E) No change in the price of the good
10. Other things being equal, which of the following would NOT shift the supply curve for gasoline?
A) A fall in the price of crude oil (from which gasoline is refined)
B) An increase in the price of gasoline.+++++++++++++++++++++++++++++++++++
C) An improvement in refining techniques that allows more gasoline to be squeezed out of a barrel of crude oil
D) An increase in the wages paid to people working in oil refineries
E) A decrease in the wages paid to people working in oil refineries
11. Profit equals:
A) price minus average cost.
B) total revenue minus total cost.
C) total revenue minus average cost.
D) price times quantity.
E) total cost minus total revenue.
12. The ability of a commodity to satisfy the needs of consumers due to some physical or other qualities is called:
A) Consumption value of a commodity
B) Consumer utility
C) Utility maximization principle
D) Marginal utility++++++++++++++++++++++++++++++++++++
E) Satisfactory price
13. Characteristics of curves of indifference
A) The curve laying above and more to the right than other curves, is most preferable.
B) Curves of indifference are convex to the beginning of coordinates;
C) Curves of indifference are never crossed;+++++++++++++++++++++
D) Curves of indifference have a negative inclination;
E) All below listed;
14. What of following expressions represents Marginal costs?
A) ∆TVC: Q
B) ∆TC: ∆Q++++++++++++++++++++++++++++++++++++++++
C) TFC:Q
D) (P Q): ∆Q
E) ∆TFC: Q
15. Diminishing marginal product refers to the fact that:
A) The marginal product of an input decreases as the quantity of the input increases.
B) The marginal product of an input increases as the quantity of the input increases.
C) The marginal product of an input does not change as the quantity of the input increases.
D) Output will increase at an increasing rate as more inputs are hired.
E) The marginal product of an input decreases as the quantity of the input decreases.
16. Which of the following is an appropriate function of government?
A) Making a market less competitive by forcing individuals from the market
B) Redistributing income to make a market outcome more equitable or fair+++++++++++++++++++++++
C) Increasing the level of externalities in the economy
D) Performing central control functions in a market economy
E) Making a market less competitive by forcing firms from the market
17. Suppose more men decided to stay at home to raise their pre-school age children. We would expect:
A) the labor force participation rate for males to decrease.
B) the labor force participation rate for males to remain the same.
C) the impact on the labor force participation rate for males to be unpredictable.
D) the labor force participation rate for males to increase.
E) the labor force participation rate for females to decrease.
18. Intermediate goods and services:
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A) Are counted in gross domestic product (GDP).
B) Are not counted in gross domestic product (GDP) because they have no value to consumers.++++++++++++++++
C) Are not counted in GDP because that would constitute double counting.
D) Are counted in national income but not in gross domestic product (GDP).
E) Are not counted in gross national product (GNP) because they have no value to consumers.
19. Define Kuznets cycles by their duration (trough to trough or peak to peak):
A) 48-60 years
B) 3 years
C) 9-10 years
D) within a year
E) 15-20 years++++++++++++++++++++++
20. The average product of labour characterizes:
A) labour productivity;
B) productivity of the capital;
C)total output;
D) number of workers;+++++++++++++++++++++++
E) tariff rate.
21. A market economy relies on:
A) decentralized choices coordinated by Adam Smith's "invisible hand."++++++++++++++++++++
B) centralized choices coordinated by Adam Smith's "invisible hand."
C) decentralized choices coordinated by the "visible hand" of authority.
D) centralized choices coordinated by the "visible hand" of authority.
E) centralized choices coordinated by the "visible hand" of individuals.
22. Economics is primarily the study of:
A) how society manages its scarce resources.++++++
B) how to operate a business successfully.
C) how to make money in the stock market.
D) the methods that government might use to transform a scarce good into an economic good.
E) how to earn money
23. What ever must be given up to obtain some item is:
A) an explicit cost.
B) an implicit cost
C) a historical cost.
D) an accounting cost.
E) an opportunity cost.++++++
24. A decrease in the price level indicates:
A) that the economy has experienced deflation.+++++++++++++
B) the existence of inflation.
C) a decline in real GDP.
D) that either inflation or deflation may exist.
E) a decline in real GNP.
