Suppose the united auto workers union successfully lobbies congress

Question 1 
Suppose the United Auto Workers union successfully lobbies Congress to enact an import quota on all foreign cars imported into the U.S. Which of the following is most likely to occur in the U.S.?
Answer 

A fall in the price of imported cars and increase in the price of domestics

An increase in the demand for domestic cars

A decrease in American autoworker wages

Higher unemployment among American autoworkers

A fall in the demand for imports
Question 2 
In a market economy,
Answer 

Resources are allocated by the private parties who own the resources

Resources are allocated by the various local, state, and federal planning committees and zoning commissions

Shortages never exist

Surpluses never exist
Question 3 
You receive a big raise at work. As a result of your now higher income, you stop bringing your lunch from home and start eating lunch at a nearby restaurant. Your homemade lunches must be
Answer 

A substitute

A complement

Normal goods

Inferior goods

Standardized products
Question 4 
If an increase in the price of bicycles leads to an increase in the demand for bus transportation, the bicycles and bus rides must be
Answer 

Substitutes

Complements

Normal goods

Inferior goods

Standardized products

Question 5 
A publicized report that finds orange juice prevents certain diseases will have what effect on the equilibrium price and quantity of orange juice?
Answer 

Price will increase, quantity will decrease

Price will increase, quantity will increase

Price will decrease, quantity will decrease

Price will decrease, quantity will increase

The new equilibrium price and quantity can not be determined
Question 6 
There is an increase in the quantity of pizza purchased but no change in the price of pizza. Which of the following is most likely to have occurred?
Answer 

Supply increased while demand remained unchanged

Both supply and demand increased

Supply increased while the quantity demanded increased

Demand increased while supply remained unchanged

Both supply and demand decreased
Question 7 
Two goods are said to be substitutes in consumption if
Answer 

An increase in the price of one leads to a fall in the demand for the other

An increase in the price of one leads to an increase in the demand for the other

An increase in the price of one leads to an increase in the supply of the other

A fall in the price of one leads to an increase in the demand for the other

A decrease in the price of one leads to a decrease in the supply of the other
Question 8 
As consumer incomes rise, the demand curve for Good X shifts to the right. Given this, Good X must be
Answer 

Produced by a competitive firm

A high quality product

A substitute good

A normal good

An inferior good

Question 9 
The Law of Demand states that price and
Answer 

Demand are positively related

Quantity demanded are positively related

Demand are negatively related

Quantity demanded are negatively related

Question 10 
If a consumer always eats cheese with macaroni, then for that consumer macaroni and cheese are examples of:
Answer 

Substitutes

Complements

Normal goods

Inferior goods

Standardized products
Question 11 
Markets that fall between pure competition and monopoly are called:
Answer 

Anti-competitive

Imperfectly competitive

Command markets

Tweener markets

Monopsonistic
Question 12 
As the baby boom generation continues to age, what will happen to the equilibrium price and quantity of homes in retirement communities?
Answer 

Price will increase, quantity will decrease

Price will increase, quantity will increase

Price will decrease, quantity will decrease

Price will decrease, quantity will increase

The new equilibrium price and quantity can not be determined

Question 13 
Which of the following is least consistent with the pure market economy?
Answer 

An established legal system that arbitrates contract disputes

An individual accepting a job for $1 per hour

The institution of private property rights

The existence of a minimum wage

Private property rights
Question 14 
From a standpoint of resource allocation, a surplus of corn implies
Answer 

Consumers would prefer some of the resources used to produce corn be used to produce something else

The market for agricultural products is failing

Government should purchase the surplus to protect the farmers

The price of corn is too low and should be increased

The quantity demanded of corn exceeds the quantity supplied
Question 15 
China’s growth has been a result of
Answer 

Increased domestic demand

Rapidly increasing inflation

Investment in other economies

Trade deficits

Trade surpluses
Question 16 
An increase in the wage from $6 per hour to $6.50 per hour causes a worker to increase her hours worked from 40 to 45 hours per week. For this worker, which effect dominates?
Answer 

Substitution

Income

Wage

Wealth

Leisure

Question 17 
A firm increases the number of workers it hires from 50 to 52, and as a result, output increases from 100 to 110. Each of the additional units of output can be sold for $2. What is the marginal revenue product of the 52nd
worker?
Answer 

2

5

10

20

50
Question 18 
The additional revenue that accrues to a firm when an additional worker is hired is
Answer 

The marginal revenue product of labor

The marginal product of labor

The marginal revenue of labor

The marginal utility of labor
Question 19 
Price ceilings may be used on a selective basis to
Answer 

Control inflation in the economy

Make a good cheaper to produce

Boost the income of firms

Make a good accessible to all income levels

Increase workers’ incomes
Question 20 
A maximum allowable price for a good or service is a
Answer 

Price ceiling

Price floor

Minimum wage

Market equilibrium

Price support

Question 21 
If an increase in the wage rate from $6.00 per hour to $6.50 per hour causes a worker to decrease his hours worked from 40 to 35 hours per week, which effect dominates?
Answer 

Substitution

Income

Wage

Wealth

Leisure
Question 22 
One of the earliest known rent control laws was instituted in which city and when?
Answer 

New York at the start of WWII

Washington D.C. during the Civil War

Paris in the 1700s

Rome in the 1400s

Chicago during the Great Depression
Question 23 
A firm increases the number of workers it hires from 50 to 52 and, as a result, output increases from 100 to 110. Each of the additional units of output can be sold for $2. What is the marginal product of the 52nd worker?
Answer 

2

5

10

20

50
Question 24 

Owners of rent controlled property may attempt to increase profits by
Answer 

Raising rents

Improving the quality of their rental units

Taking under-the-table payments

Converting commercial properties to rental properties

All of the above

Question 25 
Which effect dominates if a workers supply curve for labor is negatively sloped?
Answer 

Substitution

Income

Wage

Wealth

Leisure
Question 26 
Which of the following measures the change in the hours of work that occurs when there is a change in income, other things equal?
Answer 

The supply of labor curve

The substitution effect

The income effect

Marginal productivity

The wage effect
Question 27 
The Law of Diminishing Returns states that, as additional units of a variable input are added to a given amount of a fixed input, increases in output will
Answer 

Increase

Decline

Stay the same

Accelerate

Become erratic
Question 28 
In 1981, the U.S. federal minimum wage was increased to
Answer 

$2.00 per hour

$2.50 per hour

$3.35 per hour

$4.00 per hour

$5.15 per hour

Question 29 
Price floors are often instituted for which of the following purposes?
Answer 

To prevent inflation

To make goods and services accessible to all income levels

To increase the income of sellers

To increase the wages of workers

Question 30 
Rent control laws will _____________ the search costs of potential renters.
Answer 

Increase

Decrease

Eliminate

Mitigate

Reimburse