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Multiple Choice Quiz
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1.
Which of the following would depress the price of primary products in the world market?
A)Engel's law
B)nature's limits
C)relatively slow productivity growth in the primary sector
D)all of the above
2.
A monopoly should find that the optimal markup will be higher with:
A)relatively more in elastic demand.
B)relatively more elastic demand.
C)relatively more elastic supply.
D)unitary elastic demand.
3.
The cause of oil crises in 1973-1974 and 1979-1980 were the result of:
A)higher oil extraction costs.
B)oil consumption outpacing oil discoveries.
C)the establishment of oil fields in the Middle East.
D)the successful execution of a cartel of oil producing countries.
4.
Which of the following is not a viable reason why cartels often lack success over the long run?
A)decreased demand for the cartel's production
B)new supplies which are outside the cartel's control
C)declining market shares for the cartel.
D)member countries have the tendency to cheat
E)nonmember countries apply to join the cartel.
5.
International cartels in primary products other than oil are unlikely because:
A)no developing country would be interested in establishing a cartel unless it was for oil.
B)oil is the only good that developed countries are interested in importing from the developing world.
C)most primary products would be subject to competing supplies from non-cartel members.
D)developing countries are not sophisticated enough to establish a cartel without developed countries' assistance.
6.
OPEC countries are:
A)developed because they have relatively high per capital incomes.
B)often faced with the temptation to raise oil production above the target agreed upon in the cartel meetings.
C)all in the Middle East.
D)all anti-west.
7.
Which of the following tasks is not part of the transition from central planning to a market economy?
A)Establishing private ownership, with privatization of state businesses.
B)Establishing a legal system, with contract laws and property rights.
C)Establishing a currency union with another market economy.
D)Shifting to competitive markets and market-determined prices, with a new process of resource allocation.
8.

Which of the following statements correctly explain(s) the oil price increase since 1999?

(1) OPEC had success in reducing its production in the late 1999s and early 2000s.

(2) Demand for oil in China, India, and the United States grew.

(3) Low oil prices in the 1990s discouraged investment in new crude oil production capabilities, leading to tight supply and a lack of spare production capacity.

A)(1) + (2) + (3)
B)(1) + (2)
C)(2) + (3)
D)(1) + (3)





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