1. Introduction of a per-unit subsidy to suppliers of a good would result in:

   1. A net gain to the society

   2. A rise in consumer surplus greater than the government's expenditures

   3. A rise in producer surplus greater than the government's expenditures

   4. A net loss to the society

   5. An increase in producer surplus only in case of absolutely inelastic supply

2. Which of the following CANNOT be a rational choice, according to the common axioms?

   1. An individual prefers ten cups of tea per day to three cups

   2. An individual prefers Chinese tea to Indian tea, but prefers Indian tea to Georgian tea

   3. An individual is indifferent when choosing between Chinese tea and any variety of British tea, but prefers Earl Grey when choosing among British tea varieties

   4. An individual never drinks tea from a cup with a sunflower image on it

   5. An individual does not drink tea at all, ever

3. Suppose that you are fined 1500 rubles for speed-driving, and have to pay the sum within 30 days. From the economics standpoint, this is now your:

   1. Sunk costs

   2. Opportunity costs of speed-driving

   3. Opportunity costs of obeying to the traffic rules

   4. Direct costs of speed-driving

   5. Direct costs of obeying to the traffic rules

4. Which of the following is a normative statement?

   1. Substituting a vegetables-only diet with a well thought-out mixed diet is generally appropriate, as human digestive system has got used to those over ages

   2. A respectable dietologist claims that consuming meat leads to cancer

   3. The past trend of increasingly popular vegetarianism makes the reversion of this tendency a statistically unlikely outcome

   4. All of the above

   5. None of the above

5. Suppose that it takes Mary 3 hours to either learn all formulas in AP Statistics or 2 hours to explain them to Max (who will still forget everything before the exam in this case). However, Max can write a magic program for the Casio calculator to hold all the formulas and share it with Mary if she explains. Which of the following combinations of Max' time requirements could then result in a mutually beneficial exchange?

   1. 1 hour to write a program or 2 hours to learn everything properly himself

   2. 2 Hours to write a program or 6 hours to learn everything properly himself

   3. 2 hours to write a program or 3 hours to learn everything properly himself

   4. More than one of the above

   5. None of the above

6. Suppose that your teacher offers you cookies for attending Microeconomics classes. Suppose further that prior to this, you did not wish to attend those classes and preferred some extra sleep. Then which of the following is true:

   1. If you can no longer sleep, thinking about cookies, then the direct costs of cookies are tolerating a Microeconomics class

   2. If you can buy the cookies yourself and thus compensate for any loss associated with not visiting the Microeconomics class, then the opportunity costs of extra sleep are the price of cookies

   3. If you become so glad about this measure that you suddenly start liking Microeconomics more than extra sleep, then the opportunity costs of visiting the class are the price of cookies

   4. Two of the above

   5. Three of the above (a-c)

7. Suppose that the cross-price elasticity of demand for apples with respect to oranges is negative, and that the government imposes an import tariff for oranges from abroad. Then:

   1. The whole demand schedule for apples will shift upwards

   2. The whole demand schedule for apples will shift downwards

   3. There will be an upward movement along the demand curve for apples

   4. There will be a downward movement along the demand curve for oranges

   5. None of the above

8. Suppose that some person can do relatively more per unit of time when concentrating on one particular thing, and becomes less productive when starting to mix different activities. Then that person's PPF will:

   1. Violate the principle of increasing opportunity costs

   2. Be a straight line

   3. Be upward sloping

   4. Be discontinuous

   5. None of the above

9. Suppose that country A can produce either 40 units of wheat or 50 units of meat, country B can produce either 50 units of wheat or 40 units of meat. Then

   1. No country has any absolute advantage

   2. No country has any comparative advantage

   3. 1:1 relative prices will not bring any benefit from trade

   4. More than one of the above

   5. None of the above

10. When economic agents with linear PPF's decide to engage in trade according to the principle of comparative advantage, their aggregate PPF after trade is:

    1. A horizontal sum of the individual PPF's

    2. A vertical sum of the individual PPF's

    3. The frontier of the set representing the intersection of individual production possibility sets

    4. The frontier of the set representing the union of individual production possibility sets

    5. A line obtained by combining individual PPF's in the order of increasing slopes left to right

11) Consider a person with monetary income I_0. If his income increased twofold, and the prices for all consumption goods in the economy increased threefold, his budget line:

A) Rotated upwards

B) Rotated downwards

C) Shifted in

D) Shifted out

E) Stayed the same.

12) John always spends his whole income on three goods: denote their quantities x₁,x₂, andx₃. Suppose that the prices for these goods are: $1 for 1 unit of good 1, $2 for 1 unit of good 2 and $5 for 1 unit of good 3. What is the minimal income John will need to buy consumption bundle (10, 5, 2) at these prices?