25. Which of the following variables is the key ingredient in improving the standard of living of the average citizen?
A) low inflation
B) productivity increases++++++++++++++++++++++++++
C) high inflation
D) population growth
E) low unemployment rates
26. A change in which of the following will cause a movement along the supply curve?
A) a change in the state of technology
B) a change in taxes
C) a change in expectations about future prices
D) a change in the price of the good+++++++++++++
E) no change in the price of the good
27. Whenever the price of a good is below the equilibrium price, we know that:
A) a surplus exists.
B) a shortage exists.+++++++++++
C) quantity supplied exceeds quantity demanded.
D) the market is in equilibrium.
E) government interferes the prices.
28. Which of the following is the most likely example of an inferior good?
A) a passenger van
B) an imported beer
C) notebook computers
D) a component stereo system
E) a 20-inch black and white TV+++++++++++
29. To say that a market is in equilibrium implies that:
A) producers are earning a profit.
B) the quantity that buyers are willing and able to buy equals the quantity that sellers are willing and able to sell.++++++++++++++++++++++++++++++++
C) the market allocates goods fairly.
D) the government is not intervening.
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E) the government is intervening.
30. When the price of bananas increases, consumption of apples increases. Which of the following conclusions can be drawn?
A) Bananas are an inferior good compared to apples.
B) The goods are complements.
C) The goods are substitutes.++++++++++
D) The supplies of bananas and apples are interrelated.
E) The goods are not related.
31. For a monopolist:
A) P = MR = MC.
B) P < MR = MC.
C) P > MR = MC.++++++++++++
D) P = MR < MC.
E) P > MR > MC.
32. What is the difficulty with marginal cost pricing?
A) The firm has no incentive to keep costs low.++++++++++++
B) A firm typically earns only economic profit under marginal cost pricing.
C) Once a regulator sets a rate base and an allowable rate of return, it is impossible to calculate the appropriate price.
D) Commissions are typically captured by consumer groups.
E) A firm earns accounting profit under marginal pricing.
33. Price discrimination:
A) is practiced by competitive firms as well as by those with monopoly power.
B) refers to the practice of selling the several good at same prices to different customers.
C) occurs when a company charges a higher price for high-cost goods than for low-cost goods.
D) is always illegal.
E) refers to the practice of selling the same good at different prices to different customers.++++++
32. An increase in the price of a complementary good will result in:
A) an increase in equilibrium price and a decrease in equilibrium quantity of the related good.
B) a decrease in both the equilibrium price and the equilibrium quantity of the related good.+++++++++++++
C) an increase in both the equilibrium price and the equilibrium quantity of the related good.
D) a decrease in equilibrium price and an increase in equilibrium quantity of the related good.
E) no change in the complements and substitutes.
34. A change in which of the following will cause a movement along the supply curve?
A) a change in the state of technology
B) a change in taxes
C) a change in expectations about future prices
D) a change in the price of the good+++++++++++
E) no change in the price of the good
35. Whenever the price of a good is below the equilibrium price, we know that:
A) a surplus exists.
B) a shortage exists.++++++++++
C) quantity supplied exceeds quantity demanded.
D) the market is in equilibrium.
E) government interferes the prices.
36. Which of the following is the most likely example of an inferior good?
A) a passenger van
B) an imported beer
C) notebook computers
D) a component stereo system
E) a 20-inch black and white TV+++++++++++
37. To say that a market is in equilibrium implies that:
A) producers are earning a profit.
B) the quantity that buyers are willing and able to buy equals the quantity that sellers are willing and able to sell.+++++++++++++
C) the market allocates goods fairly.
D) the government is not intervening.
E) the government is intervening.
38. When the price of bananas increases, consumption of apples increases. Which of the following conclusions can be drawn?
A) Bananas are an inferior good compared to apples.
B) The goods are complements.
C) The goods are substitutes.+++++++++++
D) The supplies of bananas and apples are interrelated.
E) The goods are not related.
39. A market economy relies on:
A) Decentralized choices coordinated by the "visible hand" of authority.
B) Decentralized choices coordinated by Adam Smith's "invisible hand."+++++++++++
C) Centralized choices coordinated by the "visible hand" of authority.
