.....INTRODUCTION TO ECONOMICS............

Question 1

Microeconomics concepts can help you make better personal decisions. For example, which of these tools might be useful when deciding whether to buy an energy-efficient refrigerator or one without energy features?

Don’t Know

Price elasticity

Fiscal Policy

Net present value

Question 2

When his software company started to lose money, the CEO’s solution was to raise prices in the hopes of boosting revenues and profits. However, revenues fell and his strategy bankrupted the company. What microeconomic concept did he fail to apply?

Price elasticity

Fiscal Policy

Net present value

Don’t Know

Question 3

Microeconomics focuses on:

1. The behavior of individual markets and the smaller individual units that make up the broader economy -- businesses, consumers, investors, and workers.

2. Problems in the broader economy like inflation and unemployment and the rate of economic growth.

Both 1 and 2

Don’t know

Question 4

Who is the intellectual forefather of microeconomics?

John Maynard Keynes

Don’t Know

Adam Smith

Milton Friedman

Question 5

The “invisible hand” analogy from the classic book The Wealth of Nations argues that:

The self-interested actions of individuals leads to problems like monopoly and price gouging so markets need to be regulated.

The self-interested actions of individuals guide market outcomes to yield great economic benefits for the broader society.

None of the answer choices

Don’t know

Question 6

How many sectors of an economy like that of the United States, Germany, or Japan fulfill Adam Smith’s vision of a perfectly competitive marketplace delivering goods and services at lowest price and highest quality.

Most

Don't know

All

Very few

Question 7

The U.S. economy may be characterized as:

Perfectly competitive

Mixed

Primarily monopolies

Don’t know

Question 8

Oligopolies are industries which typically have:

Don’t know

Numerous firms

A single firm

A small number of large firms.

Question 9

Oligopolies are typically characterized by:

Regulated prices

Don’t know

Collusive practices such as price fixing

Fierce price competition

Question 10

A Command Economy:

Makes all the important decisions about production and distribution.

Owns most of the means of production (land and capital).

Is the employer of most workers and tells them how to do their jobs.

All of the above

Don't know

Question 11

What are the most important questions to ask in microeconomics from a societal point of view?

What shall be produced

How shall it be produced?

For whom shall it be produced for?

All of the above

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Question 12

When the government raises taxes to redistribute income from the rich to the poor through mechanisms like food stamps or Medicare:

Economic efficiency is reduced

There is no effect on economic efficiency

Economic efficiency improves

Don’t Know

Question 13

The Production Possibilities Frontier or PPF:

Illustrates how economies grow from frontier societies into industrial ones

Shows the maximum amounts of production that can be obtained given its technological knowledge and quantity of inputs available.

Calculates the optimal ratio of capital to labor

Don’t know

Question 14

If a country is operating on its PPF:

Resources are allocated fairly

Resources are allocated efficiently

Both

Don’t know

Question 15

The opportunity cost of a decision is:

1. The time spend involved in making the decision.

2. The value of a good or service forgone.

Both 1 and 2

Don’t know

Question 16

The theory of consumer and household behavior:

Explains the downward slope of the demand curve

The shape of the demand curve

All of the above

Don’t know

Question 17

Production Theory helps us understand:

Why the supply curve slopes downward

Why firms price and produce products the way they do.

Both

Don’t know

Question 18

Market failures include:

1. Imperfect competition, such as monopolies.

2. Externalities and public goods, such as pollution and national defense.

Both 1 and 2

Don’t know

Question 19

The concept of market failure provides a rationale for:

Libertarianism

Parliamentary Government

Government intervention into the free market

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Question 20

A Monopoly:

Don’t know

Results in over-consumption

Increases economic efficiency

Sets prices too high

Question 21

In the presence of a negative externality like pollution:

Both

The private costs of production are greater than the social costs of production

Production is too high relative to the efficient outcome

Don’t know

Question 22

Which of these is a non-rival good that leads to the public goods problem?

Lighthouse

Computer

Hamburger

Don’t Know

Question 23

Which of these is a major factor of production?

Land

Labor

Capital

All of the above

Don’t know

Question 24

An analysis of the capital markets will help us understand:

How to evaluate the profitability of investments

How businesses set wages

How rents are set in real estate markets

Don’t know

........FACTORS OF PRODUCTION.....

Question 1

A common measure of a nation's productive output is its:

Capital factor income

Labor factor income

Gross domestic product

All of the above

Don’t know

Question 2

Which of these is a key factor of production?

Capital

Consumption

Rent

Don’t know

Question 3

Factor pricing is important because it:

Guides resource allocations

Is a major determinant of your annual income

Helps determine the distribution of income

All of the above

Don’t know

Question 4

The essential feature of land is that:

1. Its quantity is fixed

2. It is completely unresponsive to price.

Both 1 and 2

Don’t know

Question 5

Pure Economic Rent is define as the price paid for the use of land and other natural resources which are:

Completely fixed in demand

Completely fixed in supply

Completely fixed in demand and supply

Don’t know

Question 6

Pure economic rent is:

Different from the rent people pay for their homes or apartments

The same thing as the rent people pay for their homes or apartments

The same thing as the rent people pay for their homes or apartments less any tax credits

Don’t know

Question 7

The rental payment you make to your landlord typically includes compensation for:

The use of capital such as the building structure

Labor, including building maintenance and management;

The use of utility services such as water, electricity, and gas.

All of the above

Don’t know

Question 8

In the accompanying figure, which would best represent the supply of land? 

S1

S2

S3

Don’t know

Question 9

During the “Corn Wars” in England, in the 19th century, landlords were raising the rent they were charging farmers for the use of their land, thereby forcing farmers to pass on the increase in land costs to consumers. According to the Ricardian Theory of rent, which is true?

Rent is high because the price of corn is high.

The price of corn is high because a rent is paid

The price of corn and the level of rent are independent

Don’t know

Question 10

The rights given to people to use specific property as they see fit are called.

1. Inalienable rights

2. Property rights

Both 1 and 2

Don’t know

Question 11

Henry George argued that a single tax on land would be:

1. More fair

2. More efficient

Both 1 and 2

Don’t know

Question 12

A tax on pure economic rent will:

Result in large allocative inefficiencies

Result in moderate allocative inefficiencies

Result in no allocative inefficiencies

Don’t know

Question 13

Suppose the government introduces a 50% tax on all land rent paid by farmers to landowners. Who bears the actual burden of the tax?

Farmers

Landowners

Both 1 and 2

Don’t know

Question 14

The study of who bears the burden of a tax is called:

Net tax analysis

Tax burden analysis

Tax incidence analysis

Don’t know

Question 15

Criticisms of a Georgist land tax include:

1. A land tax alone would not bring in enough revenues

2. Economic rent cannot be readily disentangled from payments for capital improvements

Both 1 and 2

Don’t know

Question 16

A quasi-rent is:

1. Any payment to a factor resource above its opportunity cost

2. Any payment to a factor resource above the amount it would receive in its next-best use

Both 1 and 2

Don’t know

Question 17

Superstars command salaries significantly above the salaries they might earn in their next best job. This increment is called:

Rent

Quasi-rent

Supra-rent

Don’t know

Question 18

Rent seeking is:

1. The name given to restricting supply to increase the price suppliers receive

2. An attempt to create either ownership rights or institutional structures that favor you

Both 1 and 2

Don’t know

Question 19

Suppose you are the CEO of a domestic firm and your foreign rival is offering lower prices to your consumers because of a production cost advantage. One way to beat your rival is to:

1. Lobby congress to impose tariffs

2. Produce more efficiently

Both 1 and 2

Don’t know