Finals Specific Questions

Question 1

The break-even level out output occurs for a business when

A) Marginal revenue equals average total cost.
B) Marginal cost equals marginal revenue.
C) Average revenue equals marginal revenue.
D) Average revenue equals average variable cost.

Answer 1

A) Marginal revenue equals average total cost.

Question 2

An increase in Producer Surplus under perfect competition will increase:

Price and Output
Price only
Output only
Supply

Answer 2

Price and Output

Question 3

The market supply curve under conditions of perfect competition is typically perfectly elastic.

True
False

Answer 3

False

Question 4

The occurrence of drought conditions in the corn market will

A) Result in a deadweight loss to society.
B) Lower consumer surplus.
C) Increase the price of corn.
D) All of these.

Answer 4

D) All of these.

Question 5

Producer Surplus is a term used by economists to determine:

Profit of Consumers
Revenue of Producers
Savings of Producers
Profit of Producers

Answer 5

Profit of Producers

Question 6

An increase in demand involves

A) A shift in the supply curve to the right.
B) Movement along the demand curve.
C) A shift in the demand curve to the left.
D) None of these.

Answer 6

D) None of these.

Question 7

An increase in supply involves

A) A shift in the demand curve to the right.
B) Movement along the supply curve.
C) A shift in the supply curve to the right.
D) None of these.

Answer 7

C) A shift in the supply curve to the right.

Question 8

An increase in the price of corn could most likely be attributed to a?

Shift in the supply curve to the right
Decrease in the quantity supplied
Increase in the quantity demanded
Shift in the supply curve to the left

Answer 8

Shift in the supply curve to the left

Question 9

The market supply curve can be found by

A) Adding the supply response for all firms for a given set of prices.
B) Adding the quantities the firms could supply at a break-even price.
C) Looking at the quantity supplied in the previous period.
D) None of these.

Answer 9

A) Adding the supply response for all firms for a given set of prices.

Question 10

An increase in supply will increase the quantity demanded.
True
False

Answer 10

True

Question 11

Total economic surplus is represented by

A) The area below the demand curve and above the market equilibrium price.
B) The area above the supply curve and below the market equilibrium price.
C) The area below the demand curve and above the supply curve.
D) None of these.

Answer 11

C) The area below the demand curve and above the supply curve.

Question 12

The firm’s supply curve in the short run is given by

A) The segment of the marginal cost curve above average total cost.
B) The segment of the marginal cost curve above average variable cost.
C) The segment of the marginal cost curve above the break-even price.
D) None of these.

Answer 12

B) The segment of the marginal cost curve above average variable cost.

Question 13

The price of the product and marginal revenue are identical under conditions of perfect competition.
True
False

Answer 13

True

Question 14

The producer’s supply response under a cobweb adjustment response is based on the previous period price.
True
False

Answer 14

True

Question 15

Given the graph below, what is the level of producer surplus at a price of $5 and quantity 5?

A) $8.50
B) $12.50
C) $15
D) $18

Answer 15

B) 1/2 x 5 x 5 = $12.50

Question 16

A market surplus occurs in a market when the quantity supplied at a given price is greater than the quantity demanded.
True
False

Answer 16

True

Question 17

A market shortage occurs in a market when the quantity supplied at a given price exceeds the quantity demanded.
True
False

Answer 17

False

Question 18

Firm’s under conditions of perfect competition will

A) Have no disproportionate influence on price.
B) Will face barriers to entry.
C) Will face a few other competitors in the market.
D) None of these.

Answer 18

A) Have no disproportionate influence on price.

Question 19

A bumper corn crop will increase both producer and consumer surplus.
True
False

Answer 19

True

Question 20

The long run average cost curve

A) Is an envelope of a series of marginal cost curves.
B) Reflects increasing, constant and decreasing returns to labor.
C) Is an envelope of a series of short run average cost curves.
D) None of these

Answer 20

C) Is an envelope of a series of short run average cost curves.

Question 21

What is this firms total cost?

100
200
300
400

Answer 21

300

Question 22

The social costs of imperfect competition are known as

A) producer surplus.
B) consumer surplus.
C) dead-weight loss.
D) None of these.

