18. Suppose some firms in a perfectly competitive industry are incurring an economic loss. As a result,
(A) all the firms will eventually incur an economic loss.
(B) some firms will leave the industry and the remaining firms quantity will decrease.
(C)some firms will leave the industry and the price of the good will rise.
(D) the total industry economic profit must equal $0.

19. Which of the following statements is FALSE?(A) In the short run, a monopolist might operate even though it is incurring an economic loss but in the short run a perfectly competitive firm always shuts down if it is incurring an economic loss.(B) A monopoly can earn an economic profit in the long run but a perfectly competitive firm cannot.(C)A monopoly can set its price while a perfectly competitive firm cannot.(D) A monopoly is protected by barriers to entry while a perfectly competitive firm is not.

20. In the long-run, a single-price monopolist will(A) not be able to continue to earn economic profits and will earn a normal profit.(B) be able to continue to earn economic profits as long as the market remains a monopoly.(C)end up being regulated by the government because it is making short-run economicprofits.

21. Which of the following expenditures associated with the production of a new high-performance SUV will be directly included in GDP?(A) the sale of bonds to finance the construction of the assembly plant(B) the purchase of used welding robots to assemble to vehicles(C)the purchase of new tires to be installed on the new vehicles(D) the purchase of new machine tools to manufacture the engines

22. From the data in the above table, GDP equals(A) $1,120. (B) $1,280.(C)$1,290. (D) $1,360.

23. When an individual is frictionally unemployed, the unemployment arises in part from(A) a short-term elimination of jobs because of a slowdown in business activity.(B) individuals searching for appropriate employment.(C)the permanent elimination of jobs because of a change in the structure of the economy.(D) a reduction in the overall demand for workers' skills.

24. If the CPI basket costs $35 in the base period but costs $42, what is the CPI in the next period?(A) 83.3 (B) $42(C)20 percent (D) 120

25. Which of the following directly creates growth in labor productivity?I. Growth in capital per hour of labor.II. Technological change.III. Population growth.(A) I only (B) II only(C)I and II (D) I and III

26. "Premier Liu Chao-shiuan announced Tuesday a government plan to distribute NT$82.9 billion (US$2.51 billion) in consumption coupons to Taiwan's citizens in a bid to stimulate ... economic growth."www.etaiwannews.com 11/18/2008The Premier's plan to boost economic growth by boosting consumption(A) will work because employment will increase.(B) will work because there will be a movement out along Taiwan's aggregate production function.(C)will not work because real GDP per person will decrease.(D) will not work because economic growth is boosted by labor productivity, not consumption.

27. If foreigners spend more on Taiwan-made goods and services than we spend on theirs,(A) foreigners must borrow from Taiwan or sell Taiwan assets to make up the difference.(B) all Taiwan national saving remains in Taiwan.(C)we must borrow from foreigners because of low imports.(D) funds flow in from abroad to help finance Taiwan investment.

28. Technological progress that increases the expected profit shifts the demand for loanable funds curve(A) leftward and reduces the real interest rate.(B) rightward and increases the real interest rate.(C)rightward and reduces the real interest rate.(D) leftward and increases the real interest rate.

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