D) Centralized choices coordinated by the "visible hand" of individuals.
E) Centralized choices coordinated by Adam Smith's "invisible hand."
40.An increase in the price of a complementary good will result in:
A) An increase in both the equilibrium price and the equilibrium quantity of the related good.
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B) An increase in equilibrium price and a decrease in equilibrium quantity of the related good.++++++++++
C) A decrease in both the equilibrium price and the equilibrium quantity of the related good.
D) No change in the complements and substitutes.
E) A decrease in equilibrium price and an increase in equilibrium quantity of the related good.
41. Define Kondratiev cycles by their duration:
A) 3 years
B) 48-60 years++++++++++++++++
C) within a year
D) 9-10 years
E) 15-20 years
Inflation refers to:
A) an increase in some prices in the economy.
B) an increase in the overall level of prices in the economy.++++++++++++++++++++++
C) a continuing fluctuation in the overall level of prices in the economy.
D) a persistent increase in the amount of goods, which can be purchased with a given amount of money.
E) an decrease in all prices in the economy.
As output increases, we know that:
A) Fixed costs decline.
B) Marginal cost first increase than decreases.
C) Total costs decline.
D) Average variable costs decline.
E) Average fixed costs decline.++++++++++++++++++++++++++++++++
A monopoly may arise for which of the following reasons?
A) Too many buyers
B) Firms can only produce a similar product
C) Government antitrust laws
D) A lot of people own a key resource
E) A single firm owns a key resource++++++++++++++++++++++++++
When the price of bananas increases, consumption of apples increases. Which of the following conclusions can be drawn?
A) Bananas are an inferior good compared to apples.
B) The goods are complements.
C) The goods are substitutes.++++++++++++++++++++
D) The supplies of bananas and apples are interrelated.
E) The goods are not related.
Suppose the price of cigarettes increases. If the demand for cigarettes is price inelastic, then the revenue of the cigarette industry will:
A) Increase.+++++++++++++++++++++++++
B) Decrease.
C) Remain unchanged.
D) Decrease initially, but then increase as people get used to the higher prices.
E) Change in an unpredictable way.
Income elasticity determines whether goods are:
A) Price elastic or not.
B) Elastic or inelastic.
C) Individual or collective.
D) Substitutes or complements.
E) Normal or inferior.+++++++++++++++++++++++
The one word that best describes elasticity is:
A) Income.
B) Price.
C) Responsiveness.++++++++++++++++++++++++++++++
D) Reaction
E) Contraction
The price elasticity of demand will tend to be higher for goods with more substitutes because:
A) Goods with many substitutes tend to be inexpensive.
B) As the price of substitutes rises, the quantity demanded will increase greatly.
C) Buyers can buy alternatives to the good in question.++++++++++++++++++++++
D) The cross-price elasticity of demand will be low.
E) Buyers can never buy alternatives to the good in question.
A change in which of the following will cause a movement along the supply curve?
A) A change in the state of technology++++++++++++++++++++
B) A change in taxes
C) A change in expectations about future prices
D) A change in the price of the good
E) No change in the price of the good
Price discrimination:
A) Is practiced by competitive firms as well as by those with monopoly power.
B) Refers to the practice of selling the several good at same prices to different customers.
C) Occurs when a company charges a higher price for high-cost goods than for low-cost goods.+++++++
D) Is always illegal.
E) Refers to the practice of selling the same good at different prices to different customers.
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A decrease in the price level indicates:
A) That the economy has experienced deflation.+++++++++++++++++++
B) The existence of inflation.
C) A decline in real GDP.
D) That either inflation or deflation may exist.
E) A decline in real GNP.
Profit equals:
A) price minus average cost.
B) total revenue minus total cost.++++++++++++++++++++
C) total revenue minus average cost.
D) price times quantity.
E) total cost minus total revenue.
The ability of a commodity to satisfy the needs of consumers due to some physical or other qualities is called:
A) Consumption value of a commodity
B) Consumer utility+++++++++++++++++
C) Utility maximization principle
D) Marginal utility
E) Satisfactory price
The price elasticity of demand will tend to be higher for goods with more substitutes because:
A) goods with many substitutes tend to be inexpensive.
B) as the price of substitutes rises, the quantity demanded will increase greatly.
