optional exam

24. In an indifference curve/budget line diagram, generally when the price of a good increases, the consumer purchases a. less of the good and moves to a lower indifference curve. b. less of the good and moves to a higher indifference curve. c. more of the good and moves to a higher indifference curve. d. more of the good and moves to a lower indifference curve.

less of the good and moves to a lower indifference curve.

2. In an indifference curve/budget line diagram, generally when the price of a good decreases, the consumer purchases a. less of the good and moves to a lower indifference curve. b. less of the good and moves to a higher indifference curve. c. more of the good and moves to a higher indifference curve. d. more of the good and moves to a lower indifference curve.

more of the good and moves to a higher indifference curve.

5. At the shutdown point, a. P = ATC b. TR = TVC. c. The total losses of the firm equal TFC. d. (b) and (c) e. None of the above.

(b) and (c)

14. The key difference between perfect and monopolistic competition is that monopolistic competition involves __________ . a. Many buyers and many sellers. b. Product differentiation. c. Brand Loyalty d. Homogenous products. e. (b) and (c)

. (b) and (c)

18. Average total cost is equal to a. average fixed cost + average variable cost. b. total cost quantity. c. the total cost per unit of output. d. All of the above answers are correct.

All of the above answers are correct

20. If price is equal to ATC for a perfectly competitive firm, the firm is a. Making normal profits. b. Making a loss but should continue to produce in the short-run. c. Making a loss and should stop producing immediately. d. Making above normal profits.

Making normal profits.

4. Total profits are maximized where a. TR equals TC. b. The TR curve and TC curve are parallel. c. The TR curve and the TC curve are parallel and TC exceeds TR. d. The TR curve and the TC curve are parallel and TR exceeds TC.

The TR curve and the TC curve are parallel and TR exceeds TC.

11. Suppose a basket of consumer goods and services costs $180 using the base period prices, and the same basket of goods and services costs $300 using the current period prices. The CPI for the current period equals a. 166.7 b. 66.7 c. 160.0 d. 60.0

a. 166.7

12. An economic recession produces a. An increase in cyclical unemployment. b. An increase in structural unemployment. c. An increase in natural unemployment. d. A decrease in cyclical unemployment. e. A decrease in natural unemployment.

a. An increase in cyclical unemployment.

22. The quantity demanded of good A decreases by 5 percent when the price of good B rises by 10 percent, everything else remaining constant. Fill in the blanks in the following statement by choosing the correct combination of words: The cross elasticity of demand tells us that goods A and B are ______ and as the price of good B rises, the demand for good A _________. a. Complements/decreases. b. Inferior goods/increases. c. Substitutes/decrease. d. Substitutes/increase.

a. Complements/decreases.

10. The following are all final goods except a. Flour used by the baker to make cupcakes. b. Bread eaten by a family for lunch. c. Pencils used by a student in class. d. Adidas shoes used by a basketball player.

a. Flour used by the baker to make cupcakes.

22. Which of the following statements illustrates frictional unemployment? a. Hasan is quitting his current job to find another that has better prospects. b. Many bank tellers (veznedar) lost their jobs due to the installation of ATM machines. c. Ahmet lost his job because he did not have the technical skills required to do his duty. d. Thousands of employees were laid off during the 2008-2009 recession.

a. Hasan is quitting his current job to find another that has better prospects.

4. Marginal utility theory shows us that a rare gem (mücevher) which we value highly has a ______ marginal utility and a ________ total utility. a. Large/small. b. Small/small. c. Small/large. d. Large/large.

a. Large/small.

7. In the market for cell phones, which of the following events increases the supply of cell phones? a. New technology that lowers the cost of making a cell phone. b. A rise in the wage rate paid to electronics workers. c. An increase in people's incomes. d. None of the above.

a. New technology that lowers the cost of making a cell phone.

24. In contrast to Keynes, his classical and neoclassical predecessors believed that a. Permanent unemployment could not arise in a capitalist economy. b. Temporary unemployment could not arise in a capitalist economy. c. Permanent unemployment could arise in a capitalist economy. d. None of the above.

a. Permanent unemployment could not arise in a capitalist economy.

