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A natural harmony between individuals serving their own self-interests and the broader interests of
society was the central theme of the theories of __________, but this notion was not accepted by
_________. (a) Karl Marx / David Ricardo. (b) Thomas Malthus / A.A. Cournot. (c) Adam Smith /
Jeremy Bentham. (d) Carl Menger / Eugen Bohm-Bawerk.
2. The best of all possible worlds is one in which social policies maximize the happiness of the
maximum number of people is consistent with the utilitarian philosophy attributed to: (a) Epictetus.
(b) Hugo Grotius. (c) Xenophon. (d) Jeremy Bentham. (e) Albertus Magnus.
3. According to Jeremy Bentham [1748-1832], punishment for a crime should be: (a) positively related
to the criminals hierarchical social position. (b) determined by judges who would be elected, not
appointed. (c) proportional to the amount of harm the individual caused society. (d) based on the
opinions of a jury of the criminals peers. (e) determined by intentions instead of consequences.
4. Jeremy Bentham [1748-1832] was: (a) primarily concerned with reforming the legal system. (b) the
founder of utilitarianism. (c) the owner of a pet pig that roamed through his mansion. (d) a member
of the Board of Trustees of the University of London who, stuffed and mummified after he died,
remains on the Board today. (e) all of the above.
5. Jeremy Bentham [1748-1832] argued that crime should be punished proportionally to the harm
done to society, without consideration of motive, intent or remorse. Benthams proposal would
result in more than the optimal amount of crime because of the: (a) harmful effects of crime on the
distribution of income according to the contribution standard. (b) unavailability of prisons in the late
eighteenth century. (c) inequality in the distribution of income that characterized the early stages of
the industrial revolution (d) probability of punishment being less than 100%.
6. Jeremy Bentham [1748-1832] was primarily concerned with: (a) establishing laissez faire economic
policies. (b) reforming the legal system, especially as it related to crime. (c) establishing a public
school system in England to maximize utility by ensuring equality in educational opportunities. (d)
achieving free trade policies. (e) reducing the power of the monarch.
7. Jeremy Bentham [1748-1832] would have been least familiar with the idea that: (a) criminals
should be punished proportionally to the harm done to society, without consideration of motive,
intent or remorse. (b) consumers are in equilibrium when relative market prices are precisely
proportional to the ratios of the marginal utilities [marginal jollies] from various goods. (c) the
proper goal of society is to secure the greatest good for the greatest number. (d) Adam Smith
viewed most economic activity as best regulated by the invisible hand of market forces.
8. The ideas of Jeremy Bentham [1748-1832] are most congruent with the philosophy of life known as:
(a) Buddhism. (b) social Darwinism. (c) Hinduism. (d) stoicism. (e) hedonism.
9. Jeremy Benthams musings provided major philosophical foundations for: (a) the abolition of
slavery. (b) syndicalism. (c) free international trade. (d) feudalism. (e) utilitarianism.

10. Murderers do more harm than shoplifters, so they should be punished proportionally more harshly
according to the school of thought developed by: (a) medieval scholar Thomas Aquinas. (b) Chinese
leader Mao Zedong. (c) lawyer and social reformer Jeremy Bentham. (d) mercantilist David Ricardo.
(e) physiocrat Franois Quesnay.

11. Public choice theorist Gordon Tulloch has argued that pedestrian fatalities would be reduced if cars
were equipped with a spring-loaded spear that fired through the steering column (and the driver)
when the front bumper collided with any object at a speed exceeding, say, 7 mph. A law requiring
this equipment would most directly and obviously violate: (a) the law of intentional consequences.
(b) Jeremy Benthams principle that the punishment should fit the crime. (c) the law of equal
marginal advantage. (d) Aristotles paradox of value. (e) David Ricardos law of comparative
12. The clich that the punishment should fit the crime originated in the writings of: (a) Plato. (b)
Thomas Aquinas. (c) Jeremy Bentham. (d) David Hume. (e) Thomas Hobbes.
13. Social welfare is maximized when a hedonistic calculus regulates all human action according to the
interventionist liberal: (a) John Stuart Mill. (b) Thorstein Veblen. (c) Milton Friedman. (d) Karl
Marx. (e) Jeremy Bentham.
14. The cornerstone of classical and neoclassical economic theory derived from the work of Jeremy
Bentham was the concept of (a) the wages fund. (b) population dynamics. (c) increasing cost. (d)
utility. (e) surplus value.
15. An early school of social philosophy and economics that strongly emphasized education as a
mechanism for social reform were the: (a) utilitarianism. (b) physiocracy. (c) mercantilism. (d)
classical theory. (e) medieval scholasticism.
16. The early thinker who argued that criminals should be punished proportionally to the harm done to
society, without consideration of motive, intent or remorse was: (a) John Stuart Mill. (b) Edwin
Chadwick. (c) Jeremy Bentham. (d) Adam Smith. (e) Aristotle.
17. The eccentricities of Jeremy Bentham (1748-1832) did not include: (a) allowing a pet pig to freely
roam his mansion. (b) petitioning the London Council for permission to replace shrubbery along his
driveway with mummified human cadavers. (c) leaving his estate to the University of London if his
embalmed body would on the Board of Trustees, forever. (d) being murdered by an insane servant
when he was 84 years old.
18. The idea that, on average, extra income means more to the poor than to the rich conforms most to the
teachings/philosophy of: (a) Thorstein Veblen. (b) Friedrich Nietzsche. (c) Gautama Buddha. (d)
Jeremy Bentham. (e) Nostradamus.
19. The utilitarianism of Jeremy Bentham is most closely akin to the philosophies of: (a) hedonism and
Epicureanism. (b) pragmatism and instrumentalism. (c) asceticism and stoicism. (d) dialecticism and
materialism. (e) fundamentalism and predestination.
20. The utilitarianism of Jeremy Bentham would conflict most strongly with the philosophic tenets of:
(a) the epicureans who followed the teachings of Epicurus [c. 341-271 BC]. (b) hedonism. (c)
medieval scholastics and the Greek philosophers who advocated stoicism. (d) John Stuart Mill and
other 19th century liberals.
21. The worldly philosopher who, of the following, would have been most likely to have blamed bad
calculations instead of bad motives for poor decisions would have been: (a) Adam Smith. (b) Jeremy
Bentham. (c) David Ricardo. (d) Edwin Chadwick. (e) Nassau Senior.
22. To be eternally part of an organization where utilitarian principles were discussed was among the
lifelong goals of: (a) Jeremy Bentham. (b) Robert Owen. (c) Saint Simon. (d) John Stuart Mill

23. Utilitarianism proposes that the best society is one that provides the: (a) basic goods to meet peoples
needs. (b) greatest happiness for the greatest number of people. (c) accurate measurement of utility and
disutility. (d) highest guaranteed incomes for everyone.
24. The argument that infant industries should be protected from competition by established foreign
industries was first advanced by: (a) Richard List. (b) Gustav von Schmller. (c) David Ricardo. (d)
Alexander Hamilton. (e) Thomas Robert Malthus.

1. The classical liberal who initially accepted but eventually rejected the idea that, in the long run, workers
are doomed to live miserable lives because the equilibrium wage rate is at a bare subsistence level was:
(a) Adam Smith. (b) Jeremy Bentham. (c) Thomas Robert Malthus. (c) David Ricardo. (e) John Stuart
2. In part as a rebuttal to classical liberals who included John Stuart Mill, Thomas Carlyle
characterized economics as the dismal science in an essay entitled: (a) A Review of the Theories
of Parson Malthus. (b) Consequences of the Corn Laws. (c) The Bullion Debates. (d) The Age of the
Economist. (e) Discourse on the Negro Question.
3. In Voltaires novel, Candide, his character Dr. Pangloss opines that we live in the best of all
possible worlds. This dour prediction is most consistent with the views of capitalism expressed by:
(a) anarcho-syndicalists. (b) medieval scholastics. (d) Karl Marx. (e) most classical economists.
4. The industrial revolution and the transformation of the feudal economy in England into more of a
market oriented economy occurred in part because of the flow of labor from rural to urban locations.
This flow was largely a result of: (a) the flat tax movement. (b) standardization of money. (c) the
enclosure movement. (d) the Protestant Reformation. (e) publication of the Wealth of Nations.
5. The argument that infant industries should be protected from competition by established foreign
industries was first advanced by: (a) Richard List. (b) Gustav Schmoller. (c) David Ricardo. (d)
Alexander Hamilton. (e) Thomas Robert Malthus. (f) early mercantilists.

Topic 6: Marxism
1. Dialecticism as an evolutionary technique that humans use to understand the world and the
universe was first developed by: (a) Ludwig Feurbach. (b) Georg W.F. Hegel. (c) Leonid Kantorovich.
(d) Karl Marx. (e) Eugen von Bohm-Bawerk.

2. The theory of dialecticism hypothesizes that theses generate antitheses, with interactions between
such concepts then yielding syntheses that advance human understanding. This theory was first
described by: (a) Isaac Newton. (b) Ludwig Feurbach. (c) Pierre-Simon Laplace. (d) Pierre de Fermat.
(e) Karl Marx. (f) Georg Hegel. (g) Gottfried Leibniz.

3. Karl Marx was profoundly influenced by the passage, History is not a sequence of accidental
occurrences or a collection of disconnected stories; rather, it is an organic process guided by human
spirit. The writer of this sentence was the German idealist philosopher: (a) Friedrich Engels. (b)
Karl Marx. (c) Pierre Joseph Proudhon. (d) Georg Hegel. (e) Charles Fourier.

4. The foundations of Karl Marxs dialectical materialism came from the philosopher: (a) Georg
Hegel. (b) Immanuel Kant. (c) Thomas Hobbes. (d) John Locke. (e) David Hume.

5. Dialectics involves interactions of thesis and antithesis leading to: (a) electrokinesis. (b) photosynthesis.
(c) hypothesis. (d) synthesis. (e) dissertation.

6. Synthesis is the end result of: (a) materialism. (b) deduction. (c) the equimarginal principle. (d)
dialectics. (e) diffusion.

7. The theory that dialectical processes [thesis + antithesis synthesis] yield increased understanding
about how the world works was first exposited by: (a) Aristotle. (b) Georg Hegel. (c) Karl Marx. (d)
Isaac Newton. (e) Adam Smith. (f) David Ricardo. (g) Friedrich Engels. (h) John Stuart Mill. (i) David
Hume. (j) Ludwig Feurbach. (k) John Locke.

8. Georg Hegel theorized that a concept (thesis) confronts its opposite (antithesis) to yield a synthesis that
advances human understanding. Karl Marx modified this theory into his philosophy called: (a)
dialectical materialism. (b) synergy. (c) atheism. (d) anarcho-syndicalism.

9. The Marxist theory of dialectical materialism theoretically follows a sequence: (a) synthesis
thesis antithesis. (b) antithesis synthesis thesis. (c) thesis antithesis synthesis. (d)
synthesis antithesis thesis. (e) thesis synthesis antithesis

10. Terms associated with dialectical analysis would include: (a) class warfare and the labor theory of
value. (b) thesis, antithesis, and synthesis. (c) syndicates and worker cooperatives. (d) anarchy and

11. The term that is least closely related to the others is: (a) free will. (b) dialectical materialism. (c)
path dependency. (d) hysterisis. (e) historicism.