A) over $17

B) over $20

C) over $30

D) over $50

E) John will never be able to buy the abovementioned bundle.

13) Two consumers - Anna and Beatrix, used to spend their identical incomes on goods X and Y. In addition to her monetary income, Anna had a certain amount of good X : Beatrix had only money. When the price for good X has doubled…

A) Beatrix and Anna’s budget constraints retained the same slope.

B) Beatrix and Anna’s budget constraints didn’t change

C) Anna’s budget line became twice as steep as Bea’s

D) Anna’s budget line became twice as flat as Bea’s

E) The difference in slopes of Anna’s and Bea’s budget constraints increased two times.

14) The Jones’ household consists of three people: Mr. Jones, Mrs. Jones, and little miss Jones. Whenever the Joneses disagree, they organize a vote, and do whatever a simple majority rule tells them. An economist, who wishes to study this household’s preferences for candy, has been able to compile the following table:

	Red candy	Orange candy	Green candy
Mr. Jones	Enjoy	Indifferent…	Hate
Mrs. Jones	Hate	Enjoy	Indifferent…
Ms. Jones	Indifferent…	Hate	Enjoy

Judging from this table, the Jones’ household preferences with respect to candyare:

A) Not complete

B) Not reflective

C) Not transitive

D) Not convex

E) Not monotonic.

15) Lucy has the choice to spend one hour studying for a mock exam, moderating a forum for one hour at a wage of $6, or babysitting her neighbor’s son for one hour at a wage of $8. If we know that Lucy has chosen to study for the exam:

A. The benefit received from studying is greater than the opportunity cost of $8.

B. The opportunity cost of studying is $14, which is less than the benefit received from

studying.

C. Lucy is indifferent between studying and moderating a forum.

D. Lucy’s behavior is irrational since babysitting was clearly superior to all other options.

E. Lucy is indifferent between babysitting and moderating a forum

16) Every morning, Mr. Smith enjoys a breakfast of bacon ($1 per piece) and eggs ($2 per piece). At his current level of consumption, Mr. Smith’s marginal utility of bacon is 12 and his marginal utility of eggs is 18. Is there a way Mr. Smith could increase his utility?

A. There is no way for him to increase his utility: in the short run, consumption bundles can’t be changed.

B. He could increase his bacon consumption and decrease his egg consumption until the marginal utility per dollar is equal for both.

C. He could decrease his bacon consumption and increase his egg consumption until the

marginal utility per dollar is equal for both.

D. He could increase his bacon consumption and decrease his egg consumption until

the marginal utility is equal for both.

E. He could decrease his bacon consumption and increase his egg consumption until

the marginal utility is equal for both.

17) A rational consumer who is reading detective stories by Daria Dontzova would stop reading them when:

A. the marginal benefit of reading these stories is minimized.

B. the marginal benefit of reading the next book equals the marginal cost of buying it.

C. the marginal cost of reading detective stories is maximized.

D. the total benefit equals the total cost of reading Daria Dontzova.

E. the price of the next book equals the marginal benefit of reading it.

18) If it is true that bacon and eggs are complementary goods, then

A. the income elasticity of bacon is positive and the income elasticity for eggs is negative.

B. the price elasticity for eggs is greater than the price elasticity for bacon.

C. the cross-price elasticity between bacon and eggs is negative.

D. the income elasticity of bacon is negative and the income elasticity for eggs is positive.

E. the cross-price elasticity between bacon and eggs is positive.

19) If the price of corn rises 10% and the quantity demanded for corn falls 1%, then

A. Ed = 10 and demand is price elastic.

B. Ed = 1/10 and demand is price elastic.

C. Ed = 10 and demand is price inelastic.

D. Ed = 1/10 and demand is price inelastic.

E. Ed = 10 and corn is a luxury good.

20) A small business estimates price elasticity for the product to be “– 2”. To raise total revenue, owners should:

A. decrease price as demand is elastic.

B. decrease price as demand is inelastic.

C. increase price as demand is elastic.

D. increase price as demand is inelastic.

E. do nothing; they are already maximizing total revenue.

21) If the income elasticity of demand for candy bars is -0.5, then candy bars are a____good and a 2% decrease in income will cause a______ increase in the quantity demanded¹:

A) normal; 4%;

B) luxury; 2%;

C) inferior; 1%;

D) Giffen; 2%

E) inferior; 4%.

