uppose that the table below shows the demand and supply schedules for pork bellies.

1. If the workers of a firm successfully negotiate an increase in wages, which of the following is most likely to happen? (Points : 2)
The demand curve for the product the firm produces shifts rightward.
The demand curve for the product the firm produces shifts leftward.
The supply curve of the product the firm produces shifts rightward.
The supply curve of the product the firm produces shifts leftward.2. A tax that is levied on a specific good is called: (Points : 2)
a progressive tax.
an excise tax.
an income tax.
an employment tax.

3. A pay-as-you-go pension system is not viable if: (Points : 2)
the ratio of workers to retirees becomes too high.
the ratio of workers to retirees becomes too low.
the relative sizes of generations do not change too much.
benefits paid out do not exceed revenues.

4. Governments establish the laws that regulate the interaction between businesses and households and also serve as actors in the economy themselves. (Points : 2)
True
False

5. The existence of markets requires that: (Points : 2)
private property rights be allocated and defended by government.
governments guarantee equal treatment for all.
individuals be concerned with the social good.
people have identical wants and desires.

6. Which of the following would most likely generate a positive externality? (Points : 2)
Roller coaster rides
Pollution
Alcoholic beverages
Education

7. The Independent reported in 2004 that “Online music stores such as Apple’s iTunes were seen as a revolution in music sales, with customers turning their backs on CDs to shop online” Based on this report, you can conclude that the introduction of online music stores has shifted: (Points : 2)
the supply curve of CDs to the right.
the supply curve of CDs to the left.
the demand curve of CDs to the right.
the demand curve of CDs to the left.

8. If countries trade on the basis of comparative advantage: (Points : 2)
the production and consumption of each good in each country rises.
the production and consumption of each good in each country falls.
global production and consumption of each good increases.
global production and consumption of each good decreases.

9. Refer to the graph below. At a price of 60 cents per dozen:

(Points : 2)
there is a surplus of 2000 dozen eggs per week.
the market is in equilibrium.
there is a shortage of 3000 dozen eggs per week.
there is a shortage of 2000 dozen eggs per week.

10. Suppose that the table below shows the demand and supply schedules for pork bellies. Based on the table, the equilibrium price of pork bellies is:

(Points : 2)
$0.10/lb.
$0.25/lb.
$0.50/lb.
$0.75/lb.

11. Which of the following is an illustration of the law of increasing opportunity costs? (Points : 2)
As more cars are produced, the opportunity cost of each additional car is greater than for the preceding unit.
As more cars are produced, the opportunity cost of each additional car is less than for the preceding unit.
As more cars are produced, the opportunity cost of each additional car is the same as for the preceding unit.
People pay lower prices for cars the higher the costs of producing cars.

12. A government can finance its budget deficit by doing all of the following except: (Points : 2)
buying bonds.
borrowing from its central bank.
selling bonds.
printing money.

13. The marginal benefit from consuming another unit of a good: (Points : 2)
must equal the marginal cost or the unit will not be consumed.
must exceed the sunk cost or the unit will not be consumed.
is the additional benefit above what you have already derived.
equals the total benefit obtained from the consumption of all prior units.

14. If people begin to favor science fiction novels to a greater degree than previously, the demand curve for science fiction novels: (Points : 2)
shifts rightward.
shifts leftward.
stays constant.
can shift either rightward or leftward.

15. Which of the following questions cannot be answered using a production possibility table? (Points : 2)
What combination of outputs can be produced?
How much less of one output can be produced if more of another output is produced?
What combination of outputs is best?
How much output can be produced from a given level of inputs?

16. Marginal analysis suggests that you will choose to do something if: (Points : 2)
the total benefit is less than the total cost.
the marginal cost exceeds the marginal benefit.
the total benefit exceeds the total cost.
the marginal benefit exceeds the marginal cost.

17. Tiger Woods was an Economics major at Stanford University, but never completed his degree given the millions he was foregoing playing professional golf. Essentially, this means that: (Points : 2)
the opportunity cost of being in college was too great.
the opportunity cost of being in college was too small.
the marginal benefits of college exceeded the marginal benefits of golf.
the marginal benefits of college exceeded the marginal costs of college.

18. Refer to the graph below. If government imposes a minimum wage at _______, there will be a surplus in this market.

(Points : 2)
$3.50
$7.00
$9.20
$10.30

19. The minimum wage law is an example of a price ceiling. (Points : 2)
True
False

20. Ireland has a comparative advantage in producing hops: (Points : 2)
if its opportunity cost of producing hops is higher than the opportunity cost in other countries.
if its opportunity cost of producing hops is the same as the opportunity cost in other countries.
if its opportunity cost of producing hops is lower than the opportunity cost in other countries.
regardless of the opportunity cost in other countries.

21. The use of the phrase “other things equal” in supply and demand analysis indicates that: (Points : 2)
an equilibrium price has been reached.
an equilibrium quantity has been reached.
factors other than the one under consideration are kept constant.
we are considering all the changes which might take place in actual markets.

22. Bond holders: (Points : 2)
lose when actual inflation is less than was expected.
lose when actual inflation is more than was expected.
lose when the expected inflation built into the nominal interest rate is correct.
do not lose when the expected inflation built into the nominal interest rate is lower than actual inflation.

23. Many industries routinely contribute large amounts of money to the election campaigns of politicians. This is likely an example of an attempt to influence: (Points : 2)
economic forces.
political forces.
social forces.
the price mechanism.