12. Dialectic materialism is a cornerstone of: (a) Marxism. (b) socialism. (c) communism. (d) capitalism. (e)

13. Karl Marx theorized that the ultimate transition from capitalism to communism is an inevitable
consequence of: (a) laws of motion. (b) dialectical idealism. (c) path dependency. (d) social

14. The laws of motion that Karl Marx hypothesized as inevitably sweeping capitalism into the
dustbin of history are an example of a metaphysical view called: (a) hysterisis.(b) homeostasis. (c)
determinism. (d) fundamentalism. (e) path dependency.

15. Karl Marxs dialectical materialism borrowed dialecticism from ____________ and revised a form of
materialism developed _______________. (a) Hegel; Feurbach. (b) Kant; Hegel. (c) Engels; Bhm-
Bawerk. (d) Feurbach; Schmoller. (e) Kantorovich; Heinrich.

16. Ludwig Feurbach combined materialism, a perspective explored at least as early as the ancient Greeks,
with the dialectical method of Georg Hegel, in a theory Feurbach called dialectical materialism.
Feurbachs philosophy, with slight revision, became a cornerstone of: (a) nihilism. (b) marginalism. (c)
Marxism. (d) mercantilism. (e) anarcho-syndicalism.

17. History unfolds from dialectical interactions of material things and events that are crystallized in class
struggle according to the theories of: (a) Mohandas Gandhi. (b) Karl Marx. (c) Fabian Proudhon. (d)
Georg Hegel. (e) Maximilian Schell.

18. Karl Marx believed that the unfolding of history is explained by: (a) the clash between thesis and
antithesis to yield synthesis in the ways societies produce, exchange, and distribute economic goods.
(b) dialectical idealism. (c) resolutions to conflicts between different political parties. (d) competition
among workers that ensures high standards of living.

19. Karl Marx believed that: (a) Georg Hegel was correct to focus on ideas. (b) history unfolds from the
dialectical interactions of material things and events. (c) communal socialism would be replaced by
feudalism. (d) capitalism is inherently stable because it involves no class conflicts. (e) value is the sum
of wages, interest, and rents.

20. The dialectical materialism espoused by Karl Marx and Friedrich Engels holds that the ultimate
causes of all social change originate in: (a) the minds of men and women. (b) a revolution to
overthrow the ruling class. (c) the philosophies of great scholars, (d) the lectures of economics
professors. (e) internal contradictions in the methods of production and exchange.

21. Marxists believe that: (a) human history can be interpreted as resolutions of conflicts between the
people of different economic classes. (b) pure history is a mathematical science. (c) changes in human
ideas are responsible for the unfolding of history. (d) historical change can be ignored because only the
present and future matter.

22. According to Marxist dialectics, the antithesis that develops as capitalism matures is: (a) an
exploited proletariat. (b) peaceful cooperation. (c) wage fund theory. (d) cooperative agriculture.
(e) population control.

23. Neither the dialectic method developed as an explanation for advances in understanding by
Georg Hegel nor the version altered by Karl Marx as an explanation of all history (dialectical
materialism) would be particularly consistent with the notion that: (a) thesis +antithesis
synthesis. (b) Marxism + Christian socialism liberation theology. (c) mature capitalism +
exploited proletariats revolution. (d) individual aptitude + individual effort economic success.
(e) long + short distance.

24. Karl Marx combined Georg Hegels theory of _________ with __________ theory of materialism to
form his views of how historical processes unfold. (a) dialectics/ Hegels. (b) surplus value/ David
Ricardos. (c) socialism/ Thomas Mores. (d) Dialectics/ Feuerbachs.

25. According to Karl Marx, the properties that distinguish commodities do not include: (a) useful. (b)
produced by human labor. (c) offered for sale in the market. (d) inseparable from the individual
that produced them.

26. Karl Marx theorized that capitalists would use the surplus value they exploited from workers
primarily to: (a) increase wages above a subsistent level (b) hire more workers (c) invest and
become wealthier (d) develop new technology.

27. Karl Marx cited as among important contradictions inherent in the nature of capitalist production
that would lead ultimately to the destruction of capitalism classical predictions from Adam Smith
and David Ricardo about the inevitability of: (a) falling rates of profit. (b) conflicts between the
interests of workers and landowners. (c) the subjective theory of value superceding the labor
theory of value. (d) an unsustainable, and rising reserve army of the unemployed. (e) the triumph
of socialism over capitalism.

28. According to Marxist thought, each person contributes to the economic process according to
his or her ability and receives an income according to his or her contribution under
___________; whereas, each person contributes according to his or her ability but consumes
according to his or her needs under____________. (a) libertarianism / syndicalism. (b)
capitalism / communism. (c) anarcho-syndicalism / socialism. (d) socialism / communism.

29. Karl Marx predicted that the rate of profit would fall over time because capitalist
competition and diminishing returns would offset technological advances. Similar
predictions are found nowhere in the writings of: (a) Adam Smith. (b) David Ricardo. (c)
Thomas Malthus. (d) John Stuart Mill. (e) Ralph Waldo Emerson.
30. According to Marxist theory, the forces of production are ___________and the relations of
production are ___________. (a) dynamic / static. (b) manifested in labor skills, scientific
knowledge, tools, and capital goods / manifested in the social superstructure of the arts,
literature, music, etc. (c) technology [a thesis]; institutions [the antithesis]. (d) the thesis in
the Marxian dialectic; the antithesis in the Marxian dialectic. (e) both c and d. (f) all of the
above. (g) none of the above
31. In his The Poverty of Philosophy, ___________ annihilated The Philosophy of Poverty written by
__________, because ___________ refused to join forces with him because of his inability to
entertain dissent. (a) Friedrich Engels, Thorstein Veblen, Veblen (b) Pierre Proudhon, Karl Marx,
Marx (c) Karl Marx, Pierre Proudhon, Proudhon (d) Pierre Proudhon, Friedrich Engels, Engels (e)
Thorstein Veblen, Karl Marx, Marx

32. According to Karl Marx, the capitalists and their bourgeois lackeys will be cast into the dustbin of
history as a consequence of: (a) worker revolution, which will be followed by a dictatorship of the
proletariat, and finally, communism. (b) democratic socialism resulting in the nationalization of all
industries. (c) a military coup, succeeded by a military dictatorship. (d) central planning under
socialism, yielding an accelerated rate of economic growth. (e) imperialistic wars that result in the
eventual triumph of nations lead by communists.

33. The early proponent of communism with a taste for bourgeois pleasures who owned and managed
a textile factory was: (a) Karl Marx. (b) Georg Hegel. (c) Friedrich Engels. (d) Ludwig Feurbach. (e)
Joseph Stalin.

34. Karl Marx's chief collaborator, best friend, and greatest admirer was the industrialist: (a) Sir Thomas
More. (b) Robert Owen. (c) Friedrich Engels. (d) William Godfrey.

35. The ideas of Karl Marx are most frequently associated with those of: (a) Theodore Herzl, an early
Zionist. (b) St. Thomas More, an advisor to Henry VIII. (c) Friedrich Engels, a factory owner in England.
(d) Joseph Proudhon, an early syndicalist.

36. In The Communist Manifesto, Marx and Engels called for a: (a) greater reliance on the principle of
comparative advantage. (b) regressive income tax. (c) proportional income tax. (d) world
government to resolve international disputes. (e) progressive income tax.

37. Not among the primary underpinnings of Karl Marxs theories was: (a) the labor theory of value. (b)
Hegels dialecticism. (c) Feurbachs materialism. (d) Carl Mengers marginalism.

38. NOT among the key tenets of Marxism would have been: (a) von Thunens theory of economic rent.
(b) dialectical materialism. (c) a reserve army of the unemployed. (d) a labor theory of value.

39. The powerful transformative effects of the spread of the market system in the process we now call
globalization were most accurately predicted and vividly described by: (a) Adam Smith and Thomas
Robert Malthus. (b) Richard Cantillon and Sir William Petty. (c) Karl Marx and Friedrich Engels. (d)
Bernard de Mandeville and Philipp Wilhelm von Hornick. (e) Ibn Khaldun and Abu Hamid al-Ghazali.

40. The increasing pervasiveness of the market system around the world tends to standardize
technologies while reducing production costs for commodities and services. Incredible wealth
has been generated internationally while national borders have shrunk in significance. These
consequences of globalization were forecast in the greatest detail and the most vivid language
in: (a) The Communist Manifesto, by Karl Marx and Friedrich Engels. (b) David Humes The
Specie Flow Mechanism. (c) Essay on the Principle of Population, by Thomas Robert Malthus.
(d) Principles of Political Economy, by John Stuart Mill. (e) Tableau Economique, by Franois
41. Subsequent history seems most supportive of Karl Marxs prediction that: (a) advanced capitalist
nations would succumb to communist revolutions. (b) industries, wealth and political power would
become increasingly concentrated. (c) political boundaries would decrease in importance as market
economies became globalized. (d) the middle class would eventually become as impoverished as
the working class. (e) government would become insignificant after the triumph of radical

42. Karl Marxs notion that most people advocate social or legal reforms favoring the interests of groups
to which they personally belong, and that they then erect ethical arguments to support such positions
is known as: (a) self interested opportunism. (b) nave egoism. (c) class interest or class conflict. (d)
dialectical materialism. (e) myopic solipsism.

43. Points of agreement between Marxists and most other socialists include the idea that: (a) capitalism
will be overthrown by a short but violent revolution. (b) dialectical materialism is the key to all major
historic changes. (c) government should be society's trustee over non-property resources. (d) an elite
group should dominate major social decision making. (e) service work is more important than
commodity production.

44. Interest, rent and profit are collectively known by Marxists as: (a) materialistic bloat. (b) dialectics.
(c) finance capital. (d) exploitation indicators. (e) surplus values.

45. The Marxist concept of surplus value would not include income received in the form of: (a) wages.
(b) rent. (c) interest. (d) corporate profits. (e) proprietor profits.
46. In Marxist analysis: (a) ideas are more important than economic forces in changing history. (b) the
capitalist stage of economic development succumbs to feudalism. (c) the final stage of development is
the dictatorship of the proletariat: (d) value depends on the labor time socially necessary for

47. The labor theory of value remains an article of faith among most orthodox: (a) libertarians. (b)
capitalists. (c) Keynesians. (d) Marxists. (e) Catholics.

48. Karl Marx largely accepted the classical supply-side theory of relative price determination known as
the: (a) labor theory of value. (b) diamond-water paradox. (c) human capital differential. (d) equation
of exchange. (e) subjectivism.

49. In Marxist jargon, capitalists are also known as the: (a) proletariat. (b) bourgeoisie. (c) plebeians. (d)

50. In Marxist jargon, working class people are known as the: (a) proletariat. (b) petit bourgeoisie. (c)
plebeians. (d) protagonists. (e) patricians.

51. Karl Marxs theory of society was summarized in a social pyramid which, from bottom to top,
was. (a) forces of production relations of production social superstructure. (b) relations of
production forces of production social superstructure. (c) social superstructure forces of
production relations of production. (d) forces of production social superstructure relations
of production.

