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Economics 561 MCQs

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Question;1) Suppose that in the clothing market, production costs have fallen, but the equilibrium price and quantity purchased have both increased. Based on this information you can conclude that A. the supply of clothing has grown faster than the demand for clothing B. demand for clothing has grown faster than the supply of clothing C. the supply of and demand for clothing have grown by the same proportion D. there is no way to determine what has happened to supply and demand with this information 2) Camille's Creations and Julia's Jewels both sell beads in a competitive market. If at the market price of $5, both are running out of beads to sell (they can't keep up with the quantity demanded at that price), then we would expect both Camille's and Julia's to: A. yyyy their price and reduce their quantity supplied B. raise their price and increase their quantity supplied C. lower their price and reduce their quantity supplied D. lower their price and increase their quantity supplied 3) In which of the following industries are economies of scale exhausted at relatively low levels of output? A. Aircraft production B. Automobile manufacturing C. Concrete mixing D. Newspaper printing 4) The average cost curves (AVC and ATC) should be minimized A. where MC = ATC and MC = AVC B. where FC = ATC and FC = AVC C. where TC starts to increase at a faster rate D. where ATC = AVC 5) If the wage rate increases, A. a purely competitive producer will hire less labor, but an imperfectly competitive producer will not B. an imperfectly competitive producer will hire less labor, but a purely competitive producer will not C. a purely competitive and an imperfectly competitive producer will both hire less labor D. an imperfectly competitive producer may find it profitable to hire either more or less labor 6) The real wage will rise if the nominal wage A. falls more rapidly than the general price level B. increases at the same rate as labor productivity C. increases more rapidly than the general price level D. falls at the same rate as the general price level 7) Construction workers frequently sponsor political lobbying in support of greater public spending on highways and public buildings. One reason they do this is to A. restrict the supply of construction workers B. increase the elasticity of demand for construction workers C. increase the demand for construction workers D. increase the price of substitute inputs 8) Paying an above-equilibrium wage rate might reduce unit labor costs by A. permitting the firm to attract lower-quality labor B. increasing the cost to workers of being fired for shirking C. increasing voluntary worker turnover D. increasing the supply of labor 9) A good real-world example of monopolistic competition is A. lawyers B. gas stations C. Time Warner Cable D. groceries stores 10) An industry comprising a small number of firms, each of which considers the potential reactions of its rivals in making price-output decisions, is called A. monopolistic competition B. oligopoly C. pure monopoly D. pure competition11) Price is constant or given to the individual firm selling in a purely competitive market becauseA. the firm's demand curve is downward slopingB. of product differentiation reinforced by extensive advertisingC. each seller supplies a negligible fraction of total supplyD. there are no good substitutes for its product12) The most important pricing strategy for a perfectly competitive firm isA. minimizing costB. maximizing salesC. product differentiationD. advertising13) Which of the following is a nonprice barrier of entry?A. Huge sunk costB. DiscountsC. Product differentiationD. Advertising14) A third-degree price discrimination can be applied to which of the following market structures?A. A monopolyB. An oligopolyC. A monopolistic competitionD. A perfect competition15) Investing in R&D is more likely to occur in markets whereA. firms have monopoly power protected by regulatory barriersB. markets are closely competitive markets with close to zero economic profitsC. markets are oligopoly markets with strong collusion agreementsD. markets are monopolistic competitive markets16) All economies of scale are achieved at the minimum ofA. average total costB. total costC. average variable costD. average fixed cost17) Inflation is undesirable because itA. arbitrarily redistributes real income and wealthB. invariably leads to hyperinflationC. usually is accompanied by declining real GDPD. reduces everyone?s standard of living in the same proportion18) An economy?s aggregate demand curve shifts leftward or rightward by more than changes in initial spending because of theA. net export effectB. wealth effectC. real-balances effectD. multiplier effect19) Suppose productivity rises in a particular economy, but wages stay the same. Other things equal,A. the demand curve will shift leftwardB. the supply curve will shift rightwardC. the supply curve will shift leftwardD. expenditures curve will shift rightward20) If personal taxes were decreased and resource productivity increased simultaneously, the equilibriumA. output would riseB. output would fallC. price level would necessarily fallD. price level would necessarily rise21) Expansionary fiscal policy is so named because itA. involves an expansion of the nation's money supplyB. can only be attained by expanding government consumptionC. is aimed at achieving greater price stabilityD. can motivate an expansion of real GDP22) Suppose the price level is fixed, the MPC is.5, and the GDP gap is a negative $100 billion. To achieve full-employment output (exactly), government shouldA. increase government expenditures by $100 billionB. increase government expenditures by $50 billionC. reduce taxes by $50 billionD. reduce taxes by $200 billion23) GDP understates the value of output produced by an economy because itA. includes transactions that do not take place in organized markets, such as home cooked mealsB. includes environmental degradation caused by increased output productionC. excludes value added from the underground economy, such as tips taken under the tableD. excludes the value of the wages and benefits of government employee24) Other things equal, a decrease in the real interest rate willA. shift the investment demand curve to the rightB. shift the investment demand curve to the leftC. move the economy upward along its existing investment demand curveD. move the economy downward along its existing investment demand curve25) Other things equal, a decrease in corporate income taxes willA. decrease the market price of real capital goodsB. have no effect on the location of the investment demand curveC. shift the investment demand curve to the rightD. shift the investment demand curve to the left26) Inflation in U.S. prices will causeA. an increase in the demand for U.S. dollars and an appreciation in the exchange rateB. an increase in the supply of U.S. dollars and a depreciation in the exchange rateC. a decrease in the demand for U.S. dollars and a depreciation in the exchange rateD. a decrease in the supply of U.S. dollars and an appreciation in the exchange rate27) The quantity theory of money states thatA. the money supply divided by the velocity of money equals the price level divided by real outputB. the money supply times the velocity of money equals the price level times real outputC. the money supply times the price level equals real output divided by the velocity of moneyD. the money supply times the price level equals real output times the velocity of money28) Suppose that U.S. prices rise 4% over the next year while prices in Mexico rise 6%. According to the purchasing power parity theory of exchange rates, what should happen to the exchange rate between the dollar and the peso?A. The dollar should depreciate.B. The peso should appreciate.C. The peso should depreciate.D. The dollar will be revalued.29) A rise in the domestic interest rate leads to capitalA. outflows and exchange rate appreciationB. outflows and exchange rate depreciationC. inflows and exchange rate depreciationD. inflows and exchange rate appreciation30) A firm under monopolistic competition will earnA. a positive economic profit as it has some monopoly powerB. zero economic profit as it sets P = MCC. zero economic profit as its P = ATCD. a positive economic profit as it sets MC = MR

 

Paper#57464 | Written in 18-Jul-2015

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