4. Other things the same, when the price level rises, interest rates
(A) rise, so firms increase investment.
(B) rise, so firms decrease investment.
(C) fall, so firms increase investment.
(D) fall, so firms decrease investment.

10. She _____ for days, hoping to come up with the best answer to the difficult question. (A) serrated (B) tantalized (C) undulated (D) ruminated

1. Which of the following conditions is characteristic of a monopolistically competitive firm in short-run equilibrium? (A) P = AR (B) MR = MC (C) P ＞ MC (D) All of the above are correct.

2. When economists talk about growth in the economy, they measure that growth as the (A) absolute change in nominal GDP from one period to another. (B) percentage change in nominal GDP from one period to another. (C) absolute change in real GDP from one period to another. (D) percentage change in real GDP from one period to another.

3. Suppose that a college professor is creating an exam in her university office. Which of the following would be an example of a factor of production used by the professor? (i) the professor’s time  (ii) a computer software program into which the professor types the exam questions (iii) the physical space of the professors office where she works when creating the exam (iv) the interest on the professor’s home mortgage (A) (i) only (B) (i) and (ii) only (C) (i), (ii), and (iii) only (D) (i), (ii), (iii), and (iv)

5. Suppose a basket of goods and services has been selected to calculate the CPI and 2012 has been selected as the base year. In 2012, the basket’s cost was $50； in 2014, the basket’s cost was $52； and in 2016, the basket’s cost was $55. The value of the CPI in 2016 was (A) 90.9. (B)104.0. (C)105.0. (D)110.0. 

6. Suppose Susan can wash 3 windows per hour or she can iron 6 shirts per hour. Paul can wash 1 window per hour or he can iron 6 shirts per hour. (A) Susan has a comparative advantage over Paul in washing windows. (B) Paul has a comparative advantage over Susan in ironing shirts. (C)Susan has an absolute advantage over Paul in washing windows. (D)All of the above are correct.

7. The opportunity cost of going to college is (A) the earnings given up to attend college. (B)the total amount spent on items that are required for attending college. (C)zero, since college education will allow a student to earn a higher income after graduation. (D)the total amount in (a) plus the earnings in (b).

8. A consumer chooses an optimal consumption point where the (A) marginal rate of substitution equals the relative price ratio. (B) slope of the indifference curve exceeds the slope of the budget constraint. (C) ratios of all the marginal utilities are equal. (D) All of the above are correct.

9. Suppose when a monopolist produces 75 units its average revenue is $10 per unit, its marginal revenue is $5 per unit, its marginal cost is $6 per unit, and its average total cost is $5 per unit. What can we conclude about this monopolist? (A) The monopolist is currently maximizing profits, and its total profits are $375. (B)The monopolist is currently maximizing profits, and its total profits are $300. (C)The monopolist is not currently maximizing profits； it should produce more units and charge a lower price to maximize profits. (D)The monopolist is not currently maximizing profits； it should produce fewer units and charge a higher price to maximize profits.

10. In the long run the local coffee shop incurs total costs of $625 when output is 1,250 cups of coffee and $750 when output is 1,500 cups of coffee. For this range of output, the coffee shop exhibits (A) economies of scale. (B)constant returns to scale. (C)diseconomies of scale. (D) efficient scale.