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Question;1) An economist who is studying the;relationship between the money supply, interest rates, and the rate of;inflation is engaged in;A. microeconomic research;B.;macroeconomic research;C. theoretical research, because;there is no data on these variables;D. empirical research, because there;is no economic theory related to these variables;2) A basic difference between;microeconomics and macroeconomics is that microeconomics;A. focuses on the choices of;individual consumers, while macroeconomics considers the behavior of large;businesses;B. focuses on financial reporting by;individuals, while macroeconomics focuses on financial reporting by large firms;C.;examines the choices made by individual participants in an economy, while;macroeconomics considers the economy's overall performance;D. focuses on national markets;while macroeconomics concentrates on international markets;3) The distinction between supply;and the quantity supplied is best made by saying that;A. the quantity supplied is;represented graphically by a curve and supply as a point on that curve;associated with a particular price;B.;supply is represented graphically by a curve and the quantity supplied as a;point on that curve associated with a particular price;C. the quantity supplied is in;direct relation with prices, whereas supply is in inverse relation;D. the quantity supplied is in;inverse relation with prices, whereas supply is in direct relation;4) After several years of slow;economic growth, world demand for petroleum began to rise rapidly in the 1990s.;Much of the increase in demand was met by additional supplies from sources;outside the Organization of Petroleum Exporting Countries (OPEC). OPEC, during;this time, was unable to restrain output among members in its effort to lift;oil prices. What best describes these events?;A. The rise in demand shifted the;demand for oil to the right. OPEC actions shifted the demand for oil back to;the left.;B. The rise in demand shifted the;demand for oil to the right. As price rose, the supply of oil also rose.;C.;The rise in demand shifted the demand for oil to the right. As price rose, the;quantity of oil supplied rose.;D. The rise in demand reflects a;movement down along the demand curve as supply shifted to the right when suppliers;produced more oil.;5) Price elasticity of demand is;the;A. change in the quantity of a good;demanded divided by the change in the price of that good;B. change in the price of a good;divided by the change in the quantity of that good demanded;C. percentage change in price of;that good divided by the percentage change in the quantity of that good;demanded;D.;percentage change in quantity demanded of a good divided by the percentage;change in the price of that good;6) If average movie ticket prices;rise by about 5 percent and attendance falls by about 2 percent, other things;being equal, the elasticity of demand for movie tickets is about;A. 0.0;B. 0.4;C. 0.6;D.;2.5;7) When labor is the variable input;the average product equals the;A. marginal product divided by the;number of workers;B. marginal product multiplied by;the number of workers;C. number of workers divided by the;quantity of output;D.;quantity of output divided by the number of workers;8) The increase in output obtained;by hiring an additional worker is known as;A.;the average product;B. the marginal product;C. the total product;D. value added;9) Which of the following is the;best example of a long-run decision?;A.;An automobile manufacturing company is considering whether or not to invest in;robotic equipment to develop a more cost-effective production technique.;B. An automobile manufacturing;company is considering whether or not to expand its existing workforce, while;keeping the same factory and equipment.;C. A business consulting firm is considering;whether or not to hire interns to assist with research and data processing.;D. A business consulting firm is;considering whether or not to add new computers while maintaining the same;number of employees.;10) Other things being equal, when;average productivity falls;A. average fixed cost must rise;B.;marginal cost must rise;C. average total cost must rise;D. average variable cost must rise;11) According to economist Colin;Camerer of the California Institute of Technology, many New York taxi drivers;decide when to finish work by setting an income goal for themselves. If this is;true, then on busy days when the effective hourly wage is higher, taxi drivers;will;A. work the same number of hours as;they will on slower days;B.;work fewer hours than they will on slower days;C. work more hours than they will on;slower days;D. not work any hours;12) A firm's demand for labor is;derived from the;A. opportunity costs associated with;labor and leisure;B. desires and needs of the;entrepreneur;C. cost of labor inputs;D.;demand for its output;13) Owen runs a delivery business;and currently employs three drivers. He owns three vans that employees use to;make deliveries, but he is considering hiring a fourth driver. If he hires a;fourth driver, he can schedule breaks and lunch hours so all three vans are in;constant use, allowing him to increase deliveries per day from 60 to 75. This;will cost an additional $75 per day to hire the fourth driver. The marginal;cost per delivery of increasing output beyond 60 deliveries per day;A. is $0 because Owen does not have;to purchase another van;B. is $5;C. is $75;D. cannot be calculated without knowing;Owen's total fixed costs;14) Expected economic profit per;unit is equal to;A. expected price;B. expected average total cost;C.;the difference between expected average price and expected average total cost;D. the difference between expected;total revenue and expected total cost;15) If a firm in a perfectly;competitive market experiences a technological breakthrough;A. other firms would find out about;it eventually;B.;other firms would find out about it immediately;C. other firms would not find out;about it;D. some firms would find out about;it, but others would not;16) A significant difference between;monopoly and perfect competition is that;A. free entry and exit is possible;in a monopolized