Answer 22

C) dead-weight loss.

Question 23

Which form of imperfect competition is associated with the airline industry?

A) monopolistic competition
B) oligopoly
C) monopoly
D) None of these

Answer 23

B) oligopoly

Question 24

In an oligopoly

A) firms will match all price decreases of another but will not match price increases.
B) the market demand curve is kinked.
C) firms will attempt to differentiate their products.
D) All of these

Answer 24

D) All of these

Question 25

A market where there is a small number of sellers: Perfect Competitive Oligopoly Monopoly Monopolistic Competition

Answer 25

Oligopoly

Question 26

Which of the following is true about oligopoly? A) There are many sellers B) There are few buyers C) There is no ability to set price D) None of these

Answer 26

D) None of these

Question 27

What is the level of output this firm would produce? 20 25 28 50

Answer 27

20

Question 28

The Packers and Stockyards Act of 1921 A) was the principal legislation exempting cooperatives from antitrust laws. B) Both reinforced antitrust laws regarding livestock marketing and established the Packers and Stockyards Administration, still exists today C) established the Packers and Stockyards Administration, still exists today. D) reinforced antitrust laws regarding livestock marketing.

Answer 28

D) reinforced antitrust laws regarding livestock marketing.

Question 29

Barriers to entry are more likely to be stronger under monopolistic competition than under an oligopoly. True False

Answer 29

False

Question 30

The graph below exhibits what kind of market structure. Oligopoly Monopoly Monopsony Oligopsony

Answer 30

Monopoly

Question 31

A government-imposed price ceiling is an example of what? Preferential Government Policy Countervailing Action Lump-Sum Tax Imperfect Competition

Answer 31

Countervailing Action

Question 32

Which of the following is not characteristic of imperfect competition? A) Both few buyers and sellers and barriers to entry B) homogeneous products C) barriers to entry D) few buyers and sellers

Answer 32

B) homogeneous products

Question 33

What is the total revenue of this firm? 300 448 260 400

Answer 33

400

Question 34

If the government were to impose a lump-sum tax on a monopolist, what is likely to happen to the quantity produced of a commodity and the price charged relative to the situation where there is no lump-sum tax imposed? A) The price would fall but the quantity produced would rise B) No change in price, quantity produced, or profit would occur. C) The price would fall and the quantity produced would fall D) No change in price or quantity produced, only a reduction in profit

Answer 34

D) No change in price or quantity produced, only a reduction in profit

Question 35

Which of the following are common barriers to entry? A) economies of scale B) capital access and costs C) absolute unit-cost advantages D) All of these

Answer 35

D) All of these

Question 36

Non-price competition refers to actions that attempt to increase the demand for a product or service via product differentiation. True False

Answer 36

True

Question 37

A minimum price policy affects which firm? Monopolist Oligopolist Monopolistic Competitor Monopsonist

Answer 37

Monopsonist

Question 38

If the government were to establish a Minimum Price of 16, what would the output change from? and what would the new output be? 20 to 25 28 to 20 25 to 28 20 to 28

Answer 38

20 to 28

Question 39

The U.S food and fiber system is one of the least regulated industries in the economy. True False

Answer 39

False

Question 40

When firms cannot alter the price they face in the market, they are said to be price takers. True False

Answer 40

True

Question 41

Increasing the discount makes it more expensive for commercial banks to borrow reserves at a Federal Reserve District Bank discount window. True False

Answer 41

True

Question 42

A inflationary gap occurs in the economy when A) Aggregate demand is greater than potential GDP. B) Aggregate demand is greater than full employment output. C) Aggregate demand is perfectly elastic. D) None of these.

Answer 42

B) Aggregate demand is greater than full employment output.

Question 43

The functions of the Federal Reserve System include A) Supply the economy with government bonds. B) Supervise the U.S. Treasury. C) Regulate the money supply. D) None of these.

Answer 43

C) Regulate the money supply.

Question 44

A decrease in the fractional reserve requirement ratio will A) Shift the money supply curve to the left. B) Alter the slope of the money supply curve. C) Will decrease the money multiplier. D) None of these.

Answer 44

D) None of these.

