4. The following figure shows the demand curve faced by a monopolist.

Refer to the figure above. What is the quantity effect of a price reduction from $6 to $4?

(A)$600

(B)$800

(C)$1,000

(D)$1,200

5. Traffic congestion is an example of a ________. (A)positive externality (B)negative externality (C)pecuniary externality (D)free-rider problem

6. A dominant strategy ________. (A)always results in equal payoffs to all the players in a game (B)always results in a zero payoff to the opponent (C)results in a high payoff irrespective of the strategy chosen by the other player (D)always results in a low payoff irrespective of the strategy chosen by the other player

7. Scenario: Your friend Joe and you decide to race your new cars. However, both of you are caught speeding by a police patrol. The matrix below shows the respective payoffs for each choice of actions. The first number listed in each cell is the payoff to the row player, and the second number listed is the payoff to the column player.Refer to the scenario above. Which of the following strategy combinations denotes the dominant strategyequilibrium in this case?(A)(Bribe, Bribe)(B)(Bribe, Do not bribe)(C)(Do not bribe, Bribe)(D)(Do not bribe, Do not bribe)

8. Asymmetric information in a market can lead to ________. (A)market failure (B)the moral hazard problem (C)the free-rider problem (D)the tragedy of the commons

9. Jane donates time and money to charity because she values helping others. This is an example of ________. (A)pure altruism (B)rationalism (C)impure altruism (D)liberalism

10. Which of the following best describes a production possibilities curve? (A)How much of one good an economy can produce if they forgo production of another good (B)The rate at which an economy can trade production of one good for another (C)The total amount of goods an economy can produce (D)A relationship showing the maximum production of one good for a given level of production of another good  

11. The average income per capita in a country in its own currency is 75,000 units. If U.S. $1 is worth 20 units of its currency, the income per capita in the country in dollars is ________. (A)$1,850 (B)$2,500 (C)$3,750 (D)$15,000

12. Sustained growth refers to a growth process in which ________. (A)GDP per capita grows at a positive and steady rate for long periods of time (B)GDP per capita grows at a rate of more than 20 percent per year for long periods of time (C)growth in GDP per capita is primarily attributed to public sector firms and enterprises (D)growth in GDP per capita is translated into an equal increase in welfare for all citizens in a country

13. Which of the following statements is true? (A)As an economy experiences growth in GDP, the rate of unemployment is expected to decrease. (B)As an economy experiences growth in GDP, the rate of unemployment is expected to increase. (C)The unemployment rate in a country always remains constant. (D)The unemployment rate in a country is not correlated with the level of economic activity in the country.

14. Consider two economies: A and B. The nominal interest rate is the same in both economies, but the rate of inflation is higher in economy B. Which of the following statements will then be true? (A)The real interest rate will be higher in economy A. (B)The real interest rate will be higher in economy B. (C)The real interest rate will be the same in both economies. (D)The number of borrowers in both economies will depend on whether the real interest rate is higher in economy A or economy B.

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