15. Which of the following are included in the income approach to measuring GDP? a. Rent, wages, interest. b. İnterest, net exports of goods and services, consumption expenditure. c. Wages, interest, government expenditure on goods and services. d. Rent, wages, net export of goods and services.

a. Rent, wages, interest.

14. Consider the GDP price index and the CPI, and then choose the correct answer. a. The GDP price index is not an alternative to the CPI as a measure of the cost of living. b. The GDP price index weights each item using information from past expenditure surveys. c. The CPI and the GDP price index give us the same value. d. If nominal GDP rises but real GDP remains unchanged, ıt must be that production has increased.

a. The GDP price index is not an alternative to the CPI as a measure of the cost of living.

25. Which of the following statements is correct? a. The demand for Adidas shoes is more elastic than the demand for shoes in general. b. The demand for salt is very elastic. c. The demand for luxuries is less elastic than the demand for necessities. d. The demand for a narrowly defined good is less elastic than the demand for a more broadly defined good.

a. The demand for Adidas shoes is more elastic than the demand for shoes in general.

14. If the equilibrium exchange rate is $1 = 3 TL, what would be the immediate effect of a change in the exchange rate to $1 = 1 TL? a. An increase in the foreign exchange reserves of the central bank. b. A decrease in the foreign exchange reserves of the central bank. c. No change in the foreign exchange reserves of the central bank. d. None of the above.

b. A decrease in the foreign exchange reserves of the central bank.

21. Cyclical unemployment is the fluctuating unemployment over the business cycle that increases during _______ and decreases during ________. a. An expansion/a recession. b. A recession/an expansion. c. Imports/exports. d. Technological stagnation/technological advancements.

b. A recession/an expansion.

16. The long-run is a time period in which a. All of the firm's resources are fixed. b. All of the firm's resources are variable. c. the firm cannot increase its output. d. Some of the firm's resources are fixed.

b. All of the firm's resources are variable.

10. ________GDP is not a reliable measure of the change in _______because of the bias introduced by price changes. The appropriate words to fill the blanks are a. Real/inflation b. Current/real purchasing power c. Real/real purchasing power d. Current/inflation

b. Current/real purchasing power

3. The _______ is the market value of the ______ goods and services produced in a country during a given period. The appropriate words to fill the blanks are a. GNP/final b. GDP/final c. GDP/intermediate d. GNP/intermediate

b. GDP/final

1. For the CPI to provide an accurate measure of the prices paid by consumers, it is necessary to a. Assign equal weights to all the goods and services included in the market basket surveyed so that nothing is over-weighted. b. Have a market basket which corresponds to what households actually purchase. c. Change the market basket each month to reflect the changes that consumers make. d. Make certain that the incomes of the consumers surveyed do not change because such a change would affect the market basket of the goods and services they buy

b. Have a market basket which corresponds to what households actually purchase.

7. For the CPI to provide an accurate measure of the prices paid by consumers, it is necessary to a. Assign equal weights to all the goods and services included in the market basket surveyed so that nothing is over-weighted. b. Have a market basket which corresponds to what households actually purchase. c. Change the market basket each month to reflect the changes that consumers make. d. Make certain that the incomes of the consumers surveyed do not change because such a change would affect the market basket of the goods and services they buy.

b. Have a market basket which corresponds to what households actually purchase.

2. If price is higher than AVC but lower than ATC for a perfectly competitive firm, the firm is a. Making a profit. b. Making a loss but should continue to produce in the short-run. c. Making a loss and should stop producing immediately. d. Breaking even.

b. Making a loss but should continue to produce in the short-run

12. The average product of labor increases as output increases if _______ a. Average product exceeds marginal product. b. Marginal product exceeds average product. c. Total product increases. d. Marginal product increases

b. Marginal product exceeds average product.

13. In contrast to Marx's prediction, a reserve army of labor did not appear in the economic history of European countries because workers displaced by mechanization found employment in a. Agriculture. b. Services. c. Industry. d. None of the above.

b. Services.

