1.If the exchange rate between U.S. and Japan changes from $1= 100 to $1= 110, then we can conclude that

a)U.S. dollar depreciates.

b)Japanese yen depreciates.

c)U.S. has the advantage in export to Japan.

d)Japan has the advantage to import U.S. products

2.In general marginal cost curve and average cost curve are U-shaped because of

A)the law of demand.

B)the law of diminishing marginal utility.

C)the law of diminishing returns.

D)the law of comparative advantage

3.Which of the following costs will always increase as output increase?

A)Total costs (TC)

B)Average total costs (ATC)

C)Marginal costs (MC)

D)Fixed costs (FC)

4.Assume that a product has the market demand function Q_D= 10 P and the market supply function Q_S= 2 + P. If a price ceiling is set at $5, then you will predict which of the following would as a result?

A)Nothing will happen.

B)There will be a surplus.

C)There will be a shortage.

D)Quantity demanded will be zero.

5.f the price elasticity of demand for Cheese is 2.0, then a

A)12 percent drop in price leads to a 6 percent rise in the quantity demanded

B)3 percent drop in price leads to a 6 percent rise in the quantity demanded

C)$1 drop in price leads to a 2-unit rise in the quantity demanded

D)$6 drop in price leads to a 3-unit rise in the quantity demanded

6.Assume that a product has the market demand function Q_D= 10 P and the market supply function Q_S= 2 + P. The equilibrium price will be

A)$2.

B)$4.

C)$6.

D)$8.

7."After the fifth worker is hired at the hourly wage $40, the output rate increases from 64 pairs of shoes per hour to 72 pairs per hour." Given the statement, which of the following is correct after the fifth worker is hired?

A)The marginal cost (MC) becomes $5.

B)The marginal physical product (MPP) per labor hour becomes $40.

C)The marginal cost (MC) becomes $8.

D)The marginal physical product (MPP) per labor hour becomes 5.

8.Which of the following explains the total world output increase as a result of trade?

A)Specialization in production.

B)Imported technologies.

C)High tech exports.

D)Law of demand.

9.If the current price elasticity of demand for product X is 2, a 20% price cut will result in

A)a 10% increase of quantity demanded.

B)a 40% decrease of quantity demanded.

C)a 12% increase of total revenue.

D)a 16% increase of total revenue.

10.In the short run, all cost curves including ATC, AVC and MC are generally U-shaped because

A)the average fixed costs (AFC) declines as output increases.

B)the total costs (TC) rises as output increases.

C)the marginal costs (MC) declines as output increases.

D)the law of diminishing returns is held.