24. Which of the following topics would you most likely encounter in a macroeconomics course? (Points : 2)
The choices made by an individual consumer.
The output decision of a firm.
The effect of a tax on the price charged by a firm.
The effect that a change in the money supply has on interest rates.

25. An increase in the quantity of resources: (Points : 2)
shifts the PPC inward.
shifts the PPC outward.
moves the economy to a point higher up on a given PPC.
moves the economy to a point further down a given PPC.

26. Refer to the graph below. Laura’s production possibility curve for math and economics problems in one night is shown in the graph. Her opportunity cost of finishing 6 economics problems instead of 4 economics problems is:

(Points : 2)
1 math problem.
2 math problems.
3 math problems.
4 math problems.

27. Some of our farm fields are being left unused. Does this have any implications for the economy’s PPC diagram? (Points : 2)
No implications, because the PPC deals only with resources in use.
The PPC cannot be drawn if some resources are idle.
With unemployed resources, we are at a point inside the PPC.
The PPC would be upward sloping.

28. If a price ceiling below the equilibrium price is imposed on corn, the likely result will be: (Points : 2)
a lower equilibrium price for corn as the supply curve shifts out.
a higher equilibrium price for corn as the demand curve shifts out.
a shortage of corn as the price ceiling keeps the market from reaching equilibrium.
a surplus of corn as the price ceiling keeps the market from reaching equilibrium.

29. If the economy were not operating below its level of potential output, then there would be no: (Points : 2)
passive deficit.
structural deficit.
deficit at all.
debt.

30. As the price of good X rises, the demand for good Y falls. Therefore, goods X and Y are: (Points : 2)
substitutes.
normal goods.
complements.
inferior goods.

31. Which price ceiling will cause the greatest excess demand?

(Points : 2)
$1
$2
$3
$4

32. The goods market is the market in which: (Points : 2)
businesses buy factors of production from households.
households buy factors of production from businesses.
businesses produce goods and services and sell them to households.
government produces goods and services and supplies them to households.

33. Entrepreneurship is an ability that is most closely related to: (Points : 2)
household spending.
business formation.
consumer sovereignty.
e-commerce.

34. If production is efficient, then: (Points : 2)
it is not possible to produce a given quantity of output at a lower cost.
quantity demanded equals quantity supplied.
firms are earning profits.
income is fairly distributed.

35. The relationship between price and quantity supplied is given by the: (Points : 2)
law of opportunity cost.
law of profit maximization.
law of supply.
law of demand.

36. According to the law of demand, a decrease in the price of baseball trading cards causes: (Points : 2)
an increase in the quantity of trading cards demanded.
a decrease in the quantity of trading cards demanded.
an increase in the scarcity of baseball trading cards.
a greater abundance of baseball trading cards.

37. Refer to the demand curves below. When Hurricane Charley hit Southwest Florida in 2004, many water lines were damaged. Which arrow best captures this impact on the market for bottled water?

(Points : 2)
A
B
C
D

38. Refer to the graph below. Assume the graph reflects demand in the egg market. Which arrow best captures the impact of increased consumer concern about cholesterol on the egg market?

(Points : 2)
A
B
C
D

39. Refer to the graph below. Which arrow shows the effect on the demand for CDs of a decrease in the number of consumers in the market?

(Points : 2)
A
B
C
D

40. Market economies are based upon: (Points : 2)
individual planning and individual good will towards others.
government planning and individual good will towards others.
government planning and private property.
individual self-interest and private property.

41. In the production possibilities framework, economic growth is depicted by: (Points : 2)
a shift inward of the PPC.
a shift outward of the PPC.
the PPC becoming a straight line.
the PPC becoming bowed outward.

42. Assume Nike shoes and Reebok shoes are substitutes. An increase in the price of one (Reebok) will result in: (Points : 2)
A decrease in the quantity demanded of the other (Nike).
A decrease in the demand for the other (Nike).
An increase in the quantity demanded of the other (Nike).
An increase in the demand for the other (Nike).

43. A resource is said to have a comparative advantage if: (Points : 2)
it is more effective in the production of one good than another.
it is equally effective to the production of all goods.
its effectiveness in the production of a good increases as more of that good is produced.
its effectiveness in the production of a good does not change as more of that good is produced.

44. Which of the following characteristics applies more to a market economy than a Soviet-style socialist economy? (Points : 2)
Government ownership of the means of production
Labor allocation by individual choice
Capital allocation by government planning
Government-determined, rather than market-determined, distribution of income

45. If an economy produces on its production possibility curve, it is: (Points : 2)
using its resources efficiently.
using its resources unsustainably.
using its resources equitably.
using its resources inefficiently.

46. Faculty pay $15 per year for a parking permit, but many complain that they are not able to find a parking place in designated university lots. This suggests that: (Points : 2)
the price paid is above equilibrium.
the price paid is below equilibrium.
the price paid is at equilibrium.
the university should make parking free.

47. Refer to the graphs below. A recent report indicates that the device known as the right heart catheter used to diagnose heart conditions poses more risks than previously thought. The effect of the report on the market for right heart catheters is best shown by which of the graphs?

(Points : 2)
I
II
III
IV

48. Which framework directs government to avoid deficits? (Points : 2)
long run
short run
both
neither

49. The opportunity cost of obtaining more of a good is: (Points : 2)
always zero.
always less than zero.
always greater than zero.
measured by its price.

50. Economic reasoning is based on the premise that: (Points : 2)
all decisions or actions are costless.
only non-economic decisions or actions have a cost associated with them.
only economic decisions or actions have a cost associated with them.
all decisions and actions have a cost associated with them.