21. An indifference curve is plotted with the a. quantity of a good on the horizontal axis and the good's price on the vertical axis. b. quantity of a good on the horizontal axis and the quantity of another good on the vertical axis. c. price of a good on the vertical axis and income on the horizontal axis. d. quantity of a good on the horizontal axis and marginal utility on the vertical axis.

b. quantity of a good on the horizontal axis and the quantity of another good on the vertical axis.

17. The price elasticity of demand for wheat is less than one. If a drought caused the supply curve for wheat to shift leftward, then a. wheat farmers' total revenue will decrease. b. wheat farmers' total revenue will increase. c. wheat farmers' total revenue will not change because people will buy the same amount as before. d. the demand curve for wheat also will shift leftward.

b. wheat farmers' total revenue will increase.

17. The CPI ________ a. is a relatively useless measure because every year new goods become available and some old goods disappear. b. İs a measure of the amount of money that people need to spend to achieve a given standard of living. c. Measures all the changes in the cost of living. d. Has a bias of approximately 2.0 percentage points a year.

b. İs a measure of the amount of money that people need to spend to achieve a given standard of living.

9. At the Divan Pastry, two workers can decorate 14 cakes in an hour and three workers can decorate 18 cakes in an hour. The marginal product of the third worker is a. 18 cakes and the average product for three workers is 6 cakes. b. 9 cakes and is equal to the average product. c. 4 cakes and the average product for three workers is 6 cakes. d. 32 cakes and the average product for three workers is 9 cakes.

c. 4 cakes and the average product for three workers is 6 cakes.

24. Choose the correct alternative: a. Real GDP can never exceed potential GDP. b. Real GDP must always equal potential GDP. c. At times, real GDP can exceed potential GDP. d. Nominal GDP can never exceed potential GDP. e. Nominal GDP must always equal potential GDP

c. At times, real GDP can exceed potential GDP.

1. Suppose that Jennifer likes pizza and hotdogs. If her marginal utility per dollar spent on pizza is 6 and on hotdogs is 5, Jennifer a. Is maximizing her total utility. b. Could increase her total utility by buying more hotdogs and less pizza. c. Could increase her total utility by buying more pizza and fewer hotdogs. d. Is maximizing her marginal utility.

c. Could increase her total utility by buying more pizza and fewer hotdogs.

17. In the short-run, firms increase output by a. Increasing the size of their plant. b. Decreasing the size of their plant. c. Increasing the amount of labor used. d. Decreasing the amount of labor used.

c. Increasing the amount of labor used.

9. For a perfectly competitive firm, the price of the good is equal to the firm's marginal revenue because a. Information about price changes is difficult to obtain for small sellers. b. Price and marginal revenue are the same economic concepts. c. Individuals cannot influence the market price by changing their output. d. The firm's total revenue cannot be changed by anything the firms can do.

c. Individuals cannot influence the market price by changing their output.

9. When the unemployment rate is ______ than the natural unemployment rate, real GDP _______. a. Greater/is increasing b. Less/is decreasing c. Less/exceeds potential GDP d. Greater/exceeds potential GDP

c. Less/exceeds potential GDP

15. A market with a large number of sellers a. Can only be a competitive market. b. Might be an oligopoly or a perfectly competitive market. c. Might be a monopolistically competitive or a perfectly competitive market. d. Might be a perfectly competitive, monopolistically competitive, oligopoly or monopoly market.

c. Might be a monopolistically competitive or a perfectly competitive market.

23. Real GDP per person is not an accurate measure of the standard of living because it_________ a. Omits the goods and services imported from other countries. b. İncludes the gooods and services that governments buy. c. Omits the goods and services that are not bought and sold in markets. d. İncludes goods and services bought by firms

c. Omits the goods and services that are not bought and sold in markets.