Question 45

The level of saving in the economy is equal to the level of income times the marginal propensity to consume. True False

Answer 45

False

Question 46

Given the equation C = $1,500 + .70($3,000), A) Consumption is equal to $3,600. B) Marginal propensity to save is .30. C) Autonomous consumption is $1,500. D) All of these.

Answer 46

D) All of these.

Question 47

The following economy is experiencing what? A Recessionary Gap between YFE and Y1, Expansionary Monetary policy is necessary A Recessionary Gap between YFE and Y1, Contractionary Monetary policy is necessary An Inflationary Gap between YFE and Y1, Expansionary Monetary policy is necessary An Inflationary Gap between YFE and Y1, Contractionary Monetary policy is necessary

Answer 47

A Recessionary Gap between YFE and Y1, Expansionary Monetary policy is necessary

Question 48

The money multiplier is A) The number of times GDP can be increased by expansion of the money supply. B) Is equal to the fractional reserve requirement ratio times total reserves. C) Assures that excess reserves will be driven to zero. D) None of these.

Answer 48

D) None of these.

Question 49

The functions of money include A) A medium of exchange. B) A store of value. C) A unit of accounting. D) All of these.

Answer 49

D) All of these.

Question 50

The marginal propensity to save is equal to A) The change in savings with respect to the change in change in consumption. B) One minus the marginal propensity to consume. C) One plus the marginal propensity to consume. D) None of these.

Answer 50

B) One minus the marginal propensity to consume.

Question 51

A complete circular flow of the economy includes both the government sector and the financial markets. True False

Answer 51

True

Question 52

The money supply curve will shift to the left if the Federal Reserve buys government securities from commercial banks. True False

Answer 52

False

Question 53

A recessionary gap occurs in the economy when A) Aggregate demand is less than potential GDP. B) Aggregate demand is in the depression or Keynesian range of the aggregate supply curve. C) Aggregate demand is less than full employment output. D) None of these.

Answer 53

C) Aggregate demand is less than full employment output.

Question 54

Gross Domestic Product =C + I + G + Net Imports =C + I + G + Exports =C + I + G + Imports =C + I + G + Net Exports

Answer 54

=C + I + G + Net Exports

Question 55

Disposable income reflects A) Income before taxes. B) Net income from business activity. C) Personal income after taxes. D) None of these.

Answer 55

C) Personal income after taxes.

Question 56

Investment expenditures consists of A) Construction of new roads and bridges. B) Construction of office buildings. C) Purchase of farmland. D) All of these.

Answer 56

B) Construction of office buildings.

Question 57

Consumption expenditures consists of A) Purchases of airline tickets. B) Purchases of automobiles. C) Purchases of food. D) All of these

Answer 57

D) All of these

Question 58

Open market operations by the Federal Reserve System include A) Purchasing government securities from banks and other depository institutions. B) Buying or selling of government bonds by the BMOC. C) Selling bonds to banks to expand their lending capacity. D) None of these.

Answer 58

A) Purchasing government securities from banks and other depository institutions.

Question 59

The monetary policy tools available to the Federal Reserve System include A) Open market operations. B) Changes in excess reserve requirements. C) Change the prime interest rate. D) None of these.

Answer 59

A) Open market operations.

Question 60

Expansionary fiscal policy actions include A) Increase government spending. B) Cutting income taxes. C) Increased defense spending. D) All of these.

Answer 60

D) All of these.

Question 61

Expansionary monetary policy actions A) Would decrease the derived demand for farm input supply firms. B) Would increase the derived demand for farm input supply firms. C) Would decrease the demand for agricultural loans. D) None of these.

Answer 61

B) Would increase the derived demand for farm input supply firms.

Question 62

The foreign exchange rate affects agriculture because A) A stronger dollar enhances the export demand for U.S. farm commodities. B) A weaker dollar makes depresses the export demand for U.S farm commodities. C)A weaker dollar makes imports of inputs used by U.S. farmers. D) None of these.

Answer 62

D) None of these.

