I Section I I

~U1CROEOON'O'MICS S;eetliou I

Tim!!;!! - TO :rnjn~te5'

Dl[~CI~:io~: :E"..(1.(:Li '0£ i::h~ q'I,L~8tl,{[Im$ {!I~ J.r!oJ..'Qmpl(~~ S~'~L'~ '1ITJ~llId.$ t,)iJ:S:l~lW ;~ foHq ..... ed b~ ~i'l/$ ~~gg$$wd tm~~?ii,$J:;!l; o:r' COiU1iI)B~ ttOIllS. Select; '~he one t.11I,~ r ~ ~B ks(. illl each case and then fill in the ,eor,oosf-Io,ncLtlllg O'Yt1J on, the answer ::dlleet;

L A professor h ires two a;id!)'3'i~ asslgning them tlte t~)8ks of ilBadi[Jg student papers and .of '~.'I!pil1ig, leet,u~'{: notes :OI1J a oom.ptli:~el:_ OlLtC of th.e <Mdes; Ben, Gun loa:Q;d l I.lSLg.e o,l' ~, $~;Il!.J.~-!JU~ p~;lIr!.r I.'!iijif Ilj,dmiut~ ~~. t~~pe 5i)J1 'I,'I,'\'}nJ!~, of 1 ne;ct'!.:!JW 1Il0W8 per mir~lLIte, and line ot.hel' aide, i\.m.i.~ calli l'OOU 3, p~s. of a s,t.w1e:1il'~. :papif:~ ,poet ~.L'I!~J:i!"!!.I'be'll},r '~ype ,f)1} 1,i1,l1,}i'@ t:iif ~~IiLlU notes per I1IJ:Lr,luk_

"!AfhE ·h of th, :foUt[l\'ili:r~ $t~L<Wr.I1-e![l.b~ 1~ ~,:n;w:?

<

iL, ,AnD1 "£IS ~L w,rrJPi1'~1~i~ ,l,ld'l,\'~Lm~;.,£i~ [111 ii:'(:adi'rug stlJ.ldent ,papers! and U8[.L has . .a ~j)rnp'a·t:a:~i, .. re ad 1,i'21:rIt:l'~ Ill! ~Vp[IlI:g.l,ec:.tlfl;re J.I,'tl't(O'ii..

I

3-D ,- - - - - - - --+ -'-I

1 '

210·, to

:B_ A!ITIlI ,h~$ ~Ml ~tiJ-sqh,IJ~;A;! ~d v&lut;a~ in :ru~'I!d,illllE;' 5ttrld'l1lir~t papers, and Ben has lID air OO~I[L're advantage in ~'I?lPi[.I,g lecture notes,

O. Belli has. .~1. ,comp.Z!l'attiv-e ad vantage in t(:adir~g s.t lIlil:l,e.l:~[, papers, ami AHn hM: £I CQ':rD1ipU~£i.'t~v~ £icl 'l£l,lil~..ag~~ In '~;vpi'l1Ig ].ect~l;r,~ rwtes.

:2 A:coo~\d.[rug, to th.e gt.i.'!i,ph ab6¥e!, if a {10rCL'-~try ~s 'CJLl["a lloilJlUy 'pr{rldlldmg .ut pOiF~t x., 'd)~ 'UpportI!U;LH~y CO$t Qf producJ1llg. ;f!!!rIQW6Il' 'CO[l~!J[Thel' good 15

A - 20 -ca;pita,l gQOd8

B. rn~ 'it:h8J[l W CZlp~X~ iIlPOc!fi

C. [€'!,'!/!!i!:' tl1laT~ 21]t ,capi~).I. goods '0- 20 'CO[J;Sumeil' goods

K f\l£!'I,'!,'!!:!1" ~ha:r~ 20 'COI'iiEi:LJJme:r goods

'0- Ilem ~ 8lJ, 8 {:omjJ;(UMt'l,i~: ~1J."iI;:Itl1it8,g.e in both reading seudent p~1LS and, [.rplng' lee> t~~];,~ J.L{LI~~.

K :Eiam, liu'!!:li ~n :Iliil1l:100h~it'J. :.tI!d;i,r~lF~~HB in both 1!'t,'&,1~ student P~ffi and typh~~' Leer ture notes.

GO ON 'lI'O THE NEX'r F'AG,E t

:;t ~[b al~r.r v i::;wl;,g ~. ~.I1I.e.;rtr:iB,l ij~jS!i:li, ~ ·~niv.~.1i.:llty .i.[I(:I:\'l~LZ1i~~ S~lt(i€ll!t [~5,. 'It! is udiol[! w1H increase unl v0f3rgi~.y OOVOO.ll!e8 if 'tne prlee ei.3stid.ty ofdemsnd f.or ual'!,I\1.:'![stt~) cdl'tc&ti·(1rt1 is.

A. inelestte

'B. unit 'eJ a""t~t:

Co. ,~L€LS'L;~

D_ ~.lJl;ljjl GO the Pl:boo da<st~Qity .Qii: Sl'L.Ppi~y fi. equal to. or.l€!

4 'Whioh oF' th~ foUo\¥i.ng· win Qti:,!!~.[' ~£ ~h$ govoE!!rI1Ilmi;:;;nll: hnposes a priC€ oem[~ below the eqnllibrlnm price of a gCi'{iorj,,?

A. The qlll.ZUiUJ.ty sold win exceed 'the' e[[I!.lj.~ ~ rbl'hiiilfl 'q.!tltlTlli:o.ily.

'1. :Fi'irlD1'ij totai t·0'J-e!lU11.eS will lnerease if denliailJd. is ~ni(;e elasue,

C. There '\Wn I be, a. siDort.':lg€ in the, m~)td..;;et D, An HnrI.l.'ili 'wiH :<:ii'il!l;tt 4'0''''''[1'.1., i;i.i!l:IICe.. pr,Lc~ lf1 1be.!Q1;¥ the equi~ibrillLm: price,

IE:. Fd~ win ~x:ce~;l U'II' m~rgi:I'.I;!)d (i(]8~. {~f IPmdI!)d:n.~ the last urn ~ sold,

[~ \iV11.ich .or the fo.lkrwlng wiH decrease .the de:-l]1I~nd I'QI:" bf;! ,F?'

,A._. An ~[.Ilcril::;II.::;.a i,[u '~h~ [_J:ri:(:.¢ of ~}Qrk, 1.f: 'pork aJIld be€f 31.'€ 6l1Lbstitut,e goods

~3i_ :",h1 i1tc~£::'~~ h~ th'E! fJi[',l!:! i[iIf BH~l"'a;w.es,

if potatl!X!6 and beef are r:.l-Cl;mp~erli'Jl}1:I!fIUl t'y goorl!~

Co. A dEm:r¢~t~ i n ~h;::: cost gf tn'M.lspg~:!t,i:l1Ig beef to 'C()!i1:WLl!I"[l{~.!rS

D_ An il1l(:~s(;;: i.11I th4o'l 1!I'.I,eOI1r.I!$ ~1J;:'ilG~:;: of :r.lll.rJ~~ COIfJJ5Il1meu::s, if beef ~5 a normal lIDJod.

,~:::_ lFl:!I!~oodi) ~alQ!;lP,i!l'.I£ 'b~f ~~ 'b\'lt~@:l' ~o:r YPII;Lr h-eahJa, 'thillUI dl.kb:m

(1; H Ithe p~'ice of: a :nnill \:1 'Wlil·~ab81l': Input Inereases, 'L'f',hich of. M:I~ f'Qlno'L'f:ru~g wm, Qi;,:ll.mr'?

r\._ rfhi?i th:l':n wil] de(}l:{~tise ~'~I-j ~r;l"wel {rIf p~,orhmtiOJrl.

B_ Thii!; prlc~ g&' UIir!;!l god wm d-l3cr·'(!;f!Is.r:'!I i:n tJJ~t-!< short rUI[;

C-. r,['h;;:; tirm 's ,rr.ui:i:rga'IIl~, IQr:;!i~rl;:s w~ll d.'~r~l~~ Sit e'lffl'l'.'¥' 1!1!Iv€~ O[ {lilJl~Pllt-

D_, rrh~ f~!rI1I'.I.'6'; a .... fil;:I:$iga. ~~x,rMl 'IOlO:;;~ "V En, dr¥crease.