C) buyers can buy alternatives to the good in question.+++++++++++++++++++
D) the cross-price elasticity of demand will be low.
E) buyers can never buy alternatives to the good in question.
Costs which represent additional general costs at increase in volume of production at unit, refer to:
A) Marginal costs++++++++++++++++++++
B) Average costs
C) Full costs
D) Constant costs
E) There is no right answer
Characteristics of curves of indifference
A) The curve laying above and more to the right than other curves, is most preferable.
B) Curves of indifference are convex to the beginning of coordinates;++++++++++++++++++++
C) Curves of indifference are never crossed;
D) Curves of indifference have a negative inclination;
E) All below listed;
What of following expressions represents Marginal costs?
A) ∆TVC: Q
B) ∆TC: ∆Q+++++++++++++++++++++++++++++
C) TFC:Q
D) (P Q): ∆Q
E) ∆TFC: Q
The difference between the amount a seller is paid for a good and the cost of producing that good is known as:
A) net social cost.
B) producer surplus.
C) consumer surplus.+++++++++++
D) total utility.
E) net surplus of the market.
Producer surplus is measured as:
A) the area above the supply curve and below the market price.
B) the area below the supply curve and above the market price.++++++++++++++
C) the area lying above the market price, as bounded by the supply curve.
D) the area below the supply curve and above the market price as long as the market is in an equilibrium position.
E) the area above the supply curve and below the demand curve.
A perfectly competitive firm is producing notebooks for $1.00 each. If the firm produces 1,200 notebooks, its total revenue will be:
A) $12,000.
B).$12
C) $120.
D) $1,200++++++++++++++++++++++++++
E) 10 cents.
Suppose that nominal GDP is $6,000 and real GDP is $3,000. What is the GDP price deflator?
A) 150
B) 125
C) 200++++++++++++++++++++++++++++++++++++++++++++++++++++
D) 250
E) 300.
The purchase of final goods and services by households is called:
A) investment.
B) consumption.++++++++++++++++++++++++++++
C) public sector expenditure.
D) net exports.
E) outflow.
Investment is the purchase of capital equipment, inventories, and:
A) structures.+++++++++++++++++++++++
B) nondurable goods.
C) depreciation.
D) import investment.
E) appreciation.
A monopoly may arise for which of the following reasons?
A) Too many buyers
B) Firms can only produce a similar product
C) Government antitrust laws
D) A lot of people own a key resource
E) A single firm owns a key resource+++++++++++++++++++++++++++++++
Whenever the price of a good is below the equilibrium price, we know that:
A) the market is in equilibrium.
B) a surplus exists.
C) a shortage exists.+++++++++++++++++++++
D) government interferes the prices.
E) quantity supplied exceeds quantity demanded.
Suppose Joe's Pizzeria would have to pay a wage of $8 per hour to hire an additional employee. If hired, the employee would generate $9 of revenue per hour. In this case, Joe's should:
A) Hire the extra employee as this will increase its profits.+++++++++++++++++++++++++++
B) Not hire the extra employee because employing them would decrease Joe's profits.
C) Not hire the extra employee as profits will only increase by $1, but the extra employee will cost $8 per hour to hire.
D) Be indifferent about hiring the extra employee because profits at Joe's will not change if the extra employee is hired.
E) Hire the extra employee as this will increase employment level.
Suppose that nominal GDP is $6,000 and real GDP is $3,000. What is the GDP price deflator?
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A) 150
B) 125
C) 200++++++++++++++++++++++++
D) 250
E) 300.
The purchase of final goods and services by households is called:
A) Investment.
B) Consumption.+++++++++++++++++++++++++++++
C) Public sector expenditure.
D) Net exports.
E) Outflow.
Investment is the purchase of capital equipment, inventories, and:
A) Structures.+++++++++++++++++
B) Nondurable goods.
C) Depreciation.
D) Import investment.
E) Appreciation.
Gross domestic product:
A) Is the market value of all final goods and services produced within a country in a given period (usually a year).++++++++++++++++++++++++++++++++++++
B) Is the income in the hands of individuals after deducting income taxes; income available to households to spend.
C) Is the value of goods and services purchased by all levels of government -federal, state, and local - in a given period.