Question 63

The "Big Five" macroeconomic variables with respect to agriculture A) Include the rate of interest, the unemployment rate, the rate of inflation, the rate of growth in GDP and the producer price index. B) Represent key linkages between sectors in the food and fiber industry. C) Include the rate of foreign exchange, the rate of interest, the unemployment rate, the rate of inflation, and the rate of growth in GDP. D) None of these.

Answer 63

C) Include the rate of foreign exchange, the rate of interest, the unemployment rate, the rate of inflation, and the rate of growth in GDP.

Question 64

The phases of a business cycle in order include A) Peak, recession, expansion and trough. B) Peak, recession, trough and expansion. C) Peak, expansion, recession and trough. D) None of these.

Answer 64

B) Peak, recession, trough and expansion.

Question 65

Leading indicators of activity in the economy: A) Current industrial production B) Labor cost per unit or output C) New building permits D) None of these

Answer 65

C) New building permits

Question 66

Expansionary monetary policy actions A) Would increase farmers' fixed liabilities. B) Would increase farmers' total assets. C) Would decrease farmers' operating expenses. D) None of these.

Answer 66

B) Would increase farmers' total assets.

Question 67

The civilian labor force includes A) The number of employed persons. B) The number of people in the Armed Services. C) The number of employed and unemployed persons in the economy. D) None of these.

Answer 67

C) The number of employed and unemployed persons in the economy.

Question 68

The consumer price index or CPI includes A) The cost of a standard market basket bought by producers in the current year relative to a base period. B) The cost of a standard market basket bought by consumers in the current year. C) The cost of a standard market basket bought by producers in the current year. D) The cost of a standard market basket bought by consumers in the current year relative to a base period.

Answer 68

D) The cost of a standard market basket bought by consumers in the current year relative to a base period.

Question 69

Given the graph below, one can conclude that efforts by the Federal Reserve to fight inflation will ________ employment in the economy. Increase Decrease Remain Unaffected Lead to Stagflation

Answer 69

Decrease

Question 70

Types of unemployment: A) Frictional unemployment B) Seasonal unemployment C) Structural unemployment D) All of these

Answer 70

D) All of these

Question 71

The rate of growth in GDP affects agriculture A) Has a minimal effect on agriculture because more consumers eat away from home. B) Has a major effect on agriculture because people need to eat. C) Has a some effect on agriculture because of the low income elasticity for agricultural products. D) Has a major effect on agriculture because of the high income elasticity for agricultural products.

Answer 71

C) Has a some effect on agriculture because of the low income elasticity for agricultural products.

Question 72

While nominal farmland values have increased dramatically over the last several decades, real farmland values have remained relatively flat. True False

Answer 72

True

Question 73

The rate of interest affects agriculture because A) A high interest rate reduced the capitalized value of farmland. B) A low interest rate lowers farm expenses. C) A high interest rate suggests a stronger dollar which depresses farm export demand. D) All of these.

Answer 73

D) All of these.

Question 74

The short run Phillips curve illustrates: A) The trade-off between the unemployment rate and the inflation rate. B) The unemployment rate relative to the civilian labor force. C) The increase in wage rates relative to the increase in the general price level. D) None of these.

Answer 74

A) The trade-off between the unemployment rate and the inflation rate

Question 75

Contractionary fiscal policy actions will lead to a decline in farmland values and farm equity as net farm incomes decline. True False

Answer 75

True

Question 76

Which of the following statements is correct? A) Demand pull inflation is caused by an increase in demand and an increase in supply. B) Demand pull inflation is caused by an increase in demand and an increase in the quantity supplied. C) Cost push inflation is the result of rising input costs pushing the aggregate demand curve to the left. D) None of these.

Answer 76

B) Demand pull inflation is caused by an increase in demand and an increase in the quantity supplied.

Question 77

The rate of unemployment affects agriculture because A) It signals a slower growing economy. B) It signals a movement along the Phillips curve. C) It suggests weaker off-farm employment opportunities for farm operator families. D) None of these.

Answer 77

C) It suggests weaker off-farm employment opportunities for farm operator families.

Question 78

Stagflation refers to when the general economy is experiencing a falling unemployment rate and a rising inflation rate. True False

Answer 78

False

Question 79

Macroeconomic policies that promote supply expansion will expand the level of output in the aggregate product market and cause the general price level to decline. True False

Answer 79

True

Question 80

Contractionary fiscal policy actions A) Would decrease farmers' fixed liabilities. B) Would increase farmers' total assets. C) Would increase farmers' operating expenses. D) None of these.

