Multiple Choice: 1. If an asset entitles its owner to a payment of $100 at the end of one year, and to $200 at the end of a second year, and nothing after that, and the interest rate is ten percent (that is, 0.10), what is the present discounted value of the asset? a. $300 b. $100f0.10 + $200/[(0.10)(0.10)] c. $ 100/0. 10 d. Approximately $256. e. None of the above. 2. If a nancial asset will pay $100 in interest at the end of each year, forever, and the market interest rate is always 5 percent, what is the present value of that asset? a. $500. b. $100/(l.05). c. $2,000. d. $5,000. e. $50,000. f. $20,000 g. None of the above 3. Other things equal, when market interest rates rise: a. Bond prices tend to fall. b. Bond prices tend to rise. c. It must mean that the money supply has been increased. d. It must mean that the Fed has bought bonds. 4. According to your textbook, in which of the following market structures are producers most likely to earn zero economic profits in the long run? a. Oligopoly and monopoly. Monopolistic competition and perfect competition. Oligopoly and perfect competition. Monopoly and perfect competition. 5. A monopoly: a. causes inefficiency by producing too much output compared with a competitive industry. sets a lower price than a competitive industry in the long term, to rid itself of excess. poo produces the quantity that sets marginal revenue equal to marginal cost typically produces a product for which there are many close substitutes. Is the term for a firm that is the sole buyer in a market. Is more likely to develop if there are constant returns to scale in production. 6. Even if there is zero inflation, a dollar received ten years from today is worth less than a dollar received today, assuming the interest rate is positive. a True b False 7. As economists use the term, a public good is: a. any commodity that is beneficial to the majority. b. non-rival and excludable. c. rival but non-excludable. d. non-rival, non-excludable, and a plausible cause of market failure. e. a good that is produced by government, rather than the private sector. 8. As economists use the term, a public good is: a. being produced in the socially efficient quantity when marginal cost equals marginal benefit for the consumer who values it least. b. a correct description of public transit services and the public school system. c. a good for which the marginal cost of supplying additional consumers rises with each consumer served. d. one that may be difficult for business to produce profitably because once it's produced, consumers can help themselves to it without paying. 9. Which of these is not a function of money mentioned in your text book? a Store of value Medium of exchange Unit of account Double coincidence of wants 10. A monopsony is: the sole seller in a market. likely to restrict the quantity it buys because its purchases bid up the price it pays. the sole buyer in a market. A professor who drones. b. and c