Q1. If the domestic price of dates in Dateland is lower when compared to the price of dates in other countries, and Dateland decides to join the world market, we would expect:

A. the price of dates will fall for domestic consumers in Dateland

B. Dateland will become an exporter of dates

C. the price for dates will rise for domestic consumers of dates in Dateland

D. both B and C

E. both A and B

Q2. Economic profit is:

A. total revenue minus total cost (including both explicit and implicit costs).

B. the same as accounting profit.

C. accounting profit plus implicit costs.

D. accounting profit minus implicit costs.

E. A and D

Q3. Which of the following statements best describes profit?

A. An accountant considers both implicit costs and explicit costs when calculating profit.

B. An economist considers both implicit and explicit costs when calculating profit.

C. An accountant only considers explicit costs when calculating accounting profit.

D. An accountant only considers implicit costs when calculating accounting profit.

E. Both B and C

Q4. According to microeconomic theory, which of the following statements most accurately describes the behavior of consumers, firms and government in a democratic market economy?

A. Consumers seek to maximize utility, firms seek to maximize sales and government acts in the public good.

B. Consumers seek to maximize utility, firms seek to maximize profits and government acts in the public good.

C. Consumers seek to live minimalist lives, firms seek to "stick it" to consumers and government acts in the public good.

D. Consumers seek to maximize utility, firms seek to maximize profits and government takes action based on the interests of elected officials.

E. None of the above

Q5. Which of the following are predictions from the Median Voter Model?

A. a politician will label their opponent as an extremist in the general election

B. a politician will label themselves as a moderate in the general election

C. a politician will monitor his poll number and his opponent's poll numbers, and adjust his position to increase his poll numbers as needed.

D. a politician will speak in broad terms and provide few specifics out of fear of alienating possible voters

E. all of the above

Q6. When a firm earns zero economic profit, it

A. has not covered all its explicit costs.

B. has not covered all its implicit costs.

C. has earned an accounting profit if implicit costs are positive.

D. should shut down immediately.

E. should continue operating if it can cover its fixed cost.

Q7. The cost of cell phones in the United States drops because cell phone production has now been outsourced to Mexico. Economic theory predicts;

A. Consumer surplus in the U.S. will increase because of the lower price.

B. Producer surplus for the U.S. companies making cell phones in Mexico will increase because of the cost reduction.

C. Workers in Mexico will gain jobs in the cell phone industry, while workers in the U.S. cell phone industry will lose jobs.

D. Politicians in the United States running for president will bemoan the loss of jobs because of outsourcing.

E. All of the above

Q8. When the indifference curve is tangent to the budget constraint,

A. the consumer is likely to be at a sub-optimal level of consumption.

B. income is at its optimum for a consumer.

C. indifference curves are likely to intersect.

D. a consumer cannot be made better off without an increase in her income or a price decrease in one or both of the goods she consumes.

E. none of the above

Q9. The equation for a budget line for Good X and Good Y with PX being the price of Good X, P_Y being the price of Good Y, Q_X being the quantity of good X, and Q_Y being the quantity of Good Y can be written as:

A. P_XQ_X + P_YQ_Y = 1/B

B. P_XQ_X = B + PYQ_Y

C. P_XQ_X + P_YQ_Y = B

D. P_XQ_X/P_YQ_Y = 1 - B

E. none of the above

Q10. One U.S. Senator promises to vote for a measure that another U.S. Senator wants only if the favor is returned in kind. This is an example of:

A. rational ignorance

B. median voter politics

C. public interest talk

D. logrolling

E. None of the above

Q11. Ducksembourg has a comparative advantage in the production of ducks. As a result, when it begins to trade with other countries, it will ____________ ducks. When it does, domestic consumers of ducks (in Ducksembourg) will become ____________ while domestic producers of ducks (in Ducksembourg) become _____________ .

A. export; better off; worse off

B. import; better off; worse off

C. import; worse off; better off

D. import; better off; better off

E. export; worse off; better off

Q12. If the demand curve for a product shifts to the right (perhaps because of an increase in income), which of the following statements will be true?

A. Consumer Surplus for that product will increase, and Producer Surplus will decrease.

B. Consumer Surplus for that product will decrease, and Producer Surplus will decrease.

C. Consumer Surplus for that product will increase, and Producer Surplus will increase.

D. Consumer Surplus for that product will decrease, and Producer Surplus will increase

E. None of the Above

Q13. Which of the following statements is true regarding the imposition of a tariff?

A. Tariffs increase the well being of domestic consumers in the country imposing the tariff.

B. Tariffs increase the well being of domestic producers in the country imposing the tariff.

C. Tariffs decrease the well being of domestic consumers in the country imposing the tariff.

D. Tariffs decrease the well being of domestic producers in the country imposing the tariff.

E. B and C