52. According to Marx, economic history: (a) is determined by the interaction of Aggregate Demand and
Aggregate Supply. (b) is the result of class struggles. (c) will reach its pinnacle when centrally-planned
socialism replaces capitalism. (d) arises when new social and philosophical ideas are introduced into
the economic structure.

53. In Karl Marx's analysis of the capitalist economy: (a) economic growth is impossible. (b) capitalism is
effective at increasing capacity in its early stages. (c) supply automatically creates demand. (d)
socialism historically precedes capitalism. (e) capitalism is a stage that unfortunately assures Thomas
Malthus proposition that overpopulation is inevitable.

54. The powerful transformative effects of the spread of the market system in the process we now call
globalization were most accurately predicted and vividly described by: (a) Adam Smith and Thomas
Malthus. (b) Richard Cantillon and Sir William Petty. (c) Karl Marx and Friedrich Engels. (d) Bernard
de Mandeville and Philipp Wilhelm von Hornick. (e) Ibn Khaldun and Abu Hamid al-Ghazali.

55. According to Karl Marx one of the inevitable steps in the historical processes that facilitate
economic progress would be: (a) nuclear warfare. (b) class warfare. (c) dialectical warfare. (d)
capitalist revolution. (e) dictatorship of the bourgeoisie.

56. A necessary historical process (according to Marxists) that facilitates economic progress is: (a)
dialectical idealism. (b) the bourgeoisie revolution. (c) class warfare. (d) central planning.

57. According to Karl Marx, revolution would inevitably come from the oppressed workers, known as
the: (a) proletariat. (b) patricians. (c) bourgeoisie. (d) panacea. (e) petit bourgeoisie.

58. Karl Marx recognized, as Adam Smith had previously, that the development of productive forces in
every economy depends upon ______, but unlike Smith, Marx saw a conflict of interests as the
logical outcome. (a) wages-fund doctrine (b) division of labor (c) dialectics (d) capital accumulation
(e) dictatorship of the proletariat.

59. Karl Marxs approach to economic theory is largely Ricardian, but his analysis relies least on David
Ricardos: (a) theories of income distribution. (b) Lockean labor theory of value. (c) Iron Law of
Wages. (d) incorporation of Malthuss theories of population. (e) Law of Comparative Advantage.

60. Markets as mechanisms for exchange began to significantly outweigh individual trading relatively
late in the period that Karl Marx characterized as: (a) prehistory. (b) primitive culture. (c) feudalism.
(d) monarchism. (e) the industrial revolution. (f) capitalism.

61. Karl Marx theorized that the stage of economic development that immediately precedes the final
state of communism or socialism would be: (a) capitalism. (b) primitive culture. (c) a dictatorship of
the proletariat. (d) feudalism.

62. Marxists believe that capitalists have: (a) marginal and average propensities to consume equal to one.
(b) insatiable desires to compete until dominance is established. (c) control over working conditions,
and that they set wages and the length of the working day. (d) the same goals in life as workers.

63. According to an unrevised Marxian economic model: (a) only capitalists are able to save any of their
incomes. (b) workers receive wages above the subsistence level. (c) most workers could become
capitalists if they worked harder. (d) successful capitalist's children are usually less successful.

64. Marx argued that exploitation of labor is the source of capital accumulation by capitalist enterprises
which seek to increase surplus value by substituting capital for: (a) labor. (b) higher wage rates. (c)
rents. (d) proletariats. (e) leisure time.

65. According to unrevised Marxist economic models: (a) workers have a lower marginal propensity to
save than capitalists. (b) workers have a lower marginal propensity to consume than capitalists. (c)
workers and capitalists save about the same amount of every dollar. (d) workers and capitalists
spend about the same amount of every dollar. (e) pure competition leaves capitalists with no
possibility of profits.

66. According to Karl Marx, the fundamental reason capitalism is morally reprehensible is because: (a)
free trade does not allow citizens of the country to compete with foreign producers as effectively.
(b) individual workers are exploited because they do not derive the full value of their labor. (c) the
government should not be allowed to tax less wealthy individuals as much as wealthier individuals.
(d) people cannot actively participate in the government. (e) free trade exploits human greed and
thus should be regulated.

67. Marxists do not believe that: (a) capitalism is inherently unstable. (b) fully mature capitalistic
economies will fall to communism. (c) capitalistic economies will be plagued by under-consumption
and declining profit rates during their final stages. (d) communism represents the final stage in human
history. (e) equity in the distribution of income can be achieved under capitalism.

68. Orthodox Marxists do not believe that fully mature capitalism: (a) is plagued by inherently unstable
business cycles. (b) will be overthrown by communist revolutions. (c) can achieve equity through
generous welfare programs. (d) evolves out of feudalism and is ultimately replaced by communism.

69. According to Marx, capitalists can only prosper when: (a) technological advances exceed rates of
population growth. (b) job satisfaction among workers creates greater efficiency in production. (c)
there is little government intervention. The market will be efficient by itself, maximizing profit for
the capitalists. (d) capitalists exploit their workers.

70. The Marxist term for differences between wages and labor's average marginal productivity is: (a) wage
deficit. (b) surplus value. (c) exploitation quotient. (d) monopoly profit. (e) contingency fee.

71. Interest, rent and profit are collectively known by Marxists as: (a) surplus values. (b) dialectics. (c)
finance capital. (d) materialistic bloat. (e) the rate of exploitation.

72. According to Karl Marx, surplus values include all income payments except: (a) interest. (b) rent. (c)
profit. (d) wages.

73. The Marxist concept of surplus value is the difference between: (a) disequilibrium and equilibrium
under capitalism. (b) the value of labor inputs and the subsistence wage. (c) socially necessary labor
and gross labor input. (d) embodied labor and congealed labor.

74. In Marxist jargon, interest, rent and profit are collectively known as: (a) surplus values. (b) exploitation
indicators. (c) concentration indicators. (d) dialectical materials. (e) economic dialectics.

75. According to dialectical materialism, the antithesis (internal contradiction) to the capitalism
thesis that emerges as capitalism matures is: (a) the exploited proletariat. (b) peaceful
cooperation. (c) wage fund theory. (d) cooperative agriculture. (e) population control.

76. Marxists refer to differences between wages and labor's average productivity as: (a) exploitation
deficits. (b) surplus values. (c) monopoly quotients. (d) budget surpluses.

77. In Marxist jargon, interest, rent, and profit are collectively known as: (a) surplus values. (b) exploitation
indicators. (c) dialectical materials. (d) economic dialectics.

78. Replacing private property rights to non-human resources with social ownership is central to: (a)
capitalism. (b) libertarianism. (c) anarchism. (d) syndicalism. (e) Marxist socialism.

79. The idea that government is always controlled by an autocratic and exploitative elite group of
capitalists is central to: (a) utopianism. (b) Hinduism. (c) syndicalism. (d) Marxism.

80. Marx saw the government in a capitalistic system as: (a) acting to prevent monopoly and reduce class
conflict. (b) conducting welfare programs to increase worker income. (c) allied with the bourgeoisie in
exploiting the proletariat. (d) allied with the proletariat to overthrow the bourgeoisie.

81. Orthodox Marxism differs from Utopian, Christian, and Fabian socialism primarily because of its
advocacy of: (a) collective ownership of land and capital. (b) union-management cooperation about
production decisions. (c) a violent revolution to replace capitalism with socialism. (d) distribution of
income by need, not greed.

82. The boom-bust nature of capitalism is described by the Marxist theory as caused in part by: (a)
capitalists exploitation of workers surplus value and continually investing it in more capital until
smaller companies are forced out of the market. (b) stock prices moving unpredictably in either
direction. (c) weather cycles predict what happens in society because of their tie to agriculture. (d)
manic depressives always rise to highest political positions.

83. The idea that mature capitalism would go through boom-bust cycles, continually increasing the
extent of inequality in income until a violent revolution erupted was stated by: (a) Karl Marx. (b)
John Stuart Mill. (c) Charles Darwin. (d) Zeno.

84. Laws of motion that describe how capitalism is doomed were hypothesized by: (a) Adam Smith.
(b) Bentham. (c) Sir John Byng. (d) Karl Marx

85. According to Karl Marx, the bust in capitalist boom-bust business cycles is a consequence of: (a)
automation and the substitution of capital for labor.(b) shifts in production possibility frontiers
resulting from such events as war, famine, etc. (c) capital accumulation by the rich and inadequate
purchasing power in the hands of workers. (d) ever-increasing unemployment rates among the

86. According to Karl Marx, the cycle leading to the collapse of capitalism would be: (a) rise-fall. (b)
flow of money stock of wealth. (c) boom-bust. (d) spend-save. (e) flow of surplus labor stock of

87. NOT among the numerous predictions of Karl Marx was the idea that capitalism will: (a) collapse
during a short and bloody revolution. (b) slowly weaken as economic power becomes less
concentrated over time. (c) experience falling profit rates because consumption spending will be
stifled by increasingly unequal incomes. (d) succumb at the conclusion of explosive business cycles.
(e) foster increasingly aggressive imperialist policies and wars between capitalist nations.

88. The thinker most likely to have viewed World War I as imperialistic competition for raw materials
and final goods markets between coalitions of capitalists would have been: (a) David Ricardo. (b)
Karl Marx. (c) Adam Smith. (d) John Maynard Keynes. (e) Vilfredo Pareto.

89. Karl Marx, most famously known as the father of communism, did not advocate: (a) abolition of
private ownership of land and industrial capital. (b) reliance on centralized economic planning
during a brief dictatorship of the proletariat. (c) class distinctions based on merit alone. (d) a
revolution to overthrow capitalism. (e) gradual withering away of government during the transition
to communism.

90. According to Karl Marx, (a) business cycles enable larger capitalist enterprises to devour the smaller
ones. (b) capital investment eventually leads to increased labor demands. (c) the reserve army
facilitates increases in wage rates. (d) the struggle for existence would lead to equal wages.

91. Karl Marx believed that increases in production and productive capacity would lead to general
overproduction, thus. (a) gradually reducing the extent of inequality in the distribution of income.
(b) driving prices down so that only the largest and most efficient producers would survive. (c)
increasing both demands and supplies by similar proportions. (d) causing small-scale industries to
flourish. (d) reducing the problem of unemployment.

92. A Marxist prediction that may have proven at least partially accurate is: (a) the decline in the average
rate of profit. (b) cyclically increasing rates of unemployment and explosive business cycles. (c)
increased concentration of wealth and power in large corporations. (d) communist revolutions in
industrialized societies.

93. Karl Marx predicted that, over time: (a) capital would become increasingly concentrated. (b) over-
consumption would cause declining rates of profits. (c) revolutions would occur first in the
less-developed countries. (d) socialist and capitalist economies would peacefully converge.

94. The idea that capitalism is dynamically unstable because the quest for profit stimulates economic
concentration and the immiseration of workers is central to: (a) classical macroeconomics. (b)
Keynesian theory. (c) monetary velocity cycles. (d) Marxist theory. (e) Austrian theory of the
business cycle.

95. Orthodox Marxists believe that capitalism: (a) operates efficiently but inequitably. (b) is dynamically
unstable. (c) will peacefully evolve into socialism. (d) can be saved from complete collapse by active
fiscal and monetary policy.

