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060513

  1. 1. Multiple Choice Practice for FinalJune 3, 2013
  2. 2. Announcements• Practice final questions now posted on website.• Today multiple choice review, next time shortanswer.• Exam is Wed June 12, 3pm-6pm, in CENTR 119• Jake will hold final review Mon June 10 6:30-8pmin CENTR 105.
  3. 3. Extra Office Hours• Instead of this Friday, I’ll move my OH toMonday 1:30-4:30 to give you more time togather questions.• Jake will have office hours Tues 4-5 and Wed1-2.• Both of us in SEQ 236.
  4. 4. 1. What is the role of doing well in college as asignal to future employers?A. It shows that your marginal product is higher.B. It shows that you are willing to work hard.C. It shows that you do not slack.D. It is hard to do well in college if you do not workhard, but easier to do well if you do.E. It is not a valid signal.
  5. 5. 1. What is the role of doing well in college as asignal to future employers?A. It shows that your marginal product is higher.B. It shows that you are willing to work hard.C. It shows that you do not slack.D. It is hard to do well in college if you do not workhard, but easier to do well if you do.E. It is not a valid signal.
  6. 6. 2. If a fish seller were to offer a “money-backplus 10%” guarantee, this would be an exampleofA. risk neutralityB. the lemons problemC. the costly-to fake principleD. asymmetric informationE. the expected value of a gamble
  7. 7. 2. If a fish seller were to offer a “money-backplus 10%” guarantee, this would be an exampleofA. risk neutralityB. the lemons problemC. the costly-to fake principleD. asymmetric informationE. the expected value of a gamble
  8. 8. 3. ________ is the notion that insurance tendsto be purchased disproportionately by thosewho are most costly for companies to insure.A. moral hazardB. risk neutralityC. disappearing political discourseD. political courageE. adverse selection
  9. 9. 3. ________ is the notion that insurance tendsto be purchased disproportionately by thosewho are most costly for companies to insure.A. moral hazardB. risk neutralityC. disappearing political discourseD. political courageE. adverse selection
  10. 10. 4. Suppose that you are offered a low-interestrate credit card because you live in a high-income neighborhood. This is an example ofA. adverse selectionB. statistical discriminationC. conspicuous consumptionD. the costly-to-fake principleE. the equilibrium principle
  11. 11. 4. Suppose that you are offered a low-interestrate credit card because you live in a high-income neighborhood. This is an example ofA. adverse selectionB. statistical discriminationC. conspicuous consumptionD. the costly-to-fake principleE. the equilibrium principle
  12. 12. 5. A mining company hires two women with exactlythe same levels of human capital. One woman isassigned to work in the mine and the other in theoffice. If the miner receives a higher wage, this is anexample ofA. statistical discriminationB. winner-take-all marketsC. differing value marginal productsD. compensating wage differentialsE. sexism
  13. 13. 5. A mining company hires two women with exactlythe same levels of human capital. One woman isassigned to work in the mine and the other in theoffice. If the miner receives a higher wage, this is anexample ofA. statistical discriminationB. winner-take-all marketsC. differing value marginal productsD. compensating wage differentialsE. sexism
  14. 14. 6. Which of the following best describeschanges in the US income distribution between1945 and 1980?A. Income in all groups grew at roughly the same rate.B. Income in the middle quintiles grew at the fastestrate.C. Income in the bottom quintiles grew at the fastestrate.D. Income among the top 5% of all recipients grew atthe fastest rate.E. Income in the bottom quintiles fell in absoluteterms.
  15. 15. 6. Which of the following best describeschanges in the US income distribution between1945 and 1980?A. Income in all groups grew at roughly the same rate.B. Income in the middle quintiles grew at the fastestrate.C. Income in the bottom quintiles grew at the fastestrate.D. Income among the top 5% of all recipients grew atthe fastest rate.E. Income in the bottom quintiles fell in absoluteterms.