.~~_. MQ[\'! fu:rrm;; win eu~t!lo1r th~ :i.ndl.,ll;:;itr:}" :i.n th~ iO!JJg' TIll!!'! -

I Section I I

l' ,[[I. ~ gi .... ~~l U.nlii' pii!ljQd. ,!:;L ~!r~n Wn$"".[~~;;a:Si ,mo:;l~:,t~ and more of ~, good or service a![!dl ~ as :9t result, OOjO.~8 each addit1,OJilaB 1II1ili.t less and is wiHtl1iG; ~o ~p,<'I,~ less ro~· e;::bch additional unit. T~J'is bc:ioa,'ip'i.o."[" 1.S {JO[.Ig:1s.~r:;!:H~ with UiJ~ UtL~· Qf

.A._. di.!t.ui!I'J.i$hl.I!I:3- l'eit t1H IS·

It. d[!I'J.~i!l'.l.i:dlli~~ H'!i~rgil1ll'il P':rQd~l~~ c. dimMii8Iuj!'D~ mMglrw.llll.tility '0- mm'CMill'.r~ CQ5~S

K f'CM'"C€ ir"€50~l'Cc~

8 '''!N~J.~oh of H.I.£ fQHf.i"¥liing 'fi)EI~~ J~r..i.~~ U.liIii 1:'~l&ti.QI1Iship b5~we.e!!l the i'lIV0f3f8g€ ~~~ {lOS~ -CllliV€. ;(II nd 'the I1[La:t'gin~ eost ,cur''i,re ~[f.I.the S~OI!,~rn?

A. ]£[.J re a'Ver.a.ge '~otal 'COat. Cll!!rV€ is J:'itl~ ngl Ule ,m.tu·,giJ:~a.~ eost CU1rVe: ,is above ehe iI,VB @l'~e ~tIjIt~l, ~t C'1)J['!l45-

:13,_ :~r th~ :;l!io-er..f,l~ bQ~j,etl 'QOij~ (!.·I]I:~ 18 l'iiS~.ng, the mkl'l'~w8.i ;t')OO:~ C'!..Uif.''i,1'€ i5 below the ~P.i'eJ.'age wtaJ. 0!J$t curve.

C. If Uue lI.\,erage: '~OIti!J CijS~ curve is above Ul~<!: [n~Ji'T'gilll;£iJ ~m-t Il;~r'!/~, tht~ ,rn~uW.nfi~ C-Cl0rt curve 1~ ri6i:mg,

D. ]f the ~l,V0fa~'e tOt::l[, oos~ curve ls b~la'lll! the margirtl.aJ eosr c!lJl''Il!e,the ,un~u'gj:n~ eost cur .... e is ran:i~ug.

E_ Ff the- lI,Ve:L'~ aad r"<lil',gm~'J;al eost curve hU~IJ;:fat:!C't~ ·the ~R ,urJ$J:~~n~L~ Il»';ii~ i;.:JlJrv 1:') ~l't SJ. rnmirrl1lll'ffi

'9 011',1,( Il;.lh:!tJJ:~~CJte!rI~~l.c of p!;:!'J:fIloit!I!;,'~y' (!O(l'.L~~;:;r:,II~~UVT.;!l JIi1i~I!J::~1;~ is that 'lIudiv-klmd firma

A- en~8~(! h~ produce dliIfe:r~liltiatlO"m

B. a~ free. '~ ,e:w~e:r or e::drt an U!IJ.d.uc5tl'.'~ in the l{riru~ rULDI

C. ·e<.1IJ.'Iu poo~ti'\'~ eClr:1l1'lo1ll1rCS profits iJ:~ 't~e

. .. -

hng- ,run

D_. :lI;~hIElr.~is!(!: '~O m[Jld!r13~~OO '11l1flrk(i~t ~'hlu,T.;!l

E_. fSL0L9 :;:Ii d,Q'!,l.i'I1I"'!,f;ijJ.'d-s.lopll'1ig ,[j,t\I1I'J;f'lLlld ,CiLl'rv~

GO ON ro THE NEx: PAGE ~

_lO At ~h~ ~~I;~!r.n;lDl!:- p["Ql;.h~ "Uon :[,e .... r,::;I. o!F gorJd K_ pT.m(i(';; J;$ greater ~h8J1!. "JjJl~rr~~aa oost- '\lVhidl of the f(!l!krli"'['Il!~ ,acti.OIf.l3 "rlfO'uM lead to great;el'ef[jd€:(flC~~?

A. Decreasing t~J,e p,rodlll~tk(r. of good X .8. ~.nt:.1'e2I_silfJ..g· dJ:t;::: p;.~~,u:ct~on of good X,

c. m~maa:r~~rug the 'OUl:'l;e:nt level (lor produe'ltbm.l. of good. X

D_ :~.rnp(lqin,g:£il, .~:.£I;X on tl:L'l~ p.:rodndi-ijllll of gpQd X

K ]m]!osi:r!g N! ,eiIBCti ¥e' p;iJce floor on g,CiQcl.

X

li ',,\fh~ob of t..Lle fQEI~llIii i'll!g ic true of a lOJIol!lrypoolkfbil\.".;;\.u~1· 'com~e~itive firm, in 1(!oJll.g~1.'1II1b equil ihrhnn?

A. price gl.'€i!3I'ic"'ef Ulal1l. rnMglir.t:ail cost t and. mMgil1JaJ re'!/{!trlL1!e is eQ.ua~. to averfl~ tot~L! 'Co:;;~"

:B_ ,[)r.ioeo I::; gr~SilA?E:!; 'bh£'i.1ll :mfiX'g~nn~ rclW!I'JI L~ :9!wi ma.:r:gillla] GClB,t i;::l equal '~O ,;;wms.ge· total cose,

C_ Priee is :f!,'):ei:l!te!t tha!l'.I, I1I:la~Jt~laJ rew.::lllllt:, ~J.ld, uli;!jl[',E:t~n:lLl. coM .... ,is grwtf!l' ~;han ,a~c:~,e t-llta.'li 'l.'iO:'l,t-

D- MMgill1fi'l t€V5!~Ilt.e ~8 'e{,I'lltal it-o rn:w'I';[I!/'!aci eost, and price is eqnal to ,~lve:I:'a.~;e t00:~3i1 COJlt a,

R .r_;,.,~.M·gil1l:!.l ,~...eV6J:u!!l.e g!"ei::l;tel' t;haru IU]lI,t"g)on~ co:o;;t. ~Hf}d p:r I ee ~i:;i ,eq~J.tI, '~~J ~'!/enLgt"l ~;.QttL~ co~rt,

12 G$'m!::rnny" :nf1lQ!I'Jit~PQH~ ,~L!'lo1 W,IlIS!,d-8(L'Gd .i:':lEl~fiC~il!iLf}~ b~ 'Ci9."I.l5e UlieY

A- produce ilII-1- a, polnt wht'!'l'e' IIljAl'r~i'r~al cost is, less thro:~ 1II:t..c"l..r~~trla] revenue

B. pNJ:u:ue M a pa.i~.It ¥.~·~l,€lii!.:l' lilj,i!l:rg~r~a~ {iOS~ f:!:',.~01;:~~~ p:d.~

C- prndl ~r;{~ :Ili1or.-e Oilxtp~t til~n d.oes ~ il,;OliIJ,pe-~itivi3 illdl~l:stIl'Y with qim lIM cost ooJlid;~'t~OIflS

D. lead to ';:):111 meJ.'a!lDcaJtio[l. of resources in the fI:['{ll1ted, market

.IE. lead 00 "-LU, !all'ldel'aIIloe~t 601i'.I. -or resources In t ~~ ,£i;iJlij~t,d, rtJ£iJ:k{:!!~

I Secdou. I I

,1 ~ A. I,:iJ.·-o~H;-m~Yi:ml.;.!;h~!5 'I~:rm Ur>.IlIt, ~~~$ ~'I;$ QUJ.tJ;;p~~!t .L1lI, A GJ't'!diBttl'lf ,aornpet~ti "!€. mar ket hi eea two!) ~tildl'tiQ!l'!M \'ic"O['kerg~ ,c8!lic!J.liatililg th.a.t the w:lfllt:dbu'tL'll.1fl tQ. t0i~3i~ revenue or the b:.sl!. wolf·ke[· hi~i::d jtrlsrt ,e.qiljaJs !the -ex,. hl£li. cost of hU!rh.lg ~hM· ""'i{!iI:Jpt'. E:Hx months· ~,Etl<g;.r, the firm'8 finds t~;f!It th!)!! ~:mst WOII'.l.X!r6 oollltrJb l~t1:n\! w wta~ revenue 1'5 ~e5!S '~h';:blfi the extra cost or M.L'n hlg t.na.t wodmr" Wh.t'ch of ttue ro.Lk:i';l("i~lg l'm'a~ I'u.m.ve occurred in the ';[I'~el'irn to I!i!XplMH thifj· (.'lb'::'H!I~\~i,~:r.