96. The final stage of capitalism before the revolution, according to 20th century Marxists, would be: (a)
dialectical materialism. (b) the proletarian revolution. (c) petit bourgeoisie. (d) monopolistic finance
capital. (e) the final coup.

97. According to Marxists, monopoly finance capitalism: (a) will back the workers revolution. (b) will be the
downfall of socialism. (c) is the last stage of capitalism. (d) is embodied in each and every worker.

98. According to Marx, capitalisms grand finale and demise entails: (a) exploitation of labor. (b) social
revolution. (c) centralization of capital. (d) concentration of wealth

99. According to Karl Marx, the stage that immediately follows capitalism is: (a) the "withering away of
the state." (b) pure communism. (c) revolution and then a "dictatorship of the proletariat." (d) a
market system. (e) a non-exploitative Utopia.

100. Karl Marx believed that the proletariat [working class] would spontaneously generate mass
movements that would overthrow mature capitalism. The idea that a successful communist
revolution would require leadership by an elite that would, in part, originate with bourgeois
intellectuals is known as: (a) Stalinism. (b) Maoism. (c) Marxist-Leninist theory. (d) internationalism.
(e) syndicalism.
101. The groups most likely to favor government economic planning would be: (a) bureaucrats and, at least
for the short run, orthodox Marxists. (b) anarchists and syndicalists. (c) libertarians and capitalists. (d)
Buddhists and utopian socialists.
102. Marxist theory predicts that when pure communism evolves from the dictatorship of the proletariat,
there will be a "withering away" of: (a) random selection. (b) government. (c) tradition. (d) capitalism.
(e) basic human needs.

103. In Marxist predictions, the final stage or synthesis of the worker revolution would be: (a) socialism. (b)
monopolistic finance capital. (c) petit bourgeoisie. (d) communism.

104. Karl Marx believed that: (a) the underlying economic structure of society has a profound effect upon
the surrounding political and legal superstructure. (b) capitalism is far more creative and productive
than was feudalism. (c) ownership of the means of production is the primary basis for economic power
in society. (d) capitalism cannot survive and will be replaced by socialism. (e) All of the above are true.

105. Central predictions of Marxist theory do NOT include the idea that, in a capitalist system: (a) wealth
and power become increasingly concentrated across time. (b) business cycles are dynamically
stable. (c) all incomes except for wage payments are surplus values that arise from the exploitation
of labor, and tend to increase relative to wages as capitalism matures. (d) the proletariat will
eventually overthrow capitalists and their bourgeoisie lackeys in a short bloody revolution. (e)
feudal economies are less likely to experience communist revolutions than are mature capitalist

106. Marx felt that: (a) workers were generally paid the value of their labor. (b) an antithesis emerges from
interactions between a thesis and its dialectical synthesis. (c) underconsumption would drive down
capitalist profit rates in the long run.. (d) the industrial reserve army of the unemployed would unite to
form unions.

107. Marx's major predictions about capitalism would include: (a) instability in the business cycle and
cyclically increasing excess capacity. (b) exploitation of the worker by growing monopolies. (c)
deepening class struggle of proletariat and bourgeoisie. (d) All of the above.

108. Most of Marx's predictions have proven erroneous, but his forecast was predictive (but weakly so) in
suggesting that: (a) economic power would become more concentrated in the hands of giant firms. (b)
profit rates would fall over time. (c) unemployment would increase over time. (d) government would
learn to dampen the business cycle. (e) the incomes of the proletariat would remain at subsistence

109. Economic statistics from 1890 to the present provide some support for Marx's predictions of increases
in: (a) labor's real income. (b) industrial concentration in giant firms. (c) government outlays for welfare
programs. (d) class warfare.

110. In Marx's analysis of economic growth in the capitalist economy: (a) capitalist competition will evolve
into huge monopolies. (b) economic growth will stagnate because of rapid growth of profit. (c) falling
profit rates will lead to pure competition. (d) capitalists will peacefully surrender their wealth and

111. Class conflict, or social conflict in general, as predicted by Marx: (a) does not exist in any developed
country. (b) is more severe today than Marx predicted. (c) has never led to the overthrow of capitalism
in developed countries. (d) explains today's "merger mania".

112. According to Karl Marx: (a) socialism would be brought about by revolution in the advanced countries.
(b) the rural poor would rise up against the capitalists. (c) capitalist governments will peacefully evolve
into communism. (d) workers are exploited by the proletariat.

113. Karl Marx predicted that before the success of a socialist revolution, a final stage of capitalism,
monopolistic finance capital, would be somewhat uniquely characterized by: (a) growing numbers
of petite bourgeois capitalists successfully protecting their privileges. (b) imperialistic wars raging
between mature capitalist countries. (c) increasing rates of employment. (d) profit growing
dramatically as technology advances.

114. On his deathbed Karl Marx allegedly declared, I am not a Marxist, presumably because many of
his followers: (a) had renounced their faith in dialectical materialism. (b) were compromising on the
ultimate size of government and relative need as a criterion for an equitable distribution of income.
(c) had learned that his friend Friedrich Engels owned a factory. (d) ceased believing in cooperative
production. (e) had enrolled in MBA programs at Ivy League schools.

115. The fact that most Marxist regimes have seized power in primitive economies is: (a) a result of
synthesis being confronted by synergy. (b) contrary to the predictions of Marx and Engels. (c) a
consequence of relying on Hegelian dialectics. (d) evidence that strongly supports Marxist theory.

116. Marxist revolutions in Russia, China, and Cuba all represent refutations of Marxian predictions
because: (a) their revolutions were not especially bloody. (b) the new governments have not pursued
imperialist policies. (c) they all occurred in relatively feudal agricultural economies. (d) economic
growth was slower after the revolution than before.

117. Not among the predictions of Karl Marx about capitalistic economies was: (a) growing immiseration
and unemployment among the working class. (b) ever greater concentrations of capital. (c) declining
rates of profit. (d) explosive business cycles. (e) communist revolutions in primitive economies.

118. The overthrow of government by communist revolutions in primitive economies is: (a) inconsistent
with most of Marx's predictions. (b) a result of excessively rapid capital accumulation. (c) consistently
translated into rapid economic growth. (d) the beginning of representative democracy.

119. In Paul Baran and Paul Sweezeys Monopoly Capital, the attention of Marxist theory shifted from:
(a) job conditions of the working class to the global activities of privately owned industrial giants.
(b) Freudian-style job alienation to worker alienation based on the works of Max Weber and Emil
Durkheim. (c) critiques of neoclassical theory to critiques of Keynesian theory. (d) the labor theory
of value to a more subjectively based theory of value.

120. Nikolai Bukharin was a: (a) leading Marxist theoretician in the early years of the USSRs Communist
Party. (b) supporter of the quantity theory of money. (c) prominent member of the Austrian school
of thought. (d) an advocate of laissez faire economics. (e) mentor of the young John Maynard
Keynes at Cambridge.

121. Not among major problems for Soviet economic planning after Stalins death would be that: (a)
central planning emphasized quantity of output and ignored quality. (b) inadequate provision was
made for the cost of capital, leading to overly capital-intensive methods of production. (c) plant
managers commonly produced beyond their targets (d) few incentives facilitated technological

122. The Soviet leader under whom the USSR implemented central planning was: (a) Nikolai Bukharin.
(b) Lon Trotsky. (c) Alexander Stolypin. (d) Joseph Stalin. (e) V.I. Lenin.

123. Deficiencies in the former Soviet Unions planned economy included all of the following except: (a)
planning emphasized quantity of output while ignoring quality of output. (b) inadequate provision
was made for the cost of capital, leading to overly capital-intensive methods of production. (c) the
profit incentive for entrepreneurs was too high, such that money spent toward research and
development was often much greater than toward production of basic items such as consumer
durables. (d) there was little incentive to apply new technologies, contributing significantly to the
slowdown in economic growth. (e) all of the above.

Topic 7: Marginalism:
1. The evolution of classical economics to neoclassical economic analysis hinged primarily on (a)
introducing calculus into analysis, which facilitated consideration of the effect of marginal units. (b)
moving from the labor theory of value towards an assumption that all values are determined in an
exclusively subjective manner. (c) a shift from partial equilibrium analysis to general equilibrium
analysis. (d) considering industrial products in addition to agricultural products.

2. The idea that the price of a produced good reflects, not the labor embodied in it, but rather the
subjective usefulness of the last unit purchased is based on the concept of: (a) excess demand. (b)
marginal productivity. (c) marginal utility. (d) the wages-fund. (e) decreasing costs.

3. Several early contributors to the marginalist revolution identified an optimal or efficient point in an
activity as achieved when the: (a) marginal social costs of the activity equal its marginal social
benefits. (b) marginal benefits exceed marginal costs by the maximum amount. (c) the activity
absorbs the minimum possible amount of time. (d) total benefit equals the activitys total cost.

4. The equimarginal principle [also known as the law of equal marginal advantage] emphasizes the idea
that efficiency requires: (a) the fairness of the distribution of income to be judged by how close it
comes to equality. (b) all identical resources to be allocated in identical ways. (c) deployment at the
margin of equivalent resources in equivalently valuable ways. (d) marginal social benefit to most
greatly exceed marginal social cost [MSB>MSC]. (e) wealth creation which entails maximizing the
greatest good for the greatest number.

5. Economists who are most likely to emphasize the goal of efficiency and to ignore questions of
equity would be those most heavily influenced by: (a) American institutionalism. (b) neoclassical
marginalism. (c) syndicalism. (d) German historicism. (e) Fabian socialism.

6. Theorists who formalized economics by rigorously introducing mathematics and then elaborating
on the importance of marginal analysis would include: (a) William Stanley Jevons, Carl Menger,
Lon Walras, and Francis Y. Edgeworth. (b) German historicists and American institutionalists. (c)
Isaac Newton, Richard Cantillon, John Law, and Albertus Magnus. (d) members of the Fabian and
Utopian schools of thought. (e) Thomas More, Thomas Paine, Thomas Aquinas, and Thomas

7. The Marginalist Revolution that attacked economic analysis with calculus early in the
nineteenth century is most consistent with the stress on formal mathematics and detailed
statistics in the earlier writings of: (a) Carl von Clausewitz. (b) John Law. (c) Friedrich List.
(d) William Petty. (e) Bernard Mandeville.
8. Marginalism and the idea that pricing reflects marginal utility and demand was a movement away
from: (a) the quantity theory of money. (b) the labor theory of value. (c) mercantilism. (d) Marxs
business cycle theory. (e) capitalism.

9. Three pioneers of marginal analysis viewed the production-cost basis of classical value theory as
insufficiently general to account for pricing for many goods. These writers were: (a) Karl Marx,
Friedrich Engels, and Georg Feurbach,. (b) William Stanley Jevons, Carl Menger, and Lon Walras.
(c) Adam Smith, David Ricardo, and James Mill. (d) Thomas Mun, David Hume, and Oliver Cromwell.

10. While classical economists would have asserted that the equilibrium price of bananas was
determined by the price of the land on which it was grown, the fertilizers, the labor, and all of the
other factors of production, the _________ decided that it is the fertilizers, labor, and land whose
price is determined by the price of bananas. (a) German historicists. (b) American institutionalists.
(c) scholastics. (d) syndicalists. (e) marginalists.