13. In economics, the short-run is the time frame in which the quantities of ________ and the long-run is the period of time in which _______ . a. All resources are fixed/the quantities of all resources can be varied. b. Some resources are variable/the quantities of all resources are fixed. c. Some resources are fixed/the quantities of all resources can be varied. d. All resources are variable but technology is fixed/technology is variable.

c. Some resources are fixed/the quantities of all resources can be varied.

19. Which of the following statements is correct? a. When the marginal product is decreasing, the slope of the total product curve is negative. b. When the marginal product of an additional worker is less than that of the previous worker, the firm has increasing returns. c. When the marginal product of an additional worker is less than that of the previous worker, the firm has diminishing returns. d. When the marginal product exceeds the average product, the slope of the average product curve must be negative.

c. When the marginal product of an additional worker is less than that of the previous worker, the firm has diminishing returns.

25. If you are available and willing to work but have not actively looked for work in the past month then a. You are part of the labor force because you are willing to work. b. You are counted as unemployed because you are willing to work and do not have a job. c. You are not part of the labor force because you are not looking for a job. d. You are part of the labor force but are not counted as unemployed.

c. You are not part of the labor force because you are not looking for a job.

24. Suppose the demand for oranges sold in the Taşdelen Bazaar is unitary elastic. This means that a seven percent increase in the price charged by the owner leads to a. zero oranges sold by this stand. b. no change in the quantity demanded at this stand. c. a seven percent decrease in the quantity demanded at this stand. d. none of the above.

c. a seven percent decrease in the quantity demanded at this stand.

24. The rate at which a consumer will give up one product for another product as he moves along an indifference curve is referred to as a. diminishing returns. b. diminishing opportunity cost. c. the marginal rate of substitution. d. the budget line.

c. the marginal rate of substitution.

10. Which of the following is NOT a characteristic of perfect competition? a. Product differentiation. b. Brand loyalty. c. Advertising. d. All of the above.

d. All of the above

15. Which of the following statements is true? a. A normal good is a good that has a positive income elasticity of demand. b. A luxury good is a normal good. c. A luxury good has many substitutes and a positive income elasticity of demand. d. All of the above.

d. All of the above.

13. Assume that a profit maximizing capitalist producing under perfect competition is operating with a Cobb-Douglas production function. Which of the following changes will increase his demand for labor at a given wage rate? a. An increase in the price of the product. b. A decrease in the price of the product. c. An increase in the amount of capital cooperating with labor d. Answers (a) and (c) are both correct.

d. Answers (a) and (c) are both correct.

8. Suppose Ayşe consumes soda and pizza. When she has spent all her income, if the last bottle of soda she drinks provides 400 units of utility per dollar while the last slice of pizza she eats provides 300 units of utility per dollar, a. the demand curve for soda must have shifted outward. b. the demand curve for pizza must have shifted inward. c. Ayşe should buy more pizza and less soda to maximize her utility. d. Ayşe should buy less pizza and more soda to maximize her utility.

d. Ayşe should buy less pizza and more soda to maximize her utility.

16. At the point where the budget line is tangent to an indifference curve a. the slope of the budget line is equal to the slope of the indifference curve. b. the marginal rate of substitution equals the price ratio. c. it is not desirable because the consumer can move to a higher indifference curve. d. Both answers (a) and (b) are correct.

d. Both answers (a) and (b) are correct.

22. The expenditure approach to measuring GDP is based on summing a. Compensation of employees, net interest, rental income of persons, corporate profits, and proprietors' income. b. The value added by each industry. c. The total values of final goods, intermediate goods, used goods and financial assets. d. Consumption expenditure, investment, government purchases of goods and services and net exports of goods and services.

d. Consumption expenditure, investment, government purchases of goods and services and net exports of goods and services.