A- The firm laid on ,Ei.\J\!Jll!e wor k'31'8-

'8- '['.he market iSll.IiIJ'ply fO't" ~he TIl!'m~8 pm{illLll)[. de creased.

c. rr~e lll:;:nk-et dieLrfJ,a;l1id J"Ol" '~he fir'm"'~ product J;ec:tet'l~_

D_ ltooda.nomOgical. ,a.j,'i}iL<!IJDe· i1il.;:;:1",e:a.~rl the r~:n;;:l(_~tIICHv]ty ,of th-G fi.m'!i ':s, 'i,.~t',kfo['.ee.

,E_ ~[,l~il:;! ~lL':m l1Iiliib"Vt~.,':II;~~d n~lj Wlll!l;;n:t(::~1ii wiUli. 'I,\1'(I\l:J~£!r5; ~owe:dng '\W.~1g€S,

14. S<Ui)POSiJ;; JliltI!!t, ~u. l.a:r~ Ilii!,:Uinbitlt" of um~ldned. wm:~!I]l if£!1!T~eJ;' a 1ii~1,'tk1oI!'8 I.orr !lll~'!J:' ket, .Ill U1B labor 111J.~\'[h::e!t is ooimpeUti,\'~~- the :r.~lLfl:"D'9lt~~{f: of !!tno$.ldll...::d wo~:k...::~:'S h:i:~ "$ond, ;~hl;i 'woIlIge rSltll;i wm :mqs~; 1ik..al~v d.l£i;DI~'r$ hi! whleh of 'title ('{I;UO.'i!I.':IDlilf, '\'t!!,YB!

V1I) (b) (c) (d.) (~)

Nl!.llifJ ber of

~'.Iski:ntjd, \,V.a.i:'~ers Hlred b.H,.".I:·'I3~8l;!

];ncl'€ttoo

Increese

Decrease

[!I e.eD'1:61 as

,~rage Rat...::

U[l;cn,%~ Decreese Not vha.l1Ige ,[ nc r.eas.e ]),e(}:r'(~.IlI$!:'I'

1::J! A f.lode~y that wiGhes 'W ~hi.e'l,<€ greater i acome -eqll!~.i:t.y is ,lIIlOO'[, Hkely 'to have whkh 0,f the f'QUow=

- '}

i~.I.g_

A. It J:,IYJI'BsSi ire tl1l00"U"J.e tax S~rste-fli ~i.I:~d. hIgtu, ,eljti,lii;~ :!lind :g;i.[t ~;~~r;!

:13._ A. ~:eg!ll!l~:~ ~ncq\ulil'$ '~:a.x $;i/Sl;:l?lL1!i .!lind iow' e:::;t.':\~e and gilt tILX€!S

c. A~J.'OgLIi;:S3i''!,i'oe iaeome t~x svstem arrJ,..j, h[gh estate .and g~flt 'tacX,e:1

D_ A p,l·ogll.'Bsil:ve il:u::ome taM system and ~O'W '{~$~i,$fb~ ~;nd ~i.fl; t~~:i;:

:KA, 'p-r{!lI'mrHg(ua~ j.[,I(:{iiIT.L~ '~:$x 8y~tJ:'4llTJ. ~J;nd hl~b es~~ 8:l!idl~ift '~~

au ON TO T[-I8 NEXT F:AG,[, 3

1.6, The oStll!lly .of economics is :pdmarH~4' CO'l ecerued "N~t h, '!,V,hich ,of UL~ fQHQwing'Y

A,_ 'Fh('ii tG$Ung of h,ypa ~h~ !J.I.r.td~~ 00111- trolled {lo[ldiLiO'[JIi3.

B- The ,nUoca;~jQIi1 of searee reoo11U"GOO'I given unllmited Wi£l,I1It'S

C. The f:aHIl.' and eq!lliJJ t:l:'~l,troJ~ut or ,an 'hti'!J!QI.iI:Li:~!d.£

D_ Tin p~:{!IV:i.'s:i{!Il1I af ,i;}or.l.dn~l v~ ,aIllS'l,'!."lJ~rS til)

'I '1" J'"

PUL') ~Jr:: po, ICY issues

B. The d!;ev~WplIT!emi (If the 'l:lvm:uIdC8 {!If gi.'QIllP oohav.to.r

1 7' l\,rir. Gar.poeru.t iI' lcle~1"Q tes "Iri:s 'wurk lng tilm-e to produch~ tables Mid .chah's. An .L[l.cr:'eaoo hl ~h..e demand r'Ot dh£l;lrs wjll result .ii'll

A_ M.I. inerease h~ the ;aljwOir[[~'~ {tI[ time he de'.i'Q~~ bJ' procl!·~[~gng ~;..I;l,b~~

~3:_ ~1C[.1. ilili(}1·'!'!..$fie; in hil!~ OPE-~~til;!,l1I,i.ty ,OO!ll~ i[~f

'pmduci"n,I!l;' ~1bles

C. a decrease on the price of lumber

D. it decrease ln the price of chalrs IE. a decrease In hls total .r.f:W1IIlJe

ts Assnme tlllru.. 1::'lO;t'h t1le 5UJ.pp~~/' of an d tt~e de:OIUI! Id [Dl' ·80 ·gc.<!'d, ~:c€ re.latbl-ely prlce elastle, The twJ.po--' silt.imu of £I, Ji;e~'~iLH~it excise trot oru the sale of the g{~r;;icl ",,:"tlll ~!d 'C&I~il:~ U.l~ '!'$Il,Tud.I.Ib:r;~,u:u1l HC[.Id q ~9;!l"J.'ti:~.v to dum,n~'e iJ:!! whleh of the rOnQl,'l[~n~ W:a;ya.? Price QlI!al1lti~~

A. ]lflc::J.'e3SB Kl1It'l'€2ISB

B. Increase NO -ci'l!arug,e c. Iuerease Decrease D_ tiiecrease No cl~IM:lg-:::

E Decrease Decrease

19 A~Ull10 ~hillt consumers eonsider po,ta.to.es 'to, be a r ~ ~~lret·i.ol" ~ood,~ but consider !:'.i,.De to be .a [I.ol',mal, g{~r;;id- ,An i:[;tcJ:";:~a-s In ''l;""QL'18111Tn(;'lr:/ :i,IlIIJ..'Qm~ ,~!ti'~H J,L'ilQ8~ ~:ik'1!!~~~ aH.ec.t the e.quillb';l'.hml price ~d. qJIJ.UHilti~~~' of potatoes 3[11:1. riee 1.111 'w-hid.!. or th,e fo.uG'~"'iTI!,g 'W:~ys7

Potato .Rj,ue

,Pr1,ce QII;~~LI1I!ti~;y P'riw QlII.£1n~:ity:

Decrease DBCIrii!tli5-e' Increase Increass

Decrease ,I nt!\ease Increase Decrease

Decrease :~::n~!["e~ Increase

Decrease llili 0'J."{'!I1iI~ r$ [i'ecr-ease

Decrease 1).e0t'8:'JlI$ Increase

Deereese ]I) (>!."(:n.t ~11i.(~

Decrease

20 .Ai"5. ume 'thaJ.t ;1 eonsumer ~~I.d!S aM her income {[I11J. the p~~l"i:~h~'i$('ll Q:r:' ~wQ gaQdf;i- If Uluil Cl:1I111$IllIirJ~r1~ 1111- ccme deubles aud the priees of t.'!!le '~''iI!i\iJl :goo,"w also dD'LI!bJe', 'tn.e (jilllli,Tutl:!;.'If of the lo\'!,1"(I' 'g:o<!'dB purchased

" .... in.

A. Also double

B. mose 'lihi¥J I, double

C- ·h~CJ.'S:\L'f,;i;!, blJ,;L~ i h wlH b' Iess t,h~LIlI dQ.t~b~' D_ Il'lot Jl,,'Ih~m8,(~

K dJ3pE!!l".!d, Qr.~ U'!iil!: :!:ilzy~ ,or: !J~r,i!; d~[~~&m~ <:l~l·'.i'J~:

.A _ the, d.oll!.hlir.~ of a~!, i~.I.pu!l:s doubles Itb"l.e 'QI!xtPlll'~ iJir(}d!l;l'C~d.

