1. A relatively high base income in a cash assistance program:
A. Reduces the incentive to work
B. Increases incentive to work
C. Does not affect the incentive to work
D. Will reduce the incentive to work through the substitution effect, but will increase the incentive to work through the income effect
2. Which of the following statements about featherbedding is correct?
A. It could increase production costs, resulting in higher prices for products
B. The quantity of labor demanded by firms could actually decrease
C. It could lead to a lower wage and smaller employment in the long run
D. All of the above
3. In 1995, the United States threatened to impose 100% tariffs on ___ from ____ in it didn't lose its protectionist policies.
A. Luxury cars; Japan
B. Auto parts; japan
C. Brandies; France
D. Light trucks; Germany
4. Which of the following is a question answered with positive economic analysis?
A. Should the college reduce tuition for out of state residents?
B. Should the college charger higher tuition for part-time students?
C. If the college increased its eligibility requirements for enrollment, will class sized decline?
D. Should the college eliminate its athletic program to cut is costs?
5. The quantity demanded of a product increases as ___?
A. Consumer income rises
B. The prices of other products fall
C. The price of the product rises
D. The price of the product falls
6. The market demand curve ___.
A. Shows the relationship between the price of a good and the quantity that all consumers together are willing to buy.
B. Is drawn assuming that variable such as income and tastes are variable.
C. Is drawn assuming that the number of consumers is variable
D. Is drawn assuming that the selling price is fixed.
7. Suppose that Victoria and her friends are running a fundraiser by selling donuts. They want to know what will happen to their revenue if they increase the price of each dot form $.80 to $1. What concept do they need to apply to find out their expected revenue?
A. Price elasticity of supply
B. Price elasticity of demand
C. Cross elasticity of demand
D. Income elasticity of demand
8. Which of the following would result from quota imposed on the quantity of cars that can be imported into the United States?
A. An increase in the total surplus
B. An increase in producer surplus
C. An increase in prices for consumer
D. an increase in consumer surplus
9. Assume that Crystal's demand for handbags remains constant, but the price of the handbags increases. Crystal's consumer surplus __?
A. Decreases
B. Increases
C. Remains constant
D. May increase or decrease depending on the amount of the price decrease
10. Assume that production costs rise and demand remains constant. The equilibrium price will ___ and the producer surplus will __.
A. Increase; increase
B. Increase; decrease
C. Decrease; decrease
D. Decrease; increase
11. Utility can be thought of as the same as ___.
A. Opportunity cost
B. Satisfaction
C. Choice
D. None of the above
12. Oligopoly differs from monopoly and perfect competition in that ___.
A. Firms consider other firms actions when choosing price and quantity
B. There are a few firms in the industry
C. Firms act strategically
D. All of the above
13. A minimum wage that is less than the prevailing market wage will ___.
A. Have no effect on the market
B. Increase unemployment
C. Increase wages
D. Reduce wages
14. In order to practice price discrimination, a firm must be in a market such that the consumers in its market ___.
A. Have identical tastes
B. Have identical elasticity of demand
C. Have different elasticity of demand
D. Have the same demand for its product
15. Which of the following statements is true?
A. Free trade will benefit all workers in a nation equally
B. As a result of specialization some workers will be displaced and harmed in the short run by free trade.
C. Free trade leads to lower wages for all workers in both nations
D. Specialization will result in a decline in an industry, and none of those workers will be able to find other jobs.