I-1 1) Macroeconomics is the branch of economics that deals with which of the following topics? A) The behavior of individual consumers
B) Unemployment and interest rates
C) The behavior of individual firms and investors
D) B and C
E) A and C
I-2 2) Which of the following is a normative statement?
A) The taxes paid by the poor should be reduced in order to improve the income distribution in the U.S. B) State governments should not subsidize corporations by training welfare recipients. C) Presidential candidates should not be given funds from the federal government to run campaigns. D) The sea otter should not be allowed to spread into Southern California coastal waters, because it will reduce the value of fisheries. E) all of the above
I-3 3) In a perfectly competitive market:
A) there are a few buyers.
B) there is a single seller.
C) there is a cartel.
D) no single buyer or seller can significantly affect the market price. Answer:
I-4 4) Suppose you are in charge of product pricing and marketing strategy for a pharmaceutical company. You will have greater ability to independently set prices for your product if: A) there are no close substitutes for your product.
B) there are lots of other firms selling closely related products in your market. C) Your pricing policy should not depend on the number of close substitute products. D) none of the above
I-5 5) The "constant dollar" price is:
A) the real price of a good.
B) the nominal price of a good adjusted for inflation.
C) the "current dollar" price adjusted for inflation.
D) all of the above
E) none of the above
I-6 6) The price of a taco was $0.29 in 1970 and $0.99 in 1993. The CPI was 38.8 in 1970 and 144.0 in 1993. The 1993 price of a taco in 1970 dollars is: A) $0.08.
I-7 7) Which of the following is NOT an examples of ways in which microeconomic analysis can help in designing environmental policy? A) Determining the optimal level of vehicle tailpipe emissions standards B) Designing laws to provide incentives for firms to implement clean technologies in new vehicles C) Lobbying consumers and firms to reduce consumption of energy D) Examining the tradeoffs between ecological benefits of environmental legislation and its impacts on consumers' standard of living Answer:
I-8 8) To evaluate the potential impact of changes to its SUV business, Ford Motor Company would use: A) normative economic analysis.
B) positive economic analysis.
C) negative economic analysis.
D) arbitrage analysis.
II-1 9) Which of the following would shift the demand curve for new textbooks to the right? A) A fall in the price of paper used in publishing texts
B) A fall in the price of equivalent used textbooks
C) An increase in the number of students attending college
D) A fall in the price of new textbooks.
II-2 10) Which of the following will NOT cause a shift in the supply of gasoline? A) An increase in the wage rate of refinery workers
B) A decrease in the price of gasoline
C) An improvement in oil refining technology
D) A decrease in the price of crude oil
II-3 11) Sugar can be refined from sugar beets. When the price of those beets falls, A) the demand curve for sugar would shift right.
B) the demand curve for sugar would shift left.
C) the supply curve for sugar would shift right.
D) the supply curve for sugar would shift left.
II-4 12) Assume that steak and potatoes are complements. When the price of steak goes up, the demand curve for potatoes: A) shifts to the left.
B) shifts to the right.
C) remains constant.
D) shifts to the right initially and then returns to its original position. Answer:
II-5 13) As long as the actual market price is less than the equilibrium market price, there will be: A) upward pressure on the market price.
B) no purchases made.
C) downward pressure on the market price.
D) Both A...
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