11. Explicit treatments of marginal analysis were least central to the writings of: (a) William Stanley
Jevons. (b) Lon Walras. (c) John Stuart. Mill. (d) Carl Menger. (e) Antoine-Augustin Cournot.

12. Thinkers who explicitly dealt with the concept of diminishing marginal utility did not include: (a)
Hermann Gssen. (b) Jeremy Bentham. (c) William Stanley Jevons. (d) Friedrich Wieser. (e) Jules

13. Economic pioneers who did not explicitly use calculus to formalize their theories included: (a) Adam
Smith and David Ricardo. (b) William Stanley Jevons and Francis Ysidro Edgeworth. (c) Antoine
Augustin Cournot and Jules Dupuit. (d) Carl Menger, Friedrich von Wieser, and von Thnen. (e)
Lon Walras and Vilfredo Pareto.

14. Not among the economists who helped develop and elaborate the marginalist principles
underpinning neoclassical price theory would have been: (a) A. Jules E. Dupuit . (b) Carl Menger. (c)
William Stanley Jevons. (d) Thomas Malthus. (e) Alfred Marshall. (f) Lon Walras.

15. The most notable distinction between classical economics and neoclassical economics was
incorporation of calculus into analyses, which revealed that optimality and efficiency require
conformity with the: (a) laws of supply and demand (b) equimarginal principle. (c) scholastic
tradition. (d) thesis-antithesis-synthesis pathway.

16. The law of diminishing marginal returns is encountered in the short run when more labor is hired
because as production rises: (a) the remaining labor available for hire is less and less skilled. (b)
customers are willing to pay only lower prices for extra goods. (c) each extra worker hired
decreases the land and capital per worker, so that the workplace becomes more congested and
managerial control erodes. (d) attempts to save money cause firms to hire unqualified workers.

17. The idea that individuals optimize by making economic decisions at the analytical margin was first
explicitly stated by: (a) Aristotle. (b) Plato. (c) Isaac Newton (d) members of the Nineteenth Century
engineering school in France. (e) Adam Smith.

18. Advances such as a formal specification of the law of demand and the introduction of calculus into
economic analysis first emerged from: (a) the Austrians. (b) public choice theory. (c)
institutionalists. (d) members of the French Engineering School.

19. Although Friedrich von Wieser is often credited with the concept, Arsne Jules tienne Dupuit is
probably more appropriately credited as the first economic thinker to explicitly discuss the concept
of: (a) marginal utility. (b) the marginal product of labor. (c) the marginal propensity to consume.
(d) marginal tax rates. (e) the marginal efficiency of capital.

20. Although most English-speaking scholars did not recognize Arsne Jules tienne Dupuits
pathbreaking contribution until recently, he seems to have been the first notable economic thinker
to: (a) theorize that rental rates depend primarily on location, not agricultural potential. (b) apply
calculus to economic problems concerning marginal utility. (c) recognize the dependence of price
upon both supply and demand. (d) develop an early version of game theory.

21. Arsne Jules tienne Dupuit implicitly used the concept of diminishing marginal utility to construct
an early version of the: (a) market equilibrium for a normal good. (b) demand curves for such public
goods as roads and bridges. (c) supply curves for such standard goods as food and clothing. (d)
equilibrium of a financial market. (e) production possibilities frontier.

22. Arsne Jules tienne Dupuits calculations imply that maximizing utility requires consuming a
bundle of goods that exhausts income when, for all goods, the: (a) average utilities are equal. (b)
ratios of [marginal utility/price] are equal. (c) prices are equal. (c) total utilities are equal. (e)
marginal utilities are equal.

23. In 1844 Arsne Jules tienne Dupuit asserted that an individuals marginal utility from a stock of a
homogeneous good is determined by the: (a) use to which the last units of the good are put by the
individual. (b) cost incurred to produce the last few units of the good. (c) marginal disutility of the
labor expended to generate income to buy the good. (d) increases then decreases. (d) diminishes
then increases.

24. The first economist to extensively examine the concept of marginal utility and relate it to a demand
curve was. (a) Antoine-Augustin Cournot. (b) John Stuart Mill. (c) Arsne Jules tienne Dupuit. (d)
Karl Marx. (e) Adam Smith.

25. The first economist to explicitly discuss the possibility that price discrimination could increase social
welfare when monopoly power or public goods pose a problem was: (a) Adam Smith. (b) the
Marquis de Condorcet. (c) Arsne Jules tienne Dupuit. (d) Antoine-Augustin Cournot. (e) Lon

26. Arsne Jules tienne Dupuit argued that inefficiencies in the provision of public goods such as
bridges could be remedied through appropriate: (a) establishment of non-profit monopolies. (b)
income tax rates. (c) application of the laws of demand and supply. (d) price discrimination. (e)
auction mechanisms.

27. Arsne Jules tienne Dupuit would agree that the price paid by a people who are indifferent about
crossing a bridge should be charged a toll: (a) equal to the average cost of the bridge. (a) greater
than a person who desperately needs to cross the bridge. (c) equal to (total cost of the bridge) /
(number of users). (d) proportional to their income. (e) of zero.

28. Following the economic analysis of Arsne Jules tienne Dupuit, the marginal social cost of either
legal or illegal file sharing (e.g., downloading a song from the internet) is roughly equal to: (a) the
marginal revenue that would have otherwise been received by the artist. (b) zero. (c) the price of
the corresponding CD. (d) the opportunity cost of the artist.

29. If price discrimination will be used to efficiently pay for the construction and maintenance costs of
a bridge, then: (a) everyone will pay an equal toll. (b) people with more money will pay a higher toll.
(c) each person will pay an amount that depends in part on how much they individually value being
able to cross the bridge. (d) independent investors will pay for the bridge. (e) each toll will be
proportional to costs.

30. Arsne Jules tienne Dupuit proved that if the marginal cost of crossing a public bridge were zero,
then at the margin the efficient toll for crossing the bridge is zero. It would be inefficient to
charge a price equal to average costs to people who gained trivially or very little by crossing the
bridge. Dupuits proposed mechanism to efficiently secure total revenue sufficient to pay for the
construction and maintenance of the bridge was (a) letting entrepreneurs bid for the right to build
and operate the bridge, and giving the contract to the bidder who would charge the lowest toll.(b)
price discrimination charging higher tolls to more desperate users. (c) progressive income taxes. (d)
a per capita tax equal to total cost / population.

31. The system of pricing that would be least compatible with A. Jules E. Dupuits model of price
discrimination would be: (a) discounts at McDonalds for senior citizens. (b) the use of yield
management to fill commercial airplanes to capacity with passengers. (c) discounts on movie tickets
for students. (d) store discounts on groceries to individuals who have loyal customer cards. (e)
bartenders forgetting to charge customers for some drinks in hopes of getting bigger tips.

32. In industries in which constantly declining marginal costs across all output levels that might be
demanded at positive prices yield a natural monopoly, the welfare loss triangle commonly
identified as an efficiency failure is most likely to be significantly reduced by: (a) nationalization of
the industry. (b) antitrust actions requiring the break-up of the monopoly. (c) government
sponsored auctions to allocate a right to monopolize to the lowest bidder. (d) price discrimination.

33. Some recent research suggests that file-sharing [illicitly downloading music and movies from the
internet] is typically engaged in by consumers who are most like: (a) the marginal crossers of Jules
Dupuits bridge. (b) social Darwinists who believe in survival of the fittest. (c) the utopian
socialists sponsored by Robert Owen. (d) panhandlers who respond to doles by increasing their
time spent begging. (e) the entrepreneurs celebrated by Richard Cantillon and George Gilder.

34. The marginalist revolution erupted in full force in the early 1870s, lead by, among others, Carl
Menger in Austria and Lon Walras at Lausanne. Several earlier writers had used calculus to
address decisionmaking at the margin in their works, but their seminal treatments of marginalism
went relatively unnoticed until long after their original works had been published. The individual
below who least fits the description of being, in his time, a relatively unknown pioneer of marginal
analysis is: (a) A. Jules E. Dupuit. (b) Hermann Gssen. (c) Antoine-Augustin Cournot. (d) William
Stanley Jevons.

35. A Theory of Pleasure and Pain appeared in The Theory of Political Economy, written by: (a)
William Stanley Jevons. (b) David Ricardo. (c) Carl Menger. (d) Antoine Augustin Cournot.

36. Economists credited with discovering and then further refining marginal utility theory include: (a)
Edwin Chadwick and Everett Jernigan. (b) William S. Cassidy and Marcus Mengele. (c) David Ricardo
and Thomas Malthus. (d) Ernst Rohm and Ezzard Charles. (e) A. Jules E. Dupuit and William Stanley

37. Firms that exercise market power but which lack the ability to price discriminate operate at
inefficiently low levels of output because in equilibrium: (a) P>MC. (b) MR>MC. (c) P>ATC. (d)
ATC<MC. (e) maximum profit is not required for monopolies not disciplined by competition.

38. One of Antoine Augustin Cournots greatest achievements was being the first, or among the first, to
describe: (a) how economics could be taught and learned without using mathematical formulas and
techniques. (b) why zero-cost situations never exist. (c) the law of demand. (loi de debit). (d)
characteristics of a perfectly competitive equilibrium.

39. Antoine Augustin Cournot did not: (a) develop general equilibrium analysis in his model of duopoly
long before Lon Walras described his general equilibrium system. (b) differentiate changes in
demand or supply from changes in the quantities demanded or supplied. (c) develop some basics of
modern game theory. (d) derive demand and supply curves by applying partial derivatives to
economic functions. (e) mathematically derive the marginal revenue equals marginal cost rule for
profit maximization.

40. The structure-conduct-performance paradigm that derived from the Ricardian tradition would
probably have yielded much sooner to a more insightful modern theory of industrial organization
(with its emphasis on game theory and strategic behavior) if conventional economists had paid a lot
more attention to the ideas of: (a) Antoine Augustin Cournot and Charles Babbage. (b) Nathan
Rosenberg and E.I. duPont de Mours. (c) Thomas Malthus and Thomas Mun. (d) Jules Dupuit and
Henri Saint Simon. (e) Alfred E. Sloan and Thomas Carlyle.

41. Least consistent with the structure of the other relationships would be: (a) Veblen and Commons |
institutionalism. (b) Menger and Gssen | Austrian theory. (c) Smith and Ricardo | classical
economics. (d) Walras and Pareto | Lausanne. (e) Dupuit and Cournot | historicism.

42. The idea that a demand curve reflects the quantity of a good demanded as a function of its price
[Q=f(P)] was first clearly specified in a mathematical form by: (a) Plato and Aristotle. (b) Adam
Smith and David Ricardo. (c) Jules Dupuit, and then Antoine-Augustin Cournot. (d) Nassau Senior
and John Stuart Mill. (e) Karl Marx and Friedrich Engels.
43. The first formal model that relied on aspects of game theory is usually attributed to: (a) John Nash.
(b) Adam Smith. (c) Antoine-Augustin Cournot. (d) John Stuart Mill.

44. The first clear example of a model of interdependent decision making that is now at the heart of
modern game theory was (a) Platos discussion of the relationship between ordinary citizens and
the philosopher king. (b) Karl Marxs discussion of the clash between the proletariat and the
bourgeoisie. (c) A. Jules E. Dupuit s exposition of efficient pricing for a public good, such as a
bridge. (d) Antoine-Augustin Cournots quantity adjustment model of a duopoly. (e) Rene
Descartes exposition of cogito ergo sum.