8. Although Keynes showed that it was possible for a developed capitalist economy to settle into a position of underemployment equilibrium, he also argued that policy makers could put into effect _________ _________ policies to bring the economy back to full employment. The missing words are a. Restrictive/microeconomic b. Restrictive/macroeconomic c. Expansionary/microeconomic d. Expansionary/macroeconomic

d. Expansionary/macroeconomic

15. ______________ described economic development as a process of "creative destruction" where inventions lead to innovations which displace older techniques of production. The missing name is a. Simon Kuznets. b. Paul Samuelson. c. Alfred Marshall. d. Joseph Schumpeter

d. Joseph Schumpeter

23. If price is higher than ATC for a perfectly competitive firm, the firm is a. Making normal profits. b. Making a loss but should continue to produce in the short-run. c. Making a loss and should stop producing immediately. d. Making above normal profits.

d. Making above normal profits.

15. _______________ described economic development as a process of "creative destruction" where inventions lead to innovations which displace older techniques of production. The missing name is a. Simon Kuznets. b. Paul Samuelson. c. Alfred Marshall. d. None of the above.

d. None of the above.

13. The key difference between perfect and monopolistic competition is that monopolistic competition involves __________ . a. Many buyers and many sellers. b. A single seller. c. Homogenous products. d. Product differentiation.

d. Product differentiation.

The cross elasticity of demand tells us that goods A and B are ______ and as the price of good B rises, the demand for good A _________. a. Complements/decreases. b. Inferior goods/increases. c. Substitutes/decreases. d. Substitutes/increases.

d. Substitutes/increases.

2. The law of diminishing returns was discovered by English economists who reported to Parliament about the conditions prevailing in agriculture during a. The French Revolution b. The Battle of Trafalgar c. The First World War. d. The Continental Blockade

d. The Continental Blockade

2. Total profits are maximized where a. TR equals TC. b. The TR curve and TC curve are parallel. c. The TR curve and the TC curve are parallel and TC exceeds TR. d. The TR curve and the TC curve are parallel and TR exceeds TC.

d. The TR curve and the TC curve are parallel and TR exceeds TC.

16. Investment is defined as a. The purchase of a stock or bond. b. Financial capital. c. What consumers do with their savings. d. The purchase of new capital goods by firms.

d. The purchase of new capital goods by firms.

23. The Bureau of Labor Statistics counts Michael as being unemployed if he _______. a. Had a job last month but not this month. b. Wants a job and looked for a job last year but has now stopped looking. c. Does not have a job because the U.S. factory where he worked cannot compete with cheap Chinese imports. d. Wants a job and is willing to take a job but after searching last week cannot find a job.

d. Wants a job and is willing to take a job but after searching last week cannot find a job.

12. Hacı Hasan Company is a shoe maker operating under perfect competition. The company produced 1400 pairs of shoes last week. The marginal cost was $16 a pair, average variable cost was $23 a pair, and the market price was $25 a pair. Hacı Hasan Company is _______ profit, so if nothing changes, the company will _______ the number of shoes it produces to maximize profits this week. a. Maximizing/decrease. b. Not maximizing/decrease. c. Maximizing/increase. d. Maximizing/not change. e. Not maximizing/increase

e. Not maximizing/increase.

23. Zeynep's coffee and movie budget is $20 a week. The price of a cup of coffee is $5 and the price of a movie ticket is $2. Which of the following statements is true? a. When Zeynep spends all her income on movies, she can see 10 movies per week. b. When Zeynep buys 4 cups of coffee per week, she has no money left to buy a movie ticket. c. Zeynep can afford to buy two cups of coffee and five movie tickets per week. d. Zeynep can afford to buy three cups of coffee and six movie tickets per week. e. Options A, B, and C are all correct.

e. Options A, B, and C are all correct.

6. For a perfectly competitive firm, the price of the good is equal to the firm's marginal revenue because a. Information about price changes is difficult to obtain for small sellers. b. Price and marginal revenue are the same economic concepts. c. The firm's total revenue cannot be changed by anything the firms can do. d. the firm is a price taker in the product market.

the firm is a price taker in the product market.

3. At the point where the budget line is tangent to an indifference curve a. the marginal rate of substitution equals the price ratio. b. it is not desirable because the consumer can move to a higher indifference curve. c. Both answers (a) and (b) are correct. d. None of the above.

the marginal rate of substitution equals the price ratio.