13._ $hoil·lt-:n~11J U\'!,I"-e![".ah.~ ~Qta! ,cost t1,-ei?-:r~~ r,1S OIIIl;pUJ.'~ w~."J.-.rJ8I5€S

C- 6hort-r'UJIli {l!.VeJ,'3g.e wta.l cost f"€ITJi:!ki:r15 OOIlist,aut as Olll.1,PlLlt lncreases

D. ~O'Iiigwr!l.ll[[ ,aVe1"21g13 '!:;cit.a~ cost i[f.H:re~ as rn I'tput inCl:~fic~~8

K b:r~-:~~!n :!)I,~:rltg{~ ~qt::l.~. 0981:.. d¢(;.:t·""H$~ ~1S output in '~'€tI;~S

22 [,i:;Ioo~;ik prOdltlm8 ito::'/I ~'~JlIJ.n~ alll,1ll p.t\y;-; iI!;~ch W{.!Irkx'i;:i:'" $ 300 perweek. IE;'b;~ v..'CIrker~ ean produce 40 tl[',ail!l!3' p.B!I.' week !l.t[,j,d!, six VJiIO.rlrers ean produce 4.[1, tralas pel" w~e1c Thfl: nl<:u:~.lfla~ prod.iJ:C1l per ', .. lIee~. ,of tl I,C slx,th "'lr()!F~r ,is

.A_ $ 7\1) B_ ~3m~

C 5 ~J:O!lIi:li1::;l

D_ .1'_ ~ '~~£Iilll:'ii

K t12_J;i Jt;r.E.:i Ul5

23 U' '~he CIJ.~~,~~ ~i1;1,iIl} :ffa,m!lq in fln i[.I!,=h!iS'~l"'y ~'I'~(!.Il5~~,!~$J~d!y' collude 'w, ma:xhniz.e '~l!ieh j,urnt llJiJ:"o£.t~ tiTle" price f:QY 't.he product wHI, be

A. 'iMI. ljJ~l to the liIlaL'glIJlal. cost of pl'oduction.

B. eq!ll3J to true .f1\re:L'agm: tot{il eost .of proii!llC>-

ti'OI1l

C_ above ~Ilt:' rnM'gi!tltd cost OJ ,pl",oifl1u.(;t:'i{tlu' D_ above iAh,ot": mm.lD~poly .p:idre

B_ below tlu.e &vt.'l".(I;ge 'i,il:m1..i11,i)].e ~ pf l,irod~U.::tiQH

GO 0,[\1 TO THE ~TIEXT PAGE ~j

24 [J there a~ ,maJJW flrras 'i:fl iEU~ j:D}QlIistt.y M.u:~, each fi:l:"rIU®'~ p:rc~d!,It(:~ iLl'Id,~:;;HI1Ig:~~~sn{l:~ rr(!I111 ~;he prodlII.'(:~ of ell other mms, the i·Uldi'!,i'idlu8.~ fimJJ:i.'!1. demand CUJr"'If€ will be

A. upward sloping WIILd diffe:J!eI~t far €!a:d1J nt'"IDi,

.8_ dO'i1l.fJUW2IJ:d il-Op':i:ru.~ and dHf:{:t"~lt f{lJ.[" each hr:J:"L1'!I,

c- dO"i¥I1lv.,r~l.;I:"!J sLo,ping aJJ;cI. id~®llltkal for {3V'e(1:"Y f.i.I',[l}

D. ~l,Q'r.'.iOO'llltal and Q!ffel'€[l't fJill' each firm

E. horisontal irl~{fILaCiLl fm' every firm

2Cl1 MQl1!opoL v is different from ,;;), 'lPeJ:fuCU~1' ooJJil,p6,tit~ve '6.mll iw t.n3l!t a IiljQno!P'O!~

A. does ,Iilot havt: a U -shaped :a.ve:ri1g:e ooi:;aa. t:;osiL curve

B_ has an ,aver~~,e ib:;ed t:usi[, eueve UU<1i,t is r~ t-!;l: fur. U~' hI;) r..i:i&Oll"l't tl~

C- h:;t!;. :(&. H'I;~L'~i:I1I:!!iJ ,'!.·-rW~~~~l~ "'(:u:r ..... e Ull;e.;~ !~~, ~el'll''N ~ts. demand ClLIl''IJoe,

D. a.1"ra_'!,1S_ .eac['llI£ iWlJo,1ll01lIl!UC pro~ts

IE. operates tn ~hB Inelastle s_.eg[IIIe:J:ut (if its demend eurve

26 Fdre dmscl'arniIilMio[l 0oCClJ!1rS \'f~J;e.III,

A. the s,lJiJlil_)ly of the p rod. !lid, is 0tilStic

B. a. producr's ,a;'i/eI.'age: b::isrt is gL'ea'~eI' than its .a"'ij:~;l'a~e l·,e;"'I.ie~llIle

C_ a.. p'l"o;fllld;~ ;a'l,l\e~:,agto:: oost is loss t~J.~U:~ ~~ :iII,~r'oUb.~ :re~[II!l-e

D~ ;:)~~fl"$:r¢r.lil:)~ in ;91, p:!:'O~l~llC~'~ ~~dm ~~~~i{ill1l, difIel.~.'tles. ~n 1Ji:1,i!iJ'g)oLil31 003~S

IE. difl'eJ.'elfJ,oes in a. product's ~r.j_,te do [lot refled >Cft.itro:::m:crrloUes i~:1. costs of PWdiliC!j·kllU

27' U a [, peueJif~ 'rIir~'e increese in. @, iP'-Etrtic'!Jlm' labor market results ~lfl, ~, 10 ~i:~ill.:lrut decrease ~~;1 emploviiI:ui! [.1'1" '~i11 ~ d ~llTJ£L1Jl d: .ri:;l~: ~ @,JbDi[ ,1$

,f;\._ r.~!::!=:d~c;~~Y' ~l:;tSt:i!l;:

B_ '[i!!~a~uv(~ly -r~J£i.s·tk C- 1I;11Il:i:b ,ek1f';t~oJ;

D~ ,1,\$~~,U .... ril~1.I' ~:w;d,£t2:iit,ic K perfecUy i lilel8.s~i~

'~rJal'~T~::L~ ~,1IB..rgirw l
Number Ho,urrl;y . Ff:l.ctar Re'lJoefllle
of \tVo~:kers lj)\JacgBS Cuslt ,Prodru.'ct
'],0 $5,0'0
llli s.t o -s-tUO/ku: $8·. "IO/hr
:~,2 :5.20 ' 16 ~O/~ '" $".OO/hl:
~ .''_ "Fu
'],3, 5,3[!l :S-'I},,5Hj.nl" $6,.50{bu:
] . .::] 5,40 S-tt, 701 hI' $b.40l~f
15 5 .. ~(]J ~S-6·,.'90/ hr ffi~,30/h"!r 28 Auc-a~,\(h r ug, to the iiufm:riI:i2l,tiOJ--:1 h~ ;the.. 'tahtie :;}bo'ile'" th~ ~'!;l,I~lft.i~1 wml;;,'4;l!" "",-(n,l d ilf~CI:"-~.as~ th&; tL{!ly:rl,!! p:roifU by

A, $ 0-20 B. s LEO o, s 1.30

D. s 2AO

E. 9; 5.20

29 CnM~H::t'E!rls~it'lJ of '.:J pure pub 1 lc good l~dllLde whieh of the ['{IoHowl.lilg?

A. [1.] NOlllpaY~!fJg eonsumers eannot be' >ex/" eluded fl··oru, Om.lS'L'l!llfLili':l.g the ,g,ood,

B [Il.] GO[ISU11I1PUo-U by tmy one lPeJ.'SOOTI does 11IQ'~ l\ijd~,1lXi dill;!; o£iI,1ial~aJbLH'~Y' (Jf tli)~ geed 'w others.

o. [UI.] Th'8 MThOILurt consumed J.epelll~ 0111

~e price p;:;;ij&

A_ ] aniy-

B_ U I, -or~ly

C_ KIT o.~dl'

D .. n a:1.l~. H. ;:}j~~V .E_ tr ZU1I& ]U onlv

G() :0'.[\1 TO THE NEXT ,PAG'F,. s

30 "Vh~dJ of the fuH{iiYl!h~g tends to increase MIt:: &ap un crll.!;l,LlIlgs be~~\lffl:®n .s,hHi3d . .and '!JAin;!!: ]. ],~ "'lIUT~'€T$ 0",1'€1' '~iLliII!)!!'?

A. A,[]. i1fl'Cre~ in tJ~e demand fQL' ilAiI"lBktlled, 'l/ilOJ:ketS relative W sklHed 1NL!di:(:~'1S

B_ ';;'\,ill :illltn.ilM£l~ lu th~ supJ:1y Qf Sk.i.n~d \¥Q:l:k-· ers relatL'I,{~ to ll.Iif!~ med, '~"'!i'Q:rk"6rt:i

C. 1\ decrease iI~ ~he demand for unskilled VilL!drers relative to skiUecl, 'W()l"~~,"S

D_ .A. d~nsaSi:~ In ~~It:h dLt:! d: 'un£l,nd :fQr ;IiI!I".Id tine eHlIppzy' 'Of akmed ,,,,'O[(]rer.s.

