This document contains 30 multiple choice questions about various economics concepts. The questions cover topics such as macroeconomics, elasticity, production, costs, market structures, international trade, and more.

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1) An economist who is studying the relationship
between the money supply, interest rates, and the
rate of inflation is engaged in
2) A basic difference between microeconomics and
macroeconomics is that microeconomics
3) The distinction between supply and the quantity
supplied is best made by saying that
4) After several years of slow economic growth,
world demand for petroleum began to rise rapidly in
the 1990s. Much of the increase in demand was

2. met by additional supplies from sources outside the
Organization of Petroleum Exporting Countries
(OPEC). OPEC, during this time, was unable to
restrain output among members in its effort to lift oil
prices. What best describes these events?
5) Price elasticity of demand is the:
6) If average movie ticket prices rise by about 5
percent and attendance falls by about 2 percent,
other things being equal, the elasticity of demand
for
movie tickets is about:
7) When labor is the variable input, the average
product equals the
8) The increase in output obtained by hiring an
additional worker is known as
9) Which of the following is the best example of a
long-run decision?

3. 10) Other things being equal, when average
productivity falls,
11) According to economist Colin Camerer of the
California Institute of Technology, many New York
taxi drivers decide when to finish work by
setting an income goal for themselves. If this is true,
then on busy days when the effective hourly wage is
higher, taxi drivers will
12) A firm's demand for labor is derived from the
13) Owen runs a delivery business and currently
employs three drivers. He owns three vans that
employees use to make deliveries, but he is
considering hiring a fourth driver. If he hires a fourth
driver, he can schedule breaks and lunch hours so all
three vans are in constant use, allowing
him to increase deliveries per day from 60 to 75.
This will cost an additional $75 per day to hire the
fourth driver. The marginal cost per delivery of

4. increasing output beyond 60 deliveries per day
14) Expected economic profit per unit is equal to
15) If a firm in a perfectly competitive market
experiences a technological breakthrough,
16) A significant difference between monopoly and
perfect competition is that
17) A monopoly firm is different from a competitive
firm in that
18) The difference between a perfectly competitive
firm and a monopolistically competitive firm is that
a monopolistically competitive firm faces a
19) As long as marginal cost is below marginal
revenue, a perfectly competitive firm should
20) Because a monopolistic competitor has some
monopoly power, advertising to increase that
monopoly power makes sense as long as the
marginal

5. 21) In the Flint Hills area of Kansas, proposals to
build wind turbines to generate electricity have
pitted environmentalist against environmentalist.
Members of the Kansas Sierra Club support the
turbines as a way to reduce fossil fuel usage, while
local chapters of the Nature Conservancy say they
will befoul the landscape. The Sierra Club argues
that wind turbines
22) When negative externalities are present, market
failure often occurs because
23) A merger between a textile mill and a clothing
manufacturing company would be considered a
24) A merger between a baby food company and a
life insurance company would be considered a
25) From the point of view of consumer and
producer surplus, what problem may be created
when a country subsidizes the cost of energy to

6. consumers to help alleviate the burden of higher
energy costs?
26) Suppose people freely choose to spend 40
percent of their income on health care, but the
government decides to tax 40 percent of a person's
income to provide the same level of coverage as
before. What can be said about deadweight loss in
each case?
27) The U.S. textile industry is relatively small
because the US imports most of its clothing. A clear
result of the importation of clothing is
28) Countries can expect to gain from international
trade as long as they
29) Which of the following is an example of the law
of one price?
30) The fact that U.S. managers' salaries are
substantially greater than those of comparable
managers in Japan may be related to