitalist economy
B.Exchange and trade
C.The use of money
D.A central plan
7) Other things equal, the optimal quantity of immigrants will be greater, the:
A.higher the unemployment rate in the destination nation.
B.greater the degree of substitutability between immigrant and domestic-born workers.
C.greater the degree of complementarity between immigrant and domestic-born
workers.
D.lower the rate at which immigrants can be absorbed.
8)
Refer to the above graph of a hypothetical market for health care. The efficiency loss
caused by the provision of health insurance covering four-fifths of the cost is given by
the area:
A.egf
B.edc
C.eab
D.cdab
9) The “laissez-faire perspective” in antitrust policy strongly espouses in the following
beliefs, except:
A.Competition among firms is a battle for dominance
B.The focus of antitrust policy should be on market structure rather than behavior
C.Competition and creative destruction could lead to monopolies
D.Monopoly pricing and profits create incentives for firms that are economically
beneficial
10) The so-called Euro Zone refers to:
A.All members of the European Union
B.The EU nations that have adopted a common currency
C.The combined Eastern and Western Europe
D.Nations in Europe where the U.S. has military bases
11) Suppose that, when producing 10 units of output, a firm’s AVC is $22, its AFC is $5,
and its MC is $30. This firm’s:
A.ATC is $35.
B.ATC is $57.
C.total cost is $270.
D.total cost is $30.
12) One important consequence of the self-serving bias is that:
A.Some people cannot correct a personal trait that might be causing them to fail in
many ventures
B.Someone could persist in pursuing a failed policy despite overwhelming evidence of
the failure
C.Bad decisions can be made because people will act without pausing to see whether
their intuition is correct or not
D.Some people may wrongly believe in their forecasting ability to predict future
outcomes of risky investments
13) The Trade Adjustment Assistance Act of 2002 focused mainly on assisting:
A.U.S. firms to establish export markets around the world
B.Other nations to become familiar with, and adjust to, U.S. products
C.Workers displaced by imports or plant relocations abroad
D.Businesses who wish to globalize and compete in the world market
14) A news story states that “DVDs lose their appeal as consumers switch to online
streaming for movies.” In a competitive market for DVDs, this situation would lead to
a(n):
A.Increase in the price and the quantity sold of DVDs
B.Decrease in the price and the quantity sold of DVDs
C.Increase in the price and a decrease in the quantity sold of DVDs
D.Decrease in the price and an increase in the quantity sold of DVDs
15) In using exchange controls, a nation attempts to eliminate a balance of payments
deficit by:
A.Limiting its imports to the dollar value of its exports
B.Decreasing the nation’s domestic price level
C.Limiting its exports to the dollar value of its imports
D.Appreciating the value of its currency
16)
Refer to the diagram. The firm will produce at a loss if price is:
A.less than P1
B.P2
C.P3
D.P4
17) A trade deficit for the United States is generally financed by:
A.Lending to the Federal government
B.Borrowing from the Federal government
C.Buying securities or assets from other nations
D.Selling securities or assets to other nations
18) Assume a firm closes down in the short run and produces no output. Under these
conditions:
A.TVC is positive, but TFC and TC are zero.
B.TFC is positive, but TVC and TC are zero.
C.TFC and TC are positive, but TVC is zero.
D.TFC, TVC, and TC will all be positive.