E. AliI increase till both the Ck:lfllti!tllldi {m and ~m.pp,l,r ,of ilixL'$,Ld! Led 1j.i,;'arlmr.8

D .. Good, X is a uormal guo.d, ~mrl d.l.e"giN~ e::r[Im~IIl~ • .l1ll(:n;:1f;LSiJ'. lniJ.,.'"Q,LiTl)lil t:lll:XOS by 3'-0-

K Gq.Qd ,X ,l-SJ ~L~i, i:nf~~.i,{))r ~[)d, ~Ll1Id ~h~ gowerument dec:~OO6oo income 'ta.'100 'IIyjr :n.O'7t·

31 ['b:I:"' £tn i$OOlIlQ:r,Ii~~? ,~!);~ ~h ,f,L :MiI:~~[';~~hHil1l,~ p:rouu,(:lt:i;{!l11l '~.S7i.ibmtioo curve, wMc:h 'Of the (OUCi!L'i' ililg '![[jiJ.lf:i'~ be ~'1le?

A_ llJ T~te ~oPl,)ortlllJ:~i,ty cost {iii: P["{tiI::hlcLl1Ig ~,I([I~h-eT ''-'!nH;. a~ '[)i;)[J$bl1lt-

R [1]'.] JteOOllll'Cc~ ~1J.\e oom.pJdeb~ ;:1d:~:ptabBe to a!ter..lIiatio:;,e uses,

HI. &SOUll'~ are used e:fBiic~e1ut~v.

A_ ~ an~!,

:B_ :~~: olllly' C- HloDly D. :~ and, n IE_ ]1 ~l1Icl ] U

32 CtlnSl/i:i:mll2:'l:'" SlIi,t:[Jh.1S JS ~kf:i,r~ed, as

,/:'\'_ op.i;l9:r~~'U~;'~r 1[}Q~!t. n~h'l1J1;S' Whir'!' :r,e~l1IiJ,:1;;1 R w~l revenue mluus Q'[)port'L~Ili"lt:;r eoat

c. the dHffe1"8:T~Ge be;tvl'<:OOIJI t~e resource costs acgJ.d, due priee thllilt consumers pa:v

D, UII(;' I~Hfj~:r:-e!l"IC{:' b~h"!lwlll t.h~ 'v:t).~;!,~!";!i that.

COn51l1I!1letr8 D~at.."e ,Q;[~ :e good aud tt~~ price 'tney ,p.i:l~

R the su!l1u. of eJ{t.e~·T~a~ costs tl1:~cl bel~.e:l]tg

31 '!i,;Vh,~(~I, of till;::; roUIl}'l/1,i~!I".Ig '~/ii9!1111d ;;:.i!;l,l~~ th!';,!; (~!J!j,~ibr-I\!IlITI, pri;f.':€ of good X to ir~Cl,€M{!?

A. Producers of good, X and 3: new rt.eclU10~,~ O,[¥ '[;halio eeduces the cost of p'nlitlilldl1lg x_

B. The priee of an e'iBI3IUtiaJ llilpl(l~ in ~:he prodllldlD,1ll of. good X increases.

C_ Goods X end 'Y: are IQOlfIIi,lPte.r.m1Ie.I.~ts; and t ~,~ gQ'~nl1l:l;e[l,'~ iLin:pq$!"iJ'S :.'JL '1;::).."[ on ggorl y.

GO {)t\1 TO THE NEXT ,PAGE 6,

34 The ,gir.:ll,:ph ~1b(i1!#le shews the s!lJp-ply and demand 'qJi:lF.1le t(}l' ~tticl:1Jo~s_ J1£" ~a,ri1"glM(t~ ,gerr:it:~':d anii1Q~'iI"J!D~ ~hd ~tth~g- an a.r~k,hQke.a d~\Y dr~J.r:'l!~L¢.-' i~illy reduces 0.!J1e/5, ti.'b:®lihumi of d'evelopmg cancer, Si liIliJlM.fJ'liloously an h~rest~tiol1l of IJ:.tue aUI:ltlc.hoke 'WecvU se.'\Jiel\C~Y dameges the C"ro:-p'" \iVh icli.l. or: '!).he ,foHo~"·l.l!1ig 'Win dk~fE!I".I.m!bdy oCCI,~r as, !li. iI.\I.:!SUl:tf

A_ ''Fh~ $-1,U~f,;i!,:'i1' Qr ~,"M:!ti(:lildk'$$ will :1,lUoJ;ru~L;;N,!i. ,B_ "fh~ pri(,(>(; Qr s,r!t;Lcha\kx-l".\l ,,'riH :in(:rnnsoJ;"i.

C- r,['h~ d,A;!I1I.1.:;md {:o.r ~~rb;,~;}toke~ win cl_.t1cr>E!:'"~@$.. D- The qllU"iJ~tj:ty of n:.rti!!5hi(!;k€S grO'l.V~ win dil3-

crease,

E. The ~mJlre, or farmers who 8,~daJi~ in g~:{tr1Ni:n,g artlchokes will decrease,

3f.J; The price oF: 00 airline ttek€lt ~s. ~ypk':.aH~~ .Lmwcr if ,8, 'tt.~a~e:l" buvs the' '~i'oket 00 vera I weeks belore the JH.gh~, ' a d~p.a: ~;~~~:~ '~:t.j<1,~r~ :r$iLn~I:"' . Lh'£j,l,1J ,on thl?J; d~Ly Q£ dep,al'tlJ]J.'€'. Thls prlelng ~;t,_nl;t6ID" is besed C1'I.! ~:I!Ul: assumptton that

A. ·trnvc.Le:rs, are n'l]'t Mv,are of k.ow aidine .~rlOes ehange across t,hYlle

B_ ~,[,~\\,¢1~f:"2;i, do J.l'{!l~J h:;lvT$ .$J:~I:$iI:"[J ah:'i/4ii ,unode5 of '~nll1ijJiPo!['ta'i.;·kl,r

C- tr.e!'vciero, wlll P&"V a;lTIY price '00 travel as thf! depoctUJr-;~ dat e appreaches

D. the margi.lli.al cost or tJ:u:::' last fe1;\f seats OJIl a"TJ. ;;lij·rp!a~.I.{: ,bigbeJ: 't.hi!i.l!i':l. d~a1; f'Ol' the 'ihst fi.~'1N s~,t~

'E_ ~;r~\\'~.ers' d(';;I1r.Lsmd b(~oJ;~LrtJ~ H~$ ,r.;d~ls'~i.c AA t~~ de,palrtl'llW date a'PPl'Oacbes

GO ON "['0 THE .NEXT PAG.E 7

~il'il r:r~(JllJ:l;o~ogdcal a<d,'VM.lDes wj I~ lead to

A. a~:I . Increase ln .ilIl"'l"gh~a~ U~mty .R a decrease ln a;v:-.:::t.~ge tod:.al,[!osts C_ ;& d~t,~18f1<se ~.u il:u ,Iuet i2..c~I:''t.!l

D. ,Ell increase tn 1li'J2IJ.·.gi:na~ eosts

:... djseconornies {!iF SR1J.e

37' Marg;iifial.OO$1; is d~fhK~l· as the

A. CiltiLuge tn "to'~~ eost f.e51uh:trr:lg roffl :p.ro· d W;Lil".l$ ~,r.u a:ddi,t~(]n::1~, 1I;11"II:i:l of: {~IJ! ~~1i~lt

B_ i:;Jb~;lilb";(!o 1.111 tQt&i ~»"St, :r''"-':!$i!.L~~,L[.lg f!rQlfll '1,~f;l(1Jg B)i!l .f!dditit1r[l~i l unit if I[1JI'lUt

C. d[('eJ.'t1[lcCll3! 'be~tJj.'ai1:!!il rota 'I (:QSt and oota~ V,a:d11bte cost

D, difI'r,~:l'e[l,ce Ibet''!¥>ee:u ~ota~ 'vail.'i~Me rost and t {rrlt~l :fi.x.ed eost

