Normative economics involves
A) a statement of fact.
B) a statement of what should be.
C) a statement of what is.
D) a statement that is purely descriptive.
Ques. 2The right to private property and ability to exchange goods and services freely is known as
A) political freedom.
B) economic freedom.
C) constitutional freedom.
D) external freedom.
Ques. 3When a unit tax of 2 is levied on a product
A) the entire 2 is paid by the consumer.
B) the entire 2 is paid by the producer.
C) both the consumer and producer pay 2 each.
D) the consumer pays part of the 2 and the producer pays the rest.
Ques. 4The bowed shape of the traditional production possibilities curve reflects the
A) negative side effects of economic growth.
B) fact that not all resources are equally well-suited to producing all goods.
C) costs of unemployment.
D) problems of inequality.
Ques. 5The Herfindahl-Hirschman index is measured by
A) adding the market shares of all firms in an industry.
B) adding the squares of the market shares of all firms in an industry.
C) squaring the sum of the market shares of the all firms in an industry.
D) adding the market shares of the four largest firms in an industry.
Ques. 6Which of the following will tend to occur when the interest rate increases?
A) The demand for money curve shifts leftward.
B) The demand for money curve shifts rightward.
C) There is a rightward movement along the demand for money curve.
D) There is a leftward movement along the demand for money curve.
Ques. 7Improvements in labor productivity
A) affect the level of wages, but do not affect the rate of economic growth.
B) affect the level of profit, but do not affect the rate of economic growth.
C) hinder economic growth, because they cause unemployment.
D) contribute to economic growth.
Ques. 8Which type of regulation applies to all firms in the economy, as opposed to only covering specific industries?
A) economic regulation
B) social regulation
C) rate regulation
D) statutory regulation
Ques. 9Monopolistic competition is characterized by
A) relative ease of entry into the market.
B) a standard, undifferentiated product.
C) persistent long-run economic profits.
D) production at minimum average cost in the long run.
Ques. 10Private goods are those goods
A) that violate the principle of rival consumption.
B) for which no public market exists.
C) that can only be consumed by one individual at a time.
D) to which the non-exclusion principle applies.
Ques. 11Refer to the above figure. A unit tax has been placed on the good. What is the total amount of the tax?
A) 0
B) P2 - P0
C) P2 - P1
D) P1 - P0
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