industry, but impossible in a competitive industry;B.;competitive firms control market supply, but monopolies do not;C. the monopolist's demand curve is;the industry demand curve, while the competitive firm's demand curve is;perfectly elastic;D. profits are driven to zero in a;monopolized industry, but may be positive in a competitive industry.;17) A monopoly firm is different;from a competitive firm in that;A. there are many substitutes for a;monopolist's product while there are no substitutes for a competitive firm's;product;B. a monopolist's demand curve is;perfectly inelastic while a competitive firm's demand curve is perfectly;elastic;C.;a monopolist can influence market price while a competitive firm cannot;D. a competitive firm has a U-shaped;average cost curve while a monopolist does not;18) The difference between a;perfectly competitive firm and a monopolistically competitive firm is that a;monopolistically competitive firm faces a;A. horizontal demand curve and price;equals marginal cost in equilibrium;B.;horizontal demand curve and price exceeds marginal cost in equilibrium;C. downward-sloping demand curve and;price equals marginal cost in equilibrium;D. downward-sloping demand curve and;price exceeds marginal cost in equilibrium;19) As long as marginal cost is;below marginal revenue, a perfectly competitive firm should;A.;increase production;B. hold production constant;C. decrease production;D. reconsider past production;decisions;20) Because a monopolistic;competitor has some monopoly power, advertising to increase that monopoly power;makes sense as long as the marginal;A. benefit of advertising is;positive;B. cost of advertising is positive;C.;benefit of advertising exceeds the marginal cost of advertising;D. cost of advertising exceeds the;marginal benefit of advertising;21) In the Flint Hills area of;Kansas, proposals to build wind turbines to generate electricity have pitted;environmentalist against environmentalist. Members of the Kansas Sierra Club;support the turbines as a way to reduce fossil fuel usage, while local chapters;of the Nature Conservancy say they will befoul the landscape. The Sierra Club;argues that wind turbines;A. are a source of negative;externalities;B.;reduce negative externalities elsewhere in the economy;C. create a free-rider problem;D. are a way of solving a free-rider;problem;22) When negative externalities are;present, market failure often occurs because;A;the marginal external cost resulting from the activity is not reflected in the;market price;B. the marginal external cost;resulting from the activity is reflected in the market price;C. the existence of imports from;foreign countries takes jobs and income away from U.S. citizen;D. consumers will consume the good;at a level where their individual marginal benefits exceed the marginal costs;borne by the firm producing the good;23) A merger between a textile mill;and a clothing manufacturing company would be considered a;A. horizontal merger;B.;vertical merger;C. conglomerate merger;D. diagonal merger;24) A merger between a baby food;company and a life insurance company would be considered a;A. horizontal merger;B. vertical merger;C.;conglomerate merger;D. diagonal merger;25) From the point of view of;consumer and producer surplus, what problem may be created when a country;subsidizes the cost of energy to consumers to help alleviate the burden of;higher energy costs?;A. It hurts the poor and benefits;the rich.;B. It leads to less fuel being used;than the amount that maximizes consumer surplus.;C.;It encourages the consumption of too much fuel at the expense of other goods.;D. It has no effect, consumers gain;a surplus, but taxpayers lose the same amount because they must finance the;subsidy.;26) Suppose people freely choose to;spend 40 percent of their income on health care, but the government decides to;tax 40 percent of a person's income to provide the same level of coverage as;before. What can be said about deadweight loss in each case?;A. Taxing income results in;deadweight loss, while purchasing health care on one's own does not result in;deadweight loss.;B.;Taxing income results in less deadweight loss, because government knows better;what health care coverage is good for society.;C. There is no difference because;the goods are purchased in the market in either case.;D. There is no difference because;the total spending remains the same and the health care purchased remains the;same.;27) The U.S. textile industry is;relatively small because the US imports most of its clothing. A clear result of;the importation of clothing is;A.;there is less variety available than there would be without imports;B. the quality of clothing is lower;than it would be without imports;C. the price of clothing is higher;than it would be without imports;D. the price of clothing is lower;than it would be without imports;28) Countries can expect to gain;from international trade as long as they;A. keep production diversified;B.;specialize according to their comparative advantage;C.;produce only those goods for which they have a relatively high opportunity cost;D. use trade restrictions to reduce;competition for domestic producers;29) Which of the following is an;example of the law of one price?;A. Exchange rates tend to have equivalent;values. For example, one Italian lire equals one U.S. dollar.;B.;Because people have essentially the same basic needs wherever they live, they;tend to buy the same bundle of goods.;C. Because wages are so much lower;in China, eventually all U.S. jobs will be outsourced to China, leaving the US;to import all goods at one price.;D. Because their countries have;similar institutions, the price paid for a computer in Germany and the United;States are about the same when converted into the same currency.;30) The fact that U.S. managers;salaries are substantially greater than those of comparable managers in Japan;may be related to;A. an increase in the demand for;CEOs;B. an increase in the supply of CEOs;C. the comparatively greater;competitive markets in Japan;D. the greater number of public;goods provided in the United States


Paper#55323 | Written in 18-Jul-2015

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