45. The first theorist to explicitly address partial derivatives of both supply functions and demand
functions, thereby formally addressing both demand and supply curves in his writings was: (a)
Antoine-Augustin Cournot. (b) John Maynard Keynes. (c) Alfred Marshall. (d) Adam Smith. (e)
Nassau senior.

46. Antoine-Augustin Cournots grasp of the notion of ceteris paribus as an analytical technique was
evidenced by his clear distinction between: (a) a change in demand and a change in quantity
demanded. (b) production costs and value. (c) value in use and value in exchange. (d) labor and
non-human resources. (e) workers and capitalists.

47. One of Antoine-Augustin Cournots greatest achievements was that he was the first economist to
explicitly state, in mathematical form, the: (a) precise income and substitution effects of a change
in prices. (b) concept of diminishing returns. (c) law of demand. (d) concept of economies of scale.

48. The theory of duopoly developed by Antoine-Augustin Cournot was a precursor of modern: (a)
game theory. (b) systems analysis. (c) econometrics. (d) optimal portfolio analysis. (e) structure-
conduct-performance paradigms.

49. The graphical reaction curve Antoine-Augustin Cournot developed in his duopoly model: (a) is a
step function showing firm Bs efficient new price, given firm As previous move. (b) depicts cost-
minimizing output levels for firm A given each possible output produced by firm B. (c) is a step
function showing the appropriate next move for adjusting price by firm B, given firm As previous
move. (d) describes profit-maximizing output for firm A given each possible level of output that firm
B chooses. (e) identifies the Nash equilibrium output levels for dominant firm A and subordinate
firm B.

50. Antoine-Augustin Cournot established that profit maximization requires: (a) MC=MR. (b) MR= PQ.
(c) MR= MU. (d) QS= QD.

51. That profit maximization requires a firm to operate where marginal cost equals marginal revenue
was first made explicit in the writings of: (a) John Stuart Mill. (b) David Ricardo. (c) David Hume. (d)
Antoine-Augustin Cournot.

52. The equimarginal principle illustrates why profit maximization requires: (a) MR = MC. (b) MPPk =
MppL = w = r. (c) charging desperate buyers the highest price possible. (d) MR = ATC. (e) P = MR.

53. The end result in Antoine-Augustin Cournots model is that the equilibrium price is _________ of
the original price and the equilibrium quantity is __________ of the original quantity supplied. (a)
1/3 / 2/3. (b) 2/3 / 1/3. (c) 1/2 / 1/2. (d) 3/4 / 1/4.

54. Relative to the solution when a monopolist dominates the market for costlessly-produced water, in
Antoine-Augustin Cournots quantity-adjusting duopoly model the final equilibrium is characterized
by: (a) price = 1/3 of initial price and quantity = 2/3 of initial quantity. (b) the entry of ever greater
numbers of profit seeking firms. (c) price = 2/3 of initial price and quantity = 1/3 of initial quantity.
(d) the original firm in the market absorbing the firm that entered the market later.

55. Antoine-Augustin Cournot developed his theory of duopoly with the underlying assumption
formally called: (a) positive output conjectural variation (b) negative output conjectural variation (c)
increasing output conjectural variation (d) zero output conjectural variation (e) decreasing output
conjectural variation.

56. Antoine-Augustin Cournots rule for profit maximization is an important application of: (a) the
equimarginal principle. (b) the law of demand. (c) the quantity theory of money. (d) diminishing
marginal utility.

57. Antoine Augustin Cournot (1801-1877) was a school superintendent, but he was also arguably
among the top-ten all-time pioneers of economic theory. His path-breaking contributions did not
include developing: (a) a proof that marginal revenue = marginal cost is a requirement for profit
maximization. (b) an early form of game theory. (c) demand and supply curves as the partial
derivatives of demand and supply functions. (d) a formal model of perfect competition. (e) the
concept of marginal revenue.

58. Evolution from informal conceptual reasoning to a more analytical/mathematical approach to

economic analysis would include sequences along a timeline such as: (a) Jeremy Bentham David
Hume Richard Cantillon. (b) David Ricardo Antoine-Augustin Cournot William Stanley
Jevons. (c) Adam Smith Lon Walras Karl Marx. (d) Thorstein Veblen Alfred Marshall
Marquis de Condorcet. (e) Paul Samuelson John Maynard Keynes John Stuart Mill.

59. Johann von Thnen, Antoine Augustin Cournot, and William Stanley Jevons were in the forefront of
theorists who: (a) extended marginal analysis to help fine-tune fiscal policy. (b) integrated
calculus into economic analysis. (c) developed the marginal productivity theory of wages. (d)
explored how tradition significantly determines the distribution of income.

60. William Stanley Jevons assumed that utility was cardinally measurable and that interpersonal
comparisons of utility were possible. Jevons notions are least consistent with the theory that: (a)
income, ideally, should be distributed equally. (b) the value of $1 is higher for a homeless person
than for Bill Gates. (c) the marginal utility of income and the level of income are negatively related.
(d) the marginal utility of the 999th dollar of income to anyone is the same as the marginal utility of
the 1,000th dollar for everyone else.

61. Between 1870 and 1920, neoclassical economists did not significantly expand and refine: (a)
microeconomic theories. (b) mathematical economic analysis. (c) insights into Aristotles diamond-
water paradox. (d) macroeconomic theories of fiscal policy and Aggregate Demand.

62. Some early economists believed prices to be determined solely by factors affecting supply. Others
emphasized prices as determined by demand considerations. The first recognized marriage of
supply and demand as jointly determining prices was performed by: (a) William Stanley Jevons. (b)
Georg Feurbach (c) Antoine-Augustin Cournot. (d) Alfred Marshall. (e) Adam Smith.

63. During periods when they were developing their individual sets of theories, the pioneering analyst
least likely to have formally used demand curves and supply curves to explain how relative prices
are determined would have been (a) John Stuart Mill.(b) Antoine-Augustin Cournot. (c) David
Ricardo. (d) William Stanley Jevons. (e) Alfred Marshall.

64. That the equimarginal principle requires MUx/Px = MUy/Py = MUleisure/w for individuals to
efficiently allocate their opportunities [total budgets, including time], with the wage rate w as the
price of leisure as a good, was identified in the writings of: (a) Adam Smith. (b) William Stanley
Jevons. (c) Gary Becker. (d) Carl Menger. (e) Lon Walras.

65. A factory worker believes that the high prices of the manufactured shower drains charged by his
firm result from the long hours of hard work he devotes to running the machines used to mold and
cut the drains. The economic thinker most likely have disagreed with this analysis would have been
: (a) John Locke. (b) Karl Marx. (c) David Ricardo. (d) John Stuart Mill. (e) William Stanley Jevons.

66. With respect to methodology, William Stanley Jevons is to William Petty as Carl Menger is to: (a)
David Ricardo. (b) Adam Smith. (c) Thomas Robert Malthus. (d) John Maynard Keynes.

67. The belief that individuals can measure the satisfaction (utility) they derive from goods as easily as
they can measure distances or weights is central to the analysis of consumption by (a) many late
nineteenth-century economists, most notably William Stanley Jevons. (b) most early Austrian
economists. (c) post-modern public choice theorists. (d) Walras, Pareto, and other members of the
Lausanne school of thought.

68. William Stanley Jevons wrote, The fact is, that labor once spent has no influence on the future
value of any article: it is gone and lost forever. In commerce bygones are for ever bygones. Jevons
comment addresses the: (a) medieval concept of a just price. (b) cost-of-production theory of value.
(c) irrelevance of historical [sunk] costs for rational decisionmaking, and for current pricing. (d)
lumpiness principle. (d) irrelevance of classical theory after marginalist analysis introduced
calculus into economics.

69. Not among the variables identified by William Stanley Jevons as influencing the value [quantity of
utils gained or lost] from pleasure or pain was. (a) intensity. (b) duration. (c) certainty or
uncertainty. (d) physical and psychic strength. (e) nearness or remoteness.

70. William Stanley Jevons theory of labor supply stated that a worker will stop working when: (a) the
net pain of extra work equals the degree of utility of the real wage. (b) the utility of the real wage is
equal to zero. (c) the net pain of work exceeds the total utility of the real wage. (d) the degree of
utility from real wages was greatest. (e) survival has been assured by a subsistence wage.

71. The Englishman whose theory of labor supply relied on the equimarginal principle was: (a) Alfred
Marshall. (b) Lon Walras. (c) William Stanley Jevons. (d) H.H. Gossen. (e) Albert Magnus.

72. Many classical economists in England believed in the labor theory of value and thought supply to be
the primary determinant of the market price, while other economists claimed that demand alone
regulated pricing. Alfred Marshall and William Stanley Jevons, both neoclassical economists, argued
that market price was: (a) solely driven by externalities. (b) determined by the consumers utility.
(c) the result of cost considerations alone. (d) was jointly determined by both supply and demand.

73. The economist who spent twenty years cautiously trying out his ideas on his students before finally
presenting them to the world near the close of the 19th century was: (a) William Stanley Jevons. (b)
Henry George. (c) Lon Walras. (d) John Neville Keynes. (e) Alfred Marshall.

74. The concept of ceteris paribus was a foundation for the partial equilibrium approach to analysis
developed by. (a) John Maynard Keynes. (b) John Neville Keynes. (c) Alfred Marshall. (d) Lon

75. In the Marshallian immediate (market) period, the supply curve for perishable goods is: (a)
positively sloped. (b) negatively sloped. (c) horizontal. (d) vertical. (e) a rectangular hyperbola.

76. Alfred Marshall, whom John Maynard Keyes regarded as the great economist of the 19th century,
did not: (a) advocate using of calculus to solve optimization problems. (b) formalize partial
equilibrium analysis. (c) develop the concept of elasticity. (d) distinguish the immediate [market]
period, short run, and the long run.

77. Alfred Marshall is least deserving of credit for his contributions to: (a) partial equilibrium analysis.
(b) the theory of analytic time. (c) advanced mathematical economics. (d) a formal approach to
elasticity. (e) theories about internal economies and diseconomies of scale.

78. Undergraduate economics students receive the greatest exposure to innovations in microeconomic
theory developed by: (a) Alfred Marshall. (b) Thorstein Veblen. (c) John R. Commons. (c) Wesley
Clair Mitchell. (d) John Bates Clark.

79. John Stuart Mills vague description of the concept of elasticity was later formalized by: (a) William
Stanley Jevons. (b) Paul Samuelson. (c) Alfred Marshall. (d) Francis Y. Edgeworth. (e) Gerard

80. Alfred Marshall hypothesized the existence of three distinct market periods. Demand alone
determines the price of a good in the Marshallian: (a) intermediate period (b) short-run. (c) long
run. . (d) immediate (market) period.

81. Technology in the computer industry has advanced with breathtaking speed over the past thirty
years. Alfred Marshall would have classified year-to-year changes in technology as having occurred
during the: (a) secular period. (b) development period. (c) long run. (d) short run. (e) market
(immediate) period.