:... diffel\fl;u'ui!.': b etw 00111 11i,ver.8 I~ t{[Jul eost and . ""9

:::uvt':!""~:i(I 'IliilJ:!:iilb~~ ~}I;;!~:I, d b,Fi~lr$d by (Jil)itP1'1t

QiI!.II.,~stion :SS-:39 are bi0!~¥ O~'!i. dYi'~ ]UlUOwlllg ,i:i'j:i'lrt!l'~

FIRlf B! So PRICr_l'qG STRATEG'y

High Low

1t",~'1if1I ifl'~ ~n ~IJJ'lUI! ,;p1 Jy'

T.he Pil!.vol1 :ffJ2I.h:LX, above gh.res. i.~ te pl'oHts assoei-

, • -v

~L'h~tl ,",dfh ~h"iii!' ;s~I::H,~Lc ,~h"-11;(li;!i';i 01:" two Jhil".r.1c'l; in ~llll

QIi~'PCllli:sti(:: I !IlC.h.l15 try', 'fhe fm't e!1!.tJ:y ilil €oob C'en is ·the pmnt 'to. flrm A and. the second to 'iiiI'm B,

38 If Ull,(!! t\'l!'O firrns collude, Flrm A'ie and IFk!ln B ts profits 'w'Oru~d be w]:!ll,eh (!if the fDHm*ililg"?

F'i'tl1r,t A .·.it:m B
( 111' $,].50 $ 5'1)
(b-} :8:100 ~li(l!O
( .) steo Sa5!O
t:
(J), s 501 $Hm
(e). S. 50' $ 50 3g [f each ~m:-1i!1 8h~.lIIlta f!.'eOill.slv chcoses i~ P;!."iCJJiig sl;r,a~g.v '~~i'tb.oljJ.t. oo~h.lsto[.I.~ Firru A'IS,[ii;IilU Firm B's l)r,ofHs would be 'i.v,hi~.h of: tl I,~ fo.l h't'iiJ.U.g'f

firln A~S P'ROFIlT F]1lM' J:l'S 'PH.OFTT

( ac} SHiO $f 5iU

(h} SIOO ~;].OC}

(~} $lOlJ g,],.:3Q1i

{d} S, DO g,l@O'

(e) s sn $ ~O

00 0 [\1 TO THE .NEXT PAGEl 8

lJO Iu the shott ,~:I!IJ~, a Pf:~:r"OCd'y iL')l}1ftJ.]!etitj.vt:: firm shol!,:!,H l!ihlJ.~. d(,]i!'>V,nI wh(>!inil.l''ilti~'

,/",\,_ [n~.niH1i!.!lnl tLV~r~g,e '!/;!ji:ri;llJ b~{~ ,oQQl ~xweds 'price

E- mmnj,mtlLl1} ,aver age tot8J cost e;-;:~(16

.prioe

c. m6rr~hlt,aJ revenue exceeds ITJliH.·ghiJaB iUllSt D. Iin~:@,ru.ml cost @6eOOs 1II1an>,Ji[lallevmlllii: ~~_ it is ~OSiliJ5 maule:)'

41 A OOJilSt;::--'Illt-CD8t~ perfectb1 I! .. xnn,p€titiw .L1lId!1!:L.;;,:,t[j' is iJ~ ~01J.,g",F.LU~ eqlliHbrium. ,[f d .. e de:,u;:]J:uj, rUt '!t..he good h~~;r'etl:SI":$$,: W,hlch oil:" th~~ ~OUDW:I:IlIi:g\ '~"'HL oecn r. ir~ the long' 'rljrr~?

f\ - The price W ill ir€~_1ah~ Illndl,fl,']f1gooE- TlIlG pclee '\¥iU iL!JCJ'OO6€!.

C- The priue will deereaee ..

P. :, eonornie proftts wm irJ;el\fi!~. B- 'Eoo.!1ornic protilts will decr€!®5e',.

42 AIS.~UII!1e 8. fh,m '11J.5.et:i (!!ltlv ~"ll,ro lnputs, ,ea:,pi>!A1.l( K) and ,hbo,['fL} t 00 p,]'"'oll:hlLC€ its output, ~t tne I1fUl:rgin~ ,p:r.oJrLCiI:. of 't.;;;icPital be M_Ptr., tille mi&JJ.gin"'Ll In·,oif.llli,tt ,of ~::1~'~o!r '~ i\d' Pf;., 'tJ~e. p\l."k~ tlf {!:IlIl'~i~~~LL l)('!; ,Pl\~. :!lim! the price (if labor be P.7:..-- The leaiS~ ~.t CODlbLI1l.8,tLOI1l of Cl"Lpit~ and ~3bo!f' 1\1 00 ded ~o produce ;j. gj \re'1ll !eve~. of O!lltPL~[.. is gi,Vt::llI I~ w1"iitih .u.f: the fDUO'ivtn.g?

A_ A1.Pl./ l~b ;;;;;; A1.PJ( I fie :B_ 1Itf.Pl..J Pl., :> A:iI".l;:!1(" I Pk C- M',Pf.., I Pi;': ,= ltif.Ppr! PI:.

'0· (~,rF )",::! - ~~!r'~"] )P

, - J;I{J:,~ l'f'~' .[. - l ~b',~ ,I. II[ ",'l("

E_ ll/lP,r, = jU",P,'g'

.113 A fitll'l:1i"s demand il.':i!li'\l'e: for labor 19 ~\lilli, to, :I. tleg ..

IVJ$HL ,d .its

A _ alltu:.€i~ 'I,I";!ji.da bk~ ~.'-QS:t IC-J:L~V.;;:; B. t{!lt;f.jlJ :r'i3Ni¥lIllilQ.1I;i CiJ,;IP"(~

C- [r.l!M'~il1l.S,!iJ. fx~:$'L Ct~lrvti

D_ lIT:~f~gi,I1I:!:IIJ :t"~~I1I~,I~ pl:"Odil,!A,:iL (:IJ1TVr;!i E- &'~nlg€ ,prodllLd 01l.1l''Ii{!

lJ4: A Lorena curve caJ:u be used b\l OO{tiI1l(H~JSts to do

;'

'Whi~.:h {~f U.lA;: fQI.~DwJ.ns?·

A _ Sh(lll.'l." the. d.Is~l"~bl!T~;.Ou:u {~f par$Q[.I£i L in \QrJ.tr;!; B. g~ow the ~l!l!1{!1ll.1rMt of , ... V€~Ul ln ;fj 'f~~'ti,Q1i! 0- Shotlll' the a:moul1it 'Of 'COIfJi'5HI1fIJt~ion ln :(Ii

nation

D. ,E·::q:.hllil wt"l)' d:ile~~[Jt households have differeut iJl!1u~nes

E_ ,~p~al.UI 'l,vhy ilII come Is ,e;q,iJj~Hy distrib,!;Lt~~ in w!;;ii£iU:sil:. QI;jI\I!,ntdr.;;S

lIfi The ~J:g,eo'I~ general has ,J.e~:.e:t"lll~ ned t.ba.t s[l:lok~ ilJg C,S,U6e6 cancer aud he&.it disease for both amokeli'S and passive smokers, nonsmokers who breathe smoJ>::e-ml-ud £I,fr, If elgarette l?tkes ~.'C dr::ta-r.§l"J:il1l.eJ ~l:I. :a . .fnil-El, [r.Htr.k~!!:., w,L1~ch ~f: the ,ruJ.ll;!J1;l,fi:r.~ 'w]H, br,,!; ~·l'ne?

A- The price oijIf ~i~l'1'e:~te5 will be '1;.1]0 low' sad the qjlli .. af.ut.U~v sold ~~m be too hijgh.

B. The [prJ.,ce .or c1;gil;l'e:~tes will be eJ]de:r.u~ but ,the q,ual'.I.t~t..v sold, 'INm he it.oo ilI.i.gb,

0_ T,ne m~:~t "IJi,·m beeffieient OOt3i.lI!Sf: mar'[I-H~l.$ £i.Lwa!,ll~ ~(,p~~t);,1 m~'Lr'gl,I1I~J. b!l;ll1lll;1~h ~~nd !ITIl8<rgi nel {:Q$~8-

D. The prlee of eigarettes \'!,fiU reH.ecG..t.i'te irn~r!"'g'i.I1J:jJ social benefit ~-.ece.['iff:d by !i'1,0'111- f;iI1J:1,Qkti~'-

E:_ ',["h' I)~LC~ '!;;if (:igtl!!r.etbi¥S win (J-v-t;:iI.'l:;I:.~L'it,;ij 'Htri!< true 5!J!ci~.l COB~ lmpoa ed 0[1 nO[iS!:lf'lolre:r~-

-'J!6 A ill QP.p(l\L"~' u[.l.i~;y cost. is ~nn~:·;Li.!iJ;.1.i in wl'1~ch of ,thi3 fo!~ot\'in~ !5itlll.at~m:Jg'?