22) Vasya Pupkin is choosing between two universities: (1) and (2). The chance of getting to either university is the higher, the higher you score at your final school exams. It is, however, known that in university (1) they only care about the bestof your exam marks, and in university (2), they only care about yourworstmark. Vasya has scored 50% at calculus and 70% at chemistry. He definitely wants to study at University (1), if:

A) He retook chemistry and scored 75% - but didn’t care.

B) He retook math, scored 40%, and felt very upset.

C) He retook math, scored 65%, and didn’t care.

D) He retook chemistry, scored 55%, and felt very upset.

E) Statements (C) and (D) are correct.

23) Given the info on the graph below, we can say that…

А) Both goods are normal

B) Both goods are inferior

C) Х is a Giffen good

D) Х is an inferior good

E) not enough information for an answer

24) If we tried to measure the marginal rate of substitution of right-foot shoes for left foot shoes (for a person who already has 1 right-foot shoe)²:

A) 0

B ) 1

C) 2

D) 4

E) ∞

25) Given the demand function for good X, , whereIstands for consumer’s income, good X is³...

А) a necessity

B) a luxury

С) a Giffen good

D) an inferior good

_{E) a good having no substitutes}

26. Which of the following is true in the long run in perfect competition?

1. P=MR=MC=ATC

2. P=MR=MC>ATC

3. P>MR=MC=ATC

4. P=MR>MC=ATC

5. P>MR=MC>ATC

27. Jason cleans swimming pools in a perfectly competitive local market.

A profit-maximizer, he can charge $10 per pool to clean 9 pools per day,

incurring total variable costs of $80 and total fixed costs of $20.Which of the

following is true?

1. Jason should shut down in the short run, with economic losses of $20.

2. Jason should shut down in the short run, with economic losses of $10.

3. Jason should clean 9 pools per day, with economic losses of $20.

4. Jason should clean 9 pools per day, with economic losses of $10.

5. Jason should clean 9 pools per day, with economic profits of $10.

28. For the perfectly competitive firm, the profit maximizing decision to shut down is made when the price.

1. Falls below minimum average total cost.

2. is greater than minimum average variable cost,

but lower than minimum average total cost.

3. falls below minimum average variable cost.

4. is equal to minimum average total cost.

5. is equal to average fixed cost.

29. When a firm is earning, a normal profit from the production of a good, it is true that

1. total revenues from production are equal to explicit costs.

2. explicit costs are equal to implicit costs.

3. total revenues from production are equal to implicit costs.

4. total revenues from production are equal to the sum of explicit and implicit costs.

5. implicit costs are greater than explicit costs.

30. Which of the following is an example of a long-run adjustment for the owners of a small cafe?

1. The owners switch from whole wheat to sourdough bread.

2. The owners hire several part-time workers to cover the dinner shifts.

3. The owner work overtime on a busy weekend.

4. The owners install more energy-efficient light bulbs in all of the light fixtures.

5. The owners buy the office next door and this doubles the customer seating.

31. If total product of labor is rising at an increasing rate,

1. marginal product of labor is rising.

2. marginal product of labor is at its minimum.

3. marginal product of labor is at its maximum

4. marginal cost is rising

5. average product of labor is at its minimum.

32. The demand curve for a perfectly competitive firms product is

1. downward sloping and equal to the market demand curve.

2. perfectly elastic.

3. perfectly in elastic.

4. "kinked" at the going market price.

5. the same as the firms marginal cost curves.

33. If the current price for the perfectly competitive firm is $10.00, what would be the result of an increase in fixed cost on the firm’s profit maximizing price and quantity?

1. Increase in price and increase in quantity

2. Increase in price and decrease in quantity

3. constant price and constant quantity

4. decrease in price and decrease in quantity

5. decrease in price and increase in quantity

34. The profit-maximizing price for a perfectly competitive firm like the one shown in Figure below in the long run would be

1. A

2. B

3. C

4. D

5. E

35. In Figure above at a market price of A, the profit-maximizing output for a perfectly competitive firm is

1. 0

2. 1

3. 2

4. 3

5. 4

36. Which of the following is true about the distances between average variable cost and average total cost when graphed?

1. As output increases the difference between them gets smaller

2. As output increases the difference between them gets larger

3. Is equal to average fixed cost at all levels of output

4. Is zero at all levels of output

5. A and C are both correct

37. The following table indicates a production process characterized by

1. decreasing returns to scale

2. constant returns to scale

3. increasing returns to scale

4. increasing returns to labor

5. constant returns to labor

OUTPUT
Units of CAPITAL	6	346	490	600	692	775	846
	5	316	448	548	632	705	775
	4	282	400	480	564	632	692
	3	245	346	423	490	548	600
	2	200	282	346	400	448	490
	1	141	200	245	282	316	346
	0	1	2	3	4	5	6