82. Alfred Marshalls opinion that prices will instantly adjust to clear markets could be used as a
response to which thinkers fear of under-consumption and overproduction: (a) Karl Marx (b) Rev.
Thomas Malthus (c) Adam Smith (d) Lon Walras.

83. Various measures of analytical time that economists use frequently and the concepts of
competitive equilibria, price elasticity of demand, internal and external economies of scale,
increasing and decreasing cost industries, quasi-rent, and consumer surplus were either formalized
or can be directly attributed to the works of: (a) Alfred Marshall. (b) Joan Robinson. (c) Arthur Cecil
Pigou. (d) John Maynard Keynes. (e) Geoffrey von Neumann.

84. Alfred Marshall formalized and then popularized the analytical technique known as: (a) general
equilibrium analysis (b) felicific calculus. (c) partial equilibrium analysis. (d) differential equations.
(e) linear programming.

85. NOT among economists who contributed significantly to the study of duopoly models would have
been: (a) Antoine-Augustin Cournot (b) Alfred Marshall (c) Bertrand (d) Francis Y. Edgeworth

86. Alfred Marshall first illustrated the possibility of negatively sloped long run supply curves with an
example from the fishing industry. A more recent example of a decreasing cost industry might be:
(a) oil. (b) real estate. (c) vintage wine. (d) computers.

87. Alfred Marshall addressed the problem of continuous change in modern neoclassical analysis
through the use of assumptions using conditions known as: (a) individual markets. (b) ceteris
paribus. (c) esse quam videri. (d) projected costs. (e) ab absurdo.

88. Alfred Marshall believed that the long run supply curve can be negatively sloped so that the market
would be served by a decreasing cost industry if: (a) significant positive externalities reduce
resource costs or improve the qualities of the resources. (b) technological advances exceed growth
rates for total production. (c) wages are set in competitive labor markets. (d) most short run supply
curves are negatively sloped.

89. William Stanley Jevons and Alfred Marshall insisted that economic value was jointly determined by
supply and demand. This brought together much of the economic thought of the time and shifted
the focus to: (a) individuals and their needs. (b) social classes (c) government regulations. (d) labor

90. Alfred Marshall defined four time periods that allow economic analysis to make assumptions about
what factors are variable in production. From shortest to longest, these period are: (a) short
run>market period>long run>secular period. (b) secular period>market period>short run> long run.
(c)market period>short run>long run>secular period. d)short run>secular period>short run>long

91. In Alfred Marshalls immediate period (in contrast to the short run or long run), prices for non-
storable goods are determined solely by: (a) market demand. (b) a subjective labor theory of value.
(c) minimization of production costs. (d) utility maximization.

92. Profit opportunities can trigger technological advances in the period of analytical time that
Alfred Marshall labeled the: (a) investment horizon. (b) innovation period. (c) market period.
(d) long run (e) secular period. (f) immediate period.

93. If technological advances in an industry occur more quickly in temporal [real] time in response
to profit opportunities than do adjustments in the number of firms in the industry, then: (a)
economies of scale cause a firms long run average cost curve to consistently be negatively
sloped. (b) the Marshallian secular period is temporally shorter than the Marshallian long run.
(c) the long run supply curve of the industry is positively sloped. (d) the share of national
output attributable to the industry will grow across time.
94. The ceteris paribus assumptions invoked by Alfred Marshall in building a demand curve include the:
(a) time period for adjustment. (b) purchasing power of money. (c) prices and ranges of rival
commodities. (d) amount of moneys (income or wealth) available. (e) all of the above.

95. The idea that Price is a function of Quantity [P = g(Q) ] instead of quantity being viewed as a
function of price [Q=f(P, ) ] was among the primary distinctions between the ideas of Lon Walras
and those of: (a) A. Jules E. Dupuit . (b) William Stanley Jevons. (c) Alfred Marshall (d) Thorstein

96. The area under the Marshallian demand curve of an individual but above the current price is known
as. (a) producer surplus. (b) consumer surplus. (c) dead weight loss. (d) the unemployment rate

97. According to Alfred Marshall, the buyer wants to maximize ______, while the seller wants to
maximize_______. (a) profits / costs. (b) consumer surplus / producer surplus. (c) investment /
consumption. (d) saving / consumption. (e) investment / profits.

98. The consumer surplus derived from a particular good is zero when a buyer (a) faces a vertical
supply curve. (b) views similarly-priced goods as perfect substitutes for the good. (c) can only shop
in a market that is in disequilibrium. (d) has already purchased a strong complement for the good
being purchased. (e) has a perfectly inelastic (vertical) demand curve for the good.

99. Not among the ceteris paribus factors listed by Marshall in gauging the relationship between the
price of a good and the quantity demanded of that good is the: (a) tastes, preferences and customs
of the subject. (b) amount of money available to the purchaser. (c) prices of competing products.
(d) technology used in production of the good.

100. The concept of elasticity as the relative degree to which the quantity demanded or supplied of a
good or resource responds to a change in its relative price was developed by: (a) von Thunen. (b)
Thorstein Veblen. (c) Edwin Chamberlin. (d) Joan Robinson. (e) Karl Marx. (f) Lon Walras. (g) Alfred

101. The conditions for long-run equilibrium in a purely competitive industry were first specified in detail
by: (a) Antoine Auguste Cournot. (b) Lon Walras. (c) Vilfredo Pareto. (d) Alfred Marshall. (e) John
Stuart Mill.

102. The incorporation of mathematics to describe economic theories was viewed as least useful by an
economist who was, himself, a skilled mathematician. He was: (a) A. Jules E. Dupuit . (b) Paul A.
Samuelson. (c) Alfred Marshall. (d) William Stanley Jevons. (e) Francis Y. Edgeworth. (f) John Nash.
(g) Lon Walras. (h) Vilfredo Pareto. (i) Carl Menger. (j) Eugen Bohm-Bawerk. (k) Robert Solow. (l)
Gerard Debreu. (m) Kenneth Arrow. (n) Robert Merton. (o) Antoine-Augustin Cournot.

103. Alfred Marshall is NOT renowned as a: (a) synthesizer of neoclassical economics. (b) methodologist
who formalized partial equilibrium analysis. (c) prominent British historicist. (d) developer of
techniques to measure of elasticities.

104. Alfred Marshall analyzed differences between the monetary amounts a person would willingly pay
for a specific quantity of a good and the amounts that they do pay at a given market price, a
concept he termed: (a) buffer zone. (b) offsetting variation. (c) consumer surplus. (d) compensation
necessity. (e) exploitation factor.

105. A landowner named Giffen pointed out to Alfred Marshall a potential exception to the law of
demand with the observation that when potato prices increase, poor Irish peasants may: (a) stop
buying potatoes and switch to an alternative crop such as wheat or barley. (b) cut back on
purchases of potatoes and increase purchases of non-food consumer goods. (c) immigrate to
America where potatoes are cheaper. (d) buy more potatoes because at the higher price theyre
still cheaper than meat, so meat may need to be sacrificed because of budget constraints, leaving
only potato consumption to meet the required caloric intake.

106. In rare cases, if the price of potatoes skyrockets, there will be no room in the budgets of some poor
people for any other food, and they might be forced to subsist on only potatoes. Their consumption
of potatoes to meet caloric needs might actually rise. This would be an example of a: (a) perfect
substitute. (b) Giffen good. (c) comparative good. (d) perfect complement.

107. Explorations of the concepts of partial equilibrium analysis, elasticity calculation, consumer surplus,
and producer surplus all originated in works that summarized neoclassical theories that were
authored by: (a) Arthur Cecil Pigou. (b) John Maynard Keynes. (c) Alfred Marshall. (d) William
Stanley Jevons. (e) Thorstein Veblen.

108. The concepts of competitive equilibria, price elasticity of demand, internal and external economies
of scale, increasing and decreasing cost industries, quasi-rent, and consumer surplus can be directly
attributed to the works of: (a) Alfred Marshall. (b) John Maynard Keynes. (c) Karl Marx. (d) Joan
Robinson. (e) John Stuart Mill.

109. If a monopolists demand curve is downward sloping and linear, then its total revenue cure should
resemble a (an): (a) U-shape. (b) linear curve. (c) inverted U. (d) rectangular hyperbole.

110. Instead of viewing the quantity demanded strictly as a function of its price, an economist who
emphasized the price as a function of the quantity supplied was. (a) Lon Walras. (b) Abraham
Maslow. (c) Alfred Marshall. (d) John Nash. (e) Francois Quesnay.

111. Vilfredo Paretos very deductive mathematical models and proofs made the market seem quite
mechanistic, an approach most notably rejected by his slightly older contemporary: (a) Karl Marx.
(b) Lon Walras. (c) Alfred Marshall. (d) William Stanley Jevons. (e) Francis Y. Edgeworth.

112. ____________ viewed demand and supply functions as Qdx = f(px), Qsx = f(px), but ____________
viewed demand and supply functions as Dpx = f(qx), Spx = f(qx). (a) Walras /Jevons (b) Marshall /
Jevons (c) Walras / Marshall. (d) Marshall / Walras (e) None of the above.

113. Walras law that the sum of excess demands in a market economy equals the sum of excess supplies
can be interpreted as providing a more complete mathematical foundation for: (a) Says law of
markets, but recognizes the possibility of prolonged unemployment because surplus goods or
resources may be counter balanced by excess demands for money. (b) Keynesian consumption
functions. (c) modern game theories of the prisoners dilemma. (d) partial equilibrium analysis. (e)
the establishment of just prices as proposed by medieval scholastics.

114. According to Walras Law if, overall, surpluses exist in the markets for goods and the markets for
resources, then: (a) prices will fall instantaneously to eliminate any gluts in commodity markets. (b)
shortages must exist in financial markets. (c) wages must fall instantaneously in labor markets. (d)
the rate of return in capital markets is equal to the interest rate. (e) the rate of inflation must be

115. The continental economist who theorized that virtually all economic activity hinges on consumers
spending decisions and that the whole system automatically adjusts to match the structure of
production to the composition of demand was: (a) Lon Walras. (b) Jean Baptiste Say. (c) Jules
Dupuit. (d) Antoine-Augustin Cournot. (e) Louis Blanc.

116. Lon Walras is best known for developing what is now called: (a) the law of equimarginal utilities
per dollar. (b) game theory. (c) Stiglers law. (d) general equilibrium analysis. (e) the principle of
equal marginal law enforcement.

117. The economic theorist who most vociferously opposed using all else assumed constant [ceteris
paribus] assumptions when building theory was: (a) Karl Marx. (b) Alfred Marshall. (c) Thomas
Robert Malthus . (d) Antoine Augustin Cournot. (e) Lon Walras.

118. Lon Walras belief in market interdependency caused him to reject use of the economic
assumption of: (a) general-equilibrium analysis. (b) ceteris paribus. (c) invisible hand. (d) marginal

119. Lon Walras general equilibrium theory does not hinge on an assumption of: (a) self interested
behavior among individuals. (b) the labor theory of value.(c) flexibility in shifting resources. (d)
perfect competition.

120. Leon Walras perception that prices adjust to clear markets echoed the adjustment mechanism in
an earlier mathematical model of the behavior of a firm developed by: (a) Joseph Bertrand. (b) A.
Jules E. Dupuit. (c) Antoine-Augustin Cournot. (d) Francois Quesnay. (e) Richard Cantillon.