A - III A IStil.lde.Llt deoides W Ml;e.nd college flil] ],~;['iI[L1;e •

B. 1[[.] A f;a;lIl"Jil.y 'LJJS"eS ~~ $2nJ'tOOO S8>ViIl!.f!lB to. p!!ll",d~ase ~n ,atfi:i:,onmbHe,.

C_ [I ,L] A farmer deeides 00 ~,'!lIW .l1l10(L',e

'l/Iihw"t ~lld !~ ;;;0['111"

s. :~. on~y :13._ n on.Ly C- ]11 Q!I1iy

'0- _~ and ill Qfij'ly E. _~ ~ II, 8cAU 11]

00 ON 1'0 THIE N.6XT P;~'l:G'E s

.!J7 U the de!l:i:JJ;;:mJ. [{tit gpo d. 11 i.I:Ut:.r~s as d~l: price {!ii'

gQod X. d~c["i!!~, m~i {:alJl be :or)rJ.chJdi$f~ Lna'i.

A_ X allieR Y ~~:tI ;!iyibr.s~i·ti!.Lb~ mods

B_ X illlld Y Un;I IOO[[~f-'l-e:r.r.te:l:t~$l·Y good$

C- X U:\i :9JH .i[l.ri;!!r~Q'.!'" J:,1'Qod .litlJld Y' is a. ~~'!,pil;1rIr~r .~od.

D- X 'is a 5tJlpe.t:io;r good ,;md Y' i5 an ~r~f~ri0!' ~,ood

:!.._ bot h :x Ml.d Y :1<!J~ i:r.~ferr-J . .pr ~oods

48 U the [DI_ao:'l{eit demand . .for. a .gDOd. is ir.~-eu)S_t~e 3T~d. [.he srLlp.pl.y ls elastle, ~'i/n'hic.h of ,the fo~law-,i~'I;g is t!'1a!!: 'Wlj'{.,'i.[~ ~,hl3:l:"{o!l Is ;e.:n ~:r,I'CrE!~ in sal£!8 tSix.1

A_ (~Ll'ISi!:Lm~rs win b~:r :rnog~ 'Of ~h~ bur,~llliJllI. of t!:!c{!, ts.K.

B. Producers will bear an of the burden of the tax,

C. Producers '!,!Il,in bear most of lillie h!lH\(!,el1l of the il.,a): or risk looJ iflg sales ..

D_ :H:3Q'~h OOI1l$iuI1r.I.ElIrS u"I.I:d llrorh~c f$ will. ~rnan:~ the burden of Ute ~~1);; equ:1Uy.

'K '.IT'bi2 price or '~ille good will oot· change.

,'i:@ U' ~L\ rJlI";!i.I:f.t§r~'IJ? (:(~rn:I,[X:!t,r~i''lffj. ftr.m. .i:1lI,c~1~~ it..';; pdCri,i; SOO'i,~ the marke~ eqlJ.lmbJ'lu;r~. price, '\l,~~lkh of ,the ~QHO'~d:lI1g' will be b'ue ~Q:r. this fi:~,IIlJ?

A. Its '~o;~aJ reve:mle will ~[I.'Cruase.

B. ~t,s pl'o6'~ will .LI1JCfeMe,

C. ~'~s" sales will decrease but, pmB.t will IL'OI& berure.tlted.

D. Its Jen'b~nd GtlU'lle viiU MOOCI11I.e dffi~"b"iWaUl,d. ::ilopung ..

'K ],~ wiD 'I~ot b-e abl~ to sel ~ B!IliY O'UJtput:

50 [,(~,thEr smcl he!f!([ lU:'J:~ jQLllIt!y PJ.·o!Jirt,QGd ~lJLclrj L.h~l~, Sill iI!;crt1~se· ln the. p;!.'odnctiQ!l! of {!IllH1!! results LIl! an eqll.lam ill1 . ...::rease ilu the productlon of t~e other. A I1i hrc.~.>e'ttse in the demand !:o.r !e."Lthe~: -~)jtm. most ,!llrery IC~'!.!.$i:'i<

,A,_ :;II d'¢c!r.e:9!~ ~:n a:.h!(!: pdc~ of hi.a,bh~!!.· B:_ ~ d~c!r-$~~' ~n ~;h~ r",do!;;!: of ~~. ~.

c- ~ di$ot:~f;I$' iu~ ~I:~!::!= ~ql;~ilibdl!UH q~£IultJ:~.Y of' baef sold

D- ~! ir!.cr,f£!~· 'i n the demand for beef til! the 'stuOl.'lj;-·.I."llllll,

51 WM~:I of the [{tinOWLT~g best e:~]a.~HS W.'~:I;V the shortr~.r.l. £I.V(~riilg'ri!= '~[')~,£J.l I~O@~ ,j;II.IP/$ [s U-dn.l!p~d?'

,A_ Spnaaq;!.r.l;g ~Qt~!, f~xE:d, 'ooSi'.$ O'''''!::!='J: :I;!I.l@;rgv.

QII.ltpULl;, and ro!ll8t;:1:Iil~· returns

B- Spll'€miirJg ilut8!l '5xed costs o.ve;J 8, La~t' output; allidi eveI1JtljJ.aB.l::;.~ dimi:r[ish,LI'Jg retams

C- ~n(!-1·ot;!::;II$U[,lg. 'bo~;£il fLl·l:):~f! ,(l(ll;;t~ .~il'ild :i.llIi1,.:n:I::;I2;i.h~~ retUJiI'liiB

'I)_ ~'ulW'~a5~lg &'!,<""€f<tlg.e vm:i.tl.bJe (;_'Qfj!!;s 8cJJLd dsCl.'easirug returns

E. .U'J-IM'::L'eaSl:lilg ave~!age 'll.81..aable oest and InCl"'lMiShug a;eni!!:":nS

~2 Assume '~hfJJt a 61'm. is '1il1.i1~imi2iil1lg shcrt-run prof~ ,its a~lij:l that ]Jt~l1e is ._greate.r.' than ~a;iJ)!'ra.g,e. ')ffu'!aibBe Qi;,;i81l;. ~Vhidl, nf ,th-e .f"Q.I,BO\1li:i:r~g- Inl,~'5:~ l~ ~\l.·u,e ;$;~ ihf,i!: firm"" 1'5\1"€~ of O'l1Itput.?

A- ~b.rgtlliaJ Tii'!!'i,!"€!J!.II.le ls eq 1jJ~ to a-'irer,fl~ to-

tal cost, .

,K ~bl'gir~~l revenue is :gl·e;t\w:r. tn;:1Jil:1 wt!iJ '\i'f)I:dJ;tba® ooS't.

C- M,~r'gi.(1j:lilJ rn~rJ:!l'e! ~~i!:f.IJ ~o' pdC~1 whJch is, ~reater t~HHI ~'1"'{!r.tl.g~ t(l,t~! OOGt-

D- Marginal revenue equal tQ !fJ"UiJ;:~ir~~ 00$. 13- P'!!'h:e ls equa] to .a,vel'8:~ ro~al (:'''iJf5~_

53 A. ~i.u~g,] ~·pdQ(>!i 'mQnOIX!'~ii!i!l_; 's I1I.I.a~g;'Fla!. rr$''''~Lr'llfI"(~ ,~ ;~ _ r~~TU:9la to i'l;.<;; '[.l'f~';;

B_ !~~ Ui11iM.I. ~t..s. p~,~c!";!;

c- g[:~~L~r. U.I£L'UI its ~:I."i~~

n. ,!J".IA;;igtlt.L"!I.e wlrn"Ll'I i'~ m.:-,Lldlll'Ei17£$ ,rG~llI!l)iij$ E- sero wheDl i6 i!I!i~..lruj'z133 r-roJ:it

54 Wh-erJ. [(t:;trgJI1I;fJIi. ~'l:'o~:Ih~ct ,~~()e(\i,d&l .e..'!/i,:iI:~lb."Ei p!rQd n!:.:'~,

whleh (!I~ the fQUowm:!r ml1l5t b4ii tt'lJ.li!3?'

