1. Discuss the three determinants of factor demands, by giving a specific example for each one.
2. Give an example of a screening device and explain why screening devices are used.
3. List three ways that unions can increase the demand for union labor.
4. List the three union goals.
5. What is the present value of $75,000 to be received five years from today, assuming an interest rate of 6%.
6. Explain why the economically efficient level of pollution is usually not zero.
7. Participating self-sufficiency has the advantage that:

a.you don't have to worry about unemployment.

b.You can achieve a higher standard of living than you could in a market economy.

c.Both of the above.

d.Neither of the above.

8.In a market economy, the question of "how to produce" is determined by:

a.consumer demand.

b.The least cost method of production.

c.The distribution of income.

d.All of the above.

9.In a free market:

a.consumption is allocated to the buyers who value the goods most highly.

b.Production is allocated to the lowest cost producers.

c.Both of the above.

d.Neither of the above.

10.Compared to France, the U.S. has had:

a.a higher minimum wage.

b.Higher payroll taxes.

c.Lower rates of unemployment.

d.All of the above.

11.When total output is measured as the sum of all payments to resource owners, the result is:

a.Gross Domestic Product.

b.National Income.

c.Gross National Product.

d.Gross Resource Product.

12.As the price level decreases:

a.the demand for money will decrease.

b.Interest rates will decrease.

c.Consumption and investment will increase.

d.All of the above.

13.According to the classical economic theory:

a.government intervention is necessary to maintain adequate demand.

b.Interest rates, wages, and prices are inflexible.

c.The proper economic policy is laissez-faire.

d.All of the above.

14.If the MPC is 0.90, and investment spending increases by $25 billion, how much will the Real GDP increase?

a.$500 billion.

b.$250 billion.

c.$125 billion.

d.$25 billion.

15.Fiscal policy may be mistimed because of:

a.the jet lag.

b.The putting lag.

c.The impact lag.

d.All of the above.

16.If the required-reserve ratio is 10%, the potential deposit multiplier is:

a.10.

b.8.

c.5.

d.4.

17.The functions of the Fed includes:

a.holding banks' reserves.

b.Supplying the economy with currency.

c.Controlling the money supply.

d.All of the above.

18.If normal GDP is $16,150 billion and the money supply is $1,900 billion, the velocity of money is:

a.0.118.

b.0.85.

c.8.5

d.11.8

19.Which type of tax causes the distribution of income to be unchanged?

a.Proportional.

b.Progressive.

c.Regressive.

20.In the past, as economic growth occurred:

a.the real prices of nonrenewable resources generally rose.

b.Environmental quality generally degraded.

c.Both of the above.

d.Neither of the above.

21.Economic growth and economic freedom tend to be:

a.inversely related.

b.Unrelated.

c.Directly related.

d.Second cousins.

22.In recent years, the U.S. has had:

a.large trade surpluses.

b.Small trade surpluses.

c.Large trade deficits.

d.Small trade deficits.

23.When the price of a good increases from $32 to $24, the quantity demanded of the good increases from 80 to 100. What is the price elasticity of demand?

a.0.22

b.0.29

c.0.78

d.1.29

24.Money gifts:

a.are more efficient than nonmoney gifts.

b.Allow the recipient to purchase the goods that will provide the most marginal utility.

c.Both of the above.

d.Neither of the above.

25.Corporations have -----% of total sales:

a.95%.

b.81%.

c.72%.

d.58%.

26.If nine workers can produce 780 units of output and ten workers can produce 820 units of output, the marginal physical product of the tenth worker is:

a.820 units.

b.780 units.

c.82 units.

d.40 units.

27.In 1982, the average Oklahoma teacher salary was $16,781. The average Oklahoma teacher salary was $44,391 in 2012. What was the real average Oklahoma teacher salary in 2012, adjusted to the 1982 price level?

28.Cheryl had income of $25,000 in 1993, when CPI was 144.5. Cheryl had income of $50,000 in 2013, when CPI was 233.0. What was Cheryl's real income in 2013, adjusted to the 1993 price level?

29.Wenona's Widgets, Inc. can invest in a new equipment which costs $12,000,000 and is expected to generate additional annual profits of $900,000. The interest rate to finance the investment is 6%. Should Wenona's make the investment? Why? Explain in details.

30.Explain what automatic stabilizers are and give two examples of automatic stabilizers.

31.What is a progressive tax and how does a progressive tax affect the distribution of income?

32.List the four determinants of price elasticity of demand.

33.Use the following demand schedule to answer questions I and II.

Price Quantity demanded

$16 30

14 40

12 50

10 60

8 70

6 80

4 90

I.Based on the demand schedule above, compute the price elasticity of demand for a change in price from

a.$16 to $14.

b.$14 to $12.

c.$12 to $10

d.$10 to $8

e.$8 to $6

f.$6 to $4

II.Which price or prices from the demand schedule results in the maximum total revenue? And how much total revenue is generated at that price (or prices)?

34. Explain the meaning of zero economic profit.