  16. 16. 7. The Personal Responsibility Act of 1996A. removed the fiver-year limit on receiving welfare paymentsB. shifted responsibility for welfare programs from stategovernments to the federal governmentC. eliminated all welfare paymentsD. reduced incentives to work for pay in order to encouragewomen to stay home with their childrenE. shifted responsibility for welfare programs from the federalgovernment to state governments.
  17. 17. 7. The Personal Responsibility Act of 1996A. removed the fiver-year limit on receiving welfare paymentsB. shifted responsibility for welfare programs from stategovernments to the federal governmentC. eliminated all welfare paymentsD. reduced incentives to work for pay in order to encouragewomen to stay home with their childrenE. shifted responsibility for welfare programs from the federalgovernment to state governments.
  18. 18. 7. Why is an EITC typically more efficient than aminimum wage?A. Both producers and consumers receiveequilibrium surplusB. The outcome is the same as in perfectcompetitionC. There is no unemploymentD. A transfer results in no loss in surplus
  19. 19. 7. Why is an EITC typically more efficient than aminimum wage?A. Both producers and consumers receiveequilibrium surplusB. The outcome is the same as in perfectcompetitionC. There is no unemploymentD. A transfer results in no loss in surplus
  20. 20. 9. What is the smallest EITC which is preferableto a minimum wage of m?wmLA.B.C.D.w*L*-+-+
  21. 21. 9. What is the smallest EITC which is preferableto a minimum wage of m?wmLA.B.C.D.w*L*-+-+
  22. 22. 10. What is the largest EITC which is preferableto a minimum wage of m?wmLA.B.C.D.w*L*-+-+
  23. 23. 10. What is the largest EITC which is preferableto a minimum wage of m?wmLA.B.C.D.w*L*-+-+
  24. 24. 11. What is DWL in this market with full healthinsurance coverage?PQA.B.C.D.Hospital CareSD
  25. 25. 11. What is DWL in this market with full healthinsurance coverage?PQA.B.C.D.Hospital CareSD
  26. 26. 12. When will a firm install safety devices for itsworkers, all else equal?A. When the marginal benefit to the workers of doing so isvery high.B. When the marginal cost to the firm of doing so is lessthan the wage rate.C. When the marginal benefit to workers is more than themarginal cost to the firm.D. When the marginal benefit to the firm is more than themarginal cost to the workers.
  27. 27. 12. When will a firm install safety devices for itsworkers, all else equal?A. When the marginal benefit to the workers of doing so isvery high.B. When the marginal cost to the firm of doing so is lessthan the wage rate.C. When the marginal benefit to workers is more than themarginal cost to the firm.D. When the marginal benefit to the firm is more than themarginal cost to the workers.
  28. 28. 13. What is a good example of a Pigouvian Tax?A. A tax to restore efficiency in health markets.B. A tax on firms that do not provide safety totheir workers.C. A tax on firms that create a negativeexternality.
  29. 29. 13. What is a good example of a Pigouvian Tax?A. A tax to restore efficiency in health markets.B. A tax on firms that do not provide safety totheir workers.C. A tax on firms that create a negativeexternality.
  30. 30. 14. Which is a collective good?NonexcludableExcludableNonrival RivalA BC D
  31. 31. 14. Which is a collective good?NonexcludableExcludableNonrival RivalA BC D
  32. 32. 15. Which is a public good?NonexcludableExcludableNonrival RivalA BC D
  33. 33. 15. Which is a public good?NonexcludableExcludableNonrival RivalA BC D
  34. 34. 16. Suppose the government decides to fund a public goodby issuing bonds. “Crowding out,” or firm disincentive toinvests, results by the following mechanism.A. Money supply increases, interest rates riseB. Money supply decreases, interest rates riseC. Money supply increases, interest rates fallD. Money supply decreases, interest rates fall
  35. 35. 16. Suppose the government decides to fund a public goodby issuing bonds. “Crowding out,” or firm disincentive toinvests, results by the following mechanism.A. Money supply increases, interest rates riseB. Money supply decreases, interest rates riseC. Money supply increases, interest rates fallD. Money supply decreases, interest rates fall

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