A _ l:l 'I,i'{1I.a.,g€ product Is ill!ijJ~w:"l~l~', B- A 1,lIIi!'l".8;g€ ,pf.Ci.dlnct is dec~\ilii!ilgr c. l\4a.rgirr.!.al product is i!JlC1iee5~D. 'fut;f!iB produ 'L if] decreesiug,

E- ~[bta! product if! &it LIWi, maocLmUI[!.,

GO ON 1'0 THE N'EXT 'PAnE io

fj.r~ Whic.b (lor the foIJ6'i.~,i.u];§: is true i.f a liim!Ll!l}p6I,isli:?s, ".l.fL~:I!l:e.J, lI.l3'!/eTJ.U~~ m~ !I".Iieg9i~l '!/~ at; the CUJ,"rn[l:t l~w~ (~f output?

h., Demand Foil' its prod:uct is lILnH ,iJkll5,UC;, B. Demand 10[' its product pr 100 ,ek15,ti0, C, Dema nd fbi[' its product IJ".If lee i_ll'ekr~t~c, D- MMgLIli..Jn.l cost ,~5' equal to peiee.

.... ,~-hbirgil1lall'e'!r"mlLl.e ~B eq llIal to priee,

56 A rne:r_g€[' of' '~\¥O firms 1l!'1::1,Y 'j ncrease eCOIrJ{!I!IJ] lc ~1Iii-' ,ei'8l11cy by

A. decreasing aVel'ag-e ,ito,t~1 'cost thl',ough an ililt,r,OOtle iJ:~ eronomies.uf scale

lI3_ deC:l·e:asi~.I,g OiL1!tPUt t.Qi reduce IlI.k-"'I.rg;l.IiI0e!

CQ$t. ~lI1id (!g-I;Il~L,!i%'l$ ~~I:,i«

C- i:no;;;l:,r,:-.I:iIsing ~11I(;I(I:r3:iil,;: pnJfi~~ 'bll!'b diJ;)(:n;!MiS! b'l~ consumer surplus

D- i Ll}(!J:easirl:I;)" eousumer surplus bv doore::ts-

~ .. ,I,

i_lag -eoor&Cim~C prol1w

IE:_ 'i ulI:.::I"oosill'.I._g 1110~:lSi.l!~1'L""::~" s!alrpl:IllS by sJ:lIi£tt n ~g Uii~;!i d~J~!M.u.i ,Curv ' ro~ th~ pro~h.c~ to' the d~'~

U. 7 The graph aibo'ti"€ illustrates th~ ~a..oor !iTJ2!J:'k-et ({iiI '[._oo[j~e "w~'lrer.s. The- current minimum WIDge {'OJ: aU, ''If(ft1rers Is M/l- If Co:liig)l'E!gS :i.ultt'udu(le8 a SLl!b:ffl.[IiI,~ ~:nnJLFrJ '\~"i~B'~, 'i~f2 'bh;;_.;~ ~),piP'~i~, orn lv ~QtiOOI1W~'6'1 W',nilit is the most l1'ke!,v eff\!:}ct onteenage e:trrl,p~oyn IUle~.I:t?

A_ 'FeeJ'~~~ e:rnp~QymeJ:~~ wm iItc:!l:£aoo beC.!li;ul~ :Ekuli$ w~lL ';!ran~ ~o hi:r-r.:r ,L'TI~:'!3 teeI!lug€[S :t't VV~ 't.iU.lUl art Uif1•

B- rfeem~ eiDI1Iplo'ym-€''[~~ wil, inc~8S'e ~eause more '[;_oon~m:1ii 'wiU \yaJ:if~ 001 '!Af(I'l'k ail. ~iV.:ii: tharu ',at i~l-

C_ Teeuage el1l.(p'JDY-:-DIJeil~ will decrease be(!J)I;IIlf.'l~ :f,eV1f(;:i1r w~![I.Elb~ra 'wiU '~m':;ml~; ~>Q "1{Q([.k_ ~It ~;V~ U:U~:!] nt leVi _

D _ 1ee1!J::J._g€ oI3m,plQy!!ne!Jl.t will decrease Ibe.-

~,U~ fh:,[l'IIS ~'i!in 'W'iLll'it to lkre f:t:'!AreL'

te-e]:l<fL,g'\:l~,'S at Ul~ ~nflnl :llilIj ~~.'l-

'E_ ~~J.I,Ub~ il3IIlli,pkf,'ilIU'W!!ll'~ ,"",m p~o/ tlilir,l; ~u"m-e bec.::1:l~6€' th-e mark0~-cl€i!I ring "!:age i;!j, ~owel' thal~ Ttill and, '1+'1'.

GO ON 1':0 T:~E NEXT pj\G:E '11,],

r~s l'1llargllfl:Elill',e'';!em'-l£: ,Pl',Odtlii:t is defined as f~1i\

A. clJ.all'lge ~n income that {liCCIJ.U'.s ''i4~enl ,an i~Dldii;'j,(h.lal works ,ru.:!lJ.litk.1!fJiI,l hooits

B. &Ut1iige in total oover~IlJ:e~ha;t oceurs whf!rtI one ~ild,[di{r(n;1tll Ul.L"'~'~ of the good, is produeed

C. cnJ..fLriS;e [ru total ]:ev:erul!.leLha:c occurs '\'l,i"hif:.~ 'Or.l.l,;! ~1.d_dH~orH;Ll. tlIo~l;"~ {~f :!;'In ir.l,pu~ 1$ OIiTJ,-' r'~G!S'ed

,D_ tGt,l t.t::\I'e:~.I,lLB {HYi,~.ed, b~r ~h~ t],l1!a.rutit,\1 or I~tbo,r ¢rniPl'o~d

l8_ cl:liI-uige i~1 totaJ 000.1[. th at occurs -~")l,'herl, one ~'ddJ.t;:i.Q:I!li~~ '1..!J1lI L~ of ~1I1l .L1lI:p~~"'t is '!"!<r.lt!lp!o~YiSd

f1;8! AI1l h~(%e21SB' illl the m,a;rgfi]'ii3ii social be.nefit "? OOI1J$iJ]miJ:uf'!;' a JlifilM~c good should result h~

A.. til. decrease iI11 [p'!!J bllc produeelon of '~ne g:rJo-J

.B. ;[L[.i. LI1iCreaW in the i!lptJma~ quantity of tne ,good

C. 3.L decrease iIi! the o.ptima! (jlllillJI'it:U':~' of the ,@;,ooJ

D- ~ deerease i III ~]w ~ei~ {!(lst."7.i a..ssod~ed '''lith [llw(],lI!c.::iog 't~e good

~3- '3J. d~8G~ in the 6od~ 1.:(I~t.fj, ,~l:~oot'\i:~l_j.ted, wrUl consuraing the good

@o A..-rJ l.'ru£h.]sl1')1' wiM produce U:LOre than the OOcl..il'tl!Z;1 e:r~ ~i(:~ef,~~ n~'ifI:;.1~ Q.f .J;rI!l1trJ~'t '~[JdJ~1;"' \'!(,h9,ch of Ulr;': f:{~Uow:tl1l~ ,co[!d.1l~;hl:t06 t

A - 'Fb!E! pr{!!(hu"':'~~OHOI[' coneumptjcn of 8, good generaees a. positive exi[._erlJlaH~v.

'8. The prod!JIt~~OI~ ,01' OOIIlf!Jl.lIlf.lpi.i(i(j".1. or a

good gt.':T.uel',ates a IlBgawtive ,~te:rt~aUt.Y_

C- ',["h - Ll1Io!;lu~,~r,'" ,i:; :-,l :rnQ'LIli~lIl?O~:-':

D_ ·.nl' Li1I.u,iI;]$k .... pJ:odt~~ :;1 p;~~'l;)lk ~Qi;l 'E_ r,[,:h~;l :il1idu~"Lry i):I."i;,"!dt!.QE!~gL p1"i",tL ('!i ~d-

©2aU5 - CbmlPi!ed ~.v DAN LI

oo ON TO THE N~XT PAGE 12

Item No., Correct Ar~swer Item No. C-lti~T,elj_·:t {\,~].swe:i'
1 ,t.\ in D.
2, f\ ,:12 D
S ,A, ,3~ B
1, C 3A B
.[j. B ,ijEj, E
6 ,1'\ 3'6 113
'il' C 3'" f'k
' {
<3 J\, 38 B
~ lI3 ;3'9 E
10 B 411] p!;.
1.1 D ,41 A
1:2' E -4,2 p!;.
"13 C 4·3 D
1 .... B 4,4 ,J:\.
is C 4E ,A
' ,jJI
H1 113 "'~ !5 B
11 B ~:7 B
lS C 48 ~l
1.'9 A ·49 E
::ro n &0 B
2:1: 'E; 51 ~~
::22' C 52 .D
1'3 C os B
'2'4 13 iJ4 A
:z.J C 55 C
,
2n E; ,56 ,A
-·c·
2:1 .B 5"[ ,A
ss .c GS c
2'9 D .59 B
so C 'lJD U GO ON 1'0 THE NEXT 'PAGE 13,