Answer 80

D) None of these

Question 81

Producer surplus plus consumer surplus in this market is A+B A+B+C B+C+D A+B+C+D

Answer 81

A+B+C+D

Question 82

What is the fundamental basis for trade among nations? Shortages or surpluses in nations that do not trade Misguided economic policies Absolute advantage Comparative advantage

Answer 82

Comparative advantage

Question 83

The basis for trade includes A) Differing opportunity costs. B) Identical opportunity costs. C) Government regulatory actions. D) Autarky.

Answer 83

A) Differing opportunity costs.

Question 84

Which of the following terms best describes the idea that a nation's trade policy is restrictive, limiting the amount of imports from other countries? A) Protectionism B) Mercantilism C) Nationalism D) None of these

Answer 84

A) Protectionism

Question 85

Opportunity cost theory suggests that a nation has A) An absolute advantage in the production of the good with the lowest opportunity cost. B) No advantage in the production of any good with an opportunity cost. C) A comparative advantage in the good with the lower opportunity cost. D) None of these.

Answer 85

C) A comparative advantage in the good with the lower opportunity cost.

Question 86

Expansionary domestic fiscal policy A) Decreases exchange rates. B) Increases exports. C) Decreases imports. D) Increases interest rates.

Answer 86

D) Increases interest rates.

Question 87

Producer surplus in this market after trade is C C+B A+B+D B+C+D

Answer 87

C

Question 88

The tariff decreases producer surplus by the area C, decreases consumer surplus by the area C + D + E, and decreases total surplus by the area D + F. increases producer surplus by the area C, decreases consumer surplus by the area C + D + E + F, and decreases total surplus by the area D + F. creates government revenue represented by the area B + E and decreases total surplus by the area D + E + F. increases producer surplus by the area C + G and creates government revenue represented by the area D + E + F.

Answer 88

increases producer surplus by the area C, decreases consumer surplus by the area C + D + E + F, and decreases total surplus by the area D + F.

Question 89

When a small country importer imposes an import tariff, it experiences a new welfare loss, while the rest of the world experiences a net welfare gain. True False

Answer 89

False

Question 90

When a country's quantity supplied exceeds its quantity demanded for any given price, then this indicates the country has A) Excess demand. B) Excess supply. C) Import demand. D) None of these.

Answer 90

B) Excess supply.

Question 91

The four major forms of economic integration include A) Free trade area. B) Customs union. C) Common market. D) Economic union. E) All of these.

Answer 91

E) All of these.

Question 92

As the U.S. dollar appreciates in value, the price of goods in foreign currency increases resulting in A) The demand for U.S. goods to decline. B) The decline in prices. C) Loss of market share. D) All of these.

Answer 92

D) All of these.

Question 93

Consumer surplus in this markey before trade is A B+C A+B+D C

Answer 93

A

Question 94

Both U.S. Congress and the Executive Branch share responsibility for the formulation of U.S. trade policy. True False

Answer 94

True

Question 95

Which is country is NOT a key destination for US Agricultural Exports? Canada China Brazil Mexico

Answer 95

Brazil

Question 96

When a small country importer imposes an import tariff, it experiences a new welfare loss, while the rest of the world experiences a net welfare gain. True False

Answer 96

False

Question 97

The mercantilist philosophy argues that nations can become rich and powerful by exporting more than they import. True False

Answer 97

True

Question 98

A tax on an imported good is called a quota. tariff. supply tax. trade tax.

Answer 98

tariff

Question 99

An increase in U.S. interest rates would cause a decrease in the demand for U.S. dollars. True False

Answer 99

False

Question 100

According to comparative advantage, a nation should A) Not import any goods if it does not have a relative disadvantage. B) Specialize in the production of the good with the least disadvantage. C) Import only the goods where the nation has a disadvantage. D) Not produce any goods if the nation is at relative disadvantage.

Answer 100

B) Specialize in the production of the good with the least disadvantage.