D) Is the market value of all final goods and services produced by permanent residents of a nation in a given time period.
E) Is the market value of all final goods and services produced by citizens of a nation in a given time period.
A shortage will occur if:
A) A price ceiling is set above the equilibrium price.
B) A price floor is set below the equilibrium price.
C) A price floor is set above the equilibrium price.
D) A price ceiling is set below the equilibrium price.++++++++++++++++++
E) A price floor is at the equilibrium price.
Jason has just received his bachelor's degree in finance. He is now comparing the costs and benefits of getting a master's degree with working at a full-time job. This is an example of:
A) Increasing cost.
B) Decreasing the cost
C) Thinking at the margin.
D) Irrational behavior.
E) The law of diminishing returns.
The "invisible hand" that Adam Smith writes about as coordinating economic activity is:
A) man's natural affinity for his fellow-man
B) The government
C) The pricing system
D) Foreign trade
E) God
A price ceiling is:
A) A price set by government that varies with market conditions.
B) A legal maximum price at which a good can be sold.
C) A legal minimum price at which a good can be sold.
D) A price set by sellers that vary with market conditions.
E) Typically equal to the equilibrium price of a good.
National saving is composed of:
A) Private saving and public saving.+++++++++++++++++++++++++++++++
B) Public saving and government deficits.
C) Private saving and government surpluses.
D) Private saving, public saving, and government surpluses.
E) Private saving, public saving, and government deficits.
Scarcity is the result of:
A) An unfair distribution of income.
B) Taxes that is too low.
C) A fair distribution of income.
D) Taxes those are too high.
E) Too few resources to satisfy society's desires.+++++++++++++++++++++++
Diminishing marginal product refers to the fact that:
A) The marginal product of an input decreases as the quantity of the input increases.+++++++++++
B) The marginal product of an input increases as the quantity of the input increases.
C) The marginal product of an input does not change as the quantity of the input increases.
D) Output will increase at an increasing rate as more inputs are hired.
E) The marginal product of an input decreases as the quantity of the input decreases.
Which of the following is an appropriate function of government?
A) Making a market less competitive by forcing individuals from the market
B) Redistributing income to make a market outcome more equitable or fair++++++++++++++++
C) Increasing the level of externalities in the economy
D) Performing central control functions in a market economy
E) Making a market less competitive by forcing firms from the market
Suppose more men decided to stay at home to raise their pre-school age children. We would expect:
the labor force participation rate for males to decrease.
the labor force participation rate for males to remain the same.
the impact on the labor force participation rate for males to be unpredictable.
the labor force participation rate for males to increase.
E) the labor force participation rate for females to decrease.++++++++++++++++++++++
Intermediate goods and services:
A) Are counted in gross domestic product (GDP).
B) Are not counted in gross domestic product (GDP) because they have no value to consumers.+++++++
C) Are not counted in GDP because that would constitute double counting.
D) Are counted in national income but not in gross domestic product (GDP).
E) Are not counted in gross national product (GNP) because they have no value to consumers.
Define Kuznets cycles by their duration (trough to trough or peak to peak):
A) 48-60 years
B) 3 years
C) 9-10 years
D) within a year
E) 15-20 years++++++++++++++++++++++++++++++++
When the price of bananas increases, consumption of apples increases. Which of the following conclusions can be drawn?
A) Bananas are an inferior good compared to apples.
B) The goods are complements.
C) The goods are substitutes.++++++++++++++++++++++++++++++++++++
D) The supplies of bananas and apples are interrelated.
E) The goods are not related.
Economics is primarily the study of:
A) how society manages its scarce resources.++++++++++++++++++++
B) how to operate a business successfully.
C) how to make money in the stock market.
D) the methods that government might use to transform a scarce good into an economic good.
E) how to earn money
What ever must be given up to obtain some item is:
A) an explicit cost.
B) an implicit cost
C) a historical cost.
D) an accounting cost.
E) an opportunity cost.+++++++++++++++++++
A decrease in the price level indicates:
A) that the economy has experienced deflation.+++++++++++++++++++++++
B) the existence of inflation.
C) a decline in real GDP.
D) that either inflation or deflation may exist.
E) a decline in real GNP.