121. In Walrasian general equilibrium analysis, instantaneous adjustments of all relative prices so that all
that markets clear are ensured because: (a) firms reduce quantities to cure excess supplies . (b)
markets adjust in accord with Lerner wage-price reaction functions. (c) auctioneers are assumed to
adjust prices correctly. (d) Cournot reaction functions determine quantities and Bertrand reaction
functions determine price. (e) firms increase quantities to cure excess demands.

122. The dispute between Antoine-Augustin Cournot and Joseph Louis Francois Bertrand about whether
duopolists competing in a market would adjust quantities or prices was later echoed in
disagreements between: (a) David Ricardo and Thomas Malthus about the desirability of the British
Corn Laws. (b) Alfred Marshall and Lon Walras about whether disequilibria are resolved by
quantity adjustments (Marshall) or price adjustments (Walras). (c) Joan Robinson and Edwin
Chamberlin, who differed about whether oligopolists adjust prices or compete primarily through
product differentiation. (d) John Maynard Keynes and Milton Friedman on whether fiscal policies or
monetary policies would more quickly cure a depression. (e) Paul Sweezy and George Stigler on the
realism of kinked demand curve models.

123. The economist most likely to have disagreed with using partial equilibrium analysis and assuming
that some things are constant was: (a) Alfred Marshall. (b) William Stanley Jevons. (c) Lon Walras.
(d) Carl Menger.

124. Lon Walras believed that _______ would be the adjusting variable when markets were in
disequilibria, while Alfred Marshall believed it would be _______. (a) quantity / price. (b) quantity /
technology. (c) price / income. (d) price / quantity. (e) working hours / leisure time.

125. Lon Walras rejected Alfred Marshalls notion of ceteris paribus as an appropriate engine for
economic inquiry, and argued that meaningful economic analysis necessarily entails consideration
of (a) comparative partial equilibrium states. (b) general equilibrium. (c) interactions between the
political system and the economic system. (d) relationships among all social classes.

126. Lon Walras theory of general equilibrium is contrary to Alfred Marshalls partial equilibrium
theory because: (a) Walras emphasized interdependencies and feedbacks among markets, so
excess demand in any markets implies excess supply in at least one other market, and vice versa.
He concluded that in the aggregate, excess demands = excess supplies. (b) unlike Marshall, Walras
identified the demand function for goods such as orange juice as dependent not only the price of
OJ, but also on income and prices for substitutes and complements. (c) Walras concluded that P=
g(Qx, Pg, Pref, Y, N, T). (d) Walras said that the demand function for a good achieves long run
equilibrium if ceteris parebus assumptions are invoked for income, substitutes and complementary
goods, and preferences so that these variables are treated as constant. (e) None of the above.
Walras was not interested in general equilibrium theory.

127. Adjustments of prices and quantities to rectify disequilibria were a part of a process that Lon
Walras termed: (a) ttonnement. (b) mutatis mutandi. (c) ceteris parebus. (d) maximum
maximorum. (e) cogito ergo sum.

128. Any possible net gain that remains unexploited because of a market failure or an inefficient
government policy is called a: (a) positive-sum gain. (b) negative-sum gain. (c) dead-weight loss. (d)
negative-sum loss. (e) dead-weight gain.

129. Possible explanations for business cycles were least central to the major theoretical contributions
of: (a) Friedrich A. Hayek. (b) John Maynard Keynes. (c) Joseph Schumpeter. (d) Lon Walras. (e)
Adam Smith and Thomas Malthus.

130. The economist most closely identified with the emergence and early development of general
equilibrium analysis was: (a) Adam Smith. (b) Lon Walras. (c) Alfred Marshall. (d) Stanley Jevons.

131. Lon Walras developed the technique of general equilibrium analysis to: (a) deal only with single
markets for goods or resources one at a time. (b) demonstrate the superior efficiency of socialism.
(c) investigate interrelationships among markets. (d) replace the more complex analysis of partial

132. The founder of modern general equilibrium analysis was: (a) Lon Walras. (b) Adam Smith. (c)
Alfred Marshall. (d) John Maynard Keynes.

133. The founder of general-equilibrium analysis is usually acknowledged to be: (a) Antoine-Augustin
Cournot. (b) Lon Walras. (c) Milton Friedman. (d) David Hume.

134. A technique for simultaneous consideration of price and quantity adjustments in all markets for
goods and resources is termed: (a) multi-sector analysis. (b) Keynesian macroeconomics. (c)
Marshallian analyses of price adjustment mechanisms. (d) Walrasian general equilibrium analysis.
(e) an input-output matrix.

135. Lon Walras, who rejected partial equilibrium theories in favor of a general equilibrium outlook,
realized that manipulating and single economic variable necessarily affects many other variables.
He would have been most likely to condemn as naive the idea of (a) semper fidelis. (b) lux libertas.
(c) ceteris parebus. (d) semper paratus. (e) ave caesar! morituri te salutamus.

136. The Blue Gene supercomputer recently doubled its own record for computing speed, completing
280.6 trillion calculations in a second. If every person in the world were operating a handheld
calculator as fast as each can, it would still take us decades to complete the same number of
calculations that Blue Gene can in a single second. This type of extremely advanced computing
capability could be most usefully applied to economic problems of what type: (a) Marshallian
partial equilibrium analyses. (b) Ricardian comparative advantage problems. (c) Marxian dynamic
instability problems. (d) Bhm-Bawerkian interest theory problems. (e) Walrasian general
equilibrium analyses.

137. The developer of general-equilibrium analysis who disparaged Alfred Marshalls partial equilibrium
approach was: (a) William Stanley Jevons. (b) Joan Robinson. (c) Lon Walras. (d) Carl Menger.

138. The excess-demand function and comprehension that the sum of excess demands must equal the
sum of excess supplies were among innovations in theory by the neoclassical economist: (a) John
Maynard Keynes. (b) Lon Walras. (c) Paul Sweezey. (d) Antoine-Augustin Cournot. (e) William
Stanley Jevons.

139. Disagreement with the orthodox notion that the data that underpin a system remain relatively
constant over the period of analysis was central to the theories of: (a) John Maynard Keynes. (b)
Lon Walras and Thorstein Veblen. (c) Friedrich Hayek. (d) David Ricardo. (e) William Stanley

140. The Lausanne School is to Lon Walras as the Austrian School is to: (a) Vilfredo Pareto. (b) Carl
Menger. (c) Enrico Barone. (d) David Hume. (e) Ludwig Wittgenstein.

141. General equilibrium analysis appeared prior to the works of Lon Walras in the writings of: (a)
Francois Quesnay and Antoine Augustin Cournot. (b) William Stanley Jevons and Thomas Aquinas.
(c) John R. Commons and Thorstein Veblen. (d) Eugen von Bhm-Bawerk and Joseph Schumpeter.

142. If all resource markets and markets for goods are initially in a fully competitive equilibrium, the
formation of a union and an increase in the wage rate for union members does not cause: (a)
unemployment in a one-sector partial equilibrium model. (b) lower wages in the non-union sector
of a two-sector partial equilibrium model. (c) a lower total value for national income in a general
equilibrium model. (d) entrepreneurs to, on average, receive less economic profit in the long run.

143. An early disagreement about the relative power and usefulness of general versus partial
equilibrium analysis raged between: (a) Lon Walras and Alfred Marshall. (b) Carl Menger and
William S. Jevons. (c) John Commons and John Bates Clark. (d) Pierre Boisguillebert and Frederic

144. Lon Walras general equilibrium analysis gained significantly increased acceptance when it was
clarified somewhat by his immediate successor at Laussanne: (a) John Stuart Mill. (b) Alfred
Marshall. (c) Thorstein Veblen. (d) Vilfredo Pareto. (e) William Stanley Jevons.

145. Vilfredo Pareto accepted Karl Marxs view that history unfolds as a consequence of class conflict,
but he disagreed with Marxs prediction that a classless society would emerge, instead believing
that: (a) leaders of socialist and communist movements would ultimately become merely a new
exploitative and autocratic elite group. (b) Marx was incorrect to reject the labor theory of value.
(c) capitalism would be too adaptive to succumb to revolutionary communism. (d) class differences
would become blurred as economic development progressed.

146. The normative goal most closely associated with economic concepts developed by Vilfredo Pareto
is: (a) freedom. (b) equity. (c) efficiency. (d) stability. (e) security.

147. One prominent economic theorist who originally trained as an engineer is also famous as a
sociologist, in part for formulating the 80-20 rule, one version of which is: Twenty percent of the
people do eighty percent of the work, and will acquire eighty percent of all income and/or wealth
regardless of the economic or social system in which they live. This famous thinker was: (a) Thomas
Robert Malthus. (b) Karl Marx. (c) Richard Cantillon. (d) Vilfredo Pareto. (e) Simon Newcomb.

148. Vilfredo Paretos Law of Distribution asserts that: (a) relative prices for goods reflect how
intensively labor is used as an input. (b) the percentages of national income going to labor and to
capital is a constant. (c) differing work ethics, attitudes, and willpower will cause the distribution of
income to gravitate towards a consistent degree of relative inequality. (d) industrialization is
accelerated if professional managers receive a fixed proportion of corporate profit.

149. The economist who developed a theory consistent with the argument, If you redistributed the
worlds income and wealth equally across the entire population, eighty percent of it would be back
in the hands of the populations top twenty percent in twenty years, was: (a) Thomas Malthus. (b)
Richard Cantillon. (c) Ayn Rand. (d) Vilfredo Pareto. (e) Karl Marx.

150. The idea that governmental redistributions of income or wealth will ultimately have no effect on
how disparate income and wealth are distributed is sometimes called: (a) Says Law of Markets. (b)
the Law of Comparative Advantage. (c) Keynes Law. (d) Schumpeters Law. (e) Paretos Law.

151. The concept that economic inefficiency exists whenever anyone can be made better off without
reducing the welfare of some other person was first made explicit by: (a) Vilfredo Pareto. (b) Lon
Walras. (c) Antoine Augustin Cournot. (d) Jules Dupuit. (e) Carl Menger.

152. Issues notably addressed by Vilfredo Pareto did not include: (a) elitism as a major determinant of
social and economic policies. (b) the relative distributions of income or wealth. (c) the relative
importance of individual utility maximization versus sociobiological motives. (d) economic efficiency
in the context of Walrasian general equilibrium.

153. The broad approach to efficiency developed by Vilfredo Pareto can be most reasonably and directly
interpreted as an extension of: (a) Keynesian economics. (b) Marshalls partial equilibrium analysis.
(c) Walras general equilibrium analysis. (d) dialectical materialism. (e) Jeremy Benthams hedonic

154. Vilfredo Pareto proposed that economists use the term ophelimit (optimality?) because Pareto: (a)
was an avid linguist, and Epicurus had used the Greek root ophelim to describe positive-sum
transactions. (b) wanted to replace the term utility and sought a more general way to measure
preferences. (c) sought to extend a measure of the welfare of lone individuals to a measure of the
wellbeing of all of society. (d) emphasized what people do instead of why people do. (e) wanted to
ignore the sensate basis of consumer wants.

155. Cardinal measurement is to the utility analysis of Jeremy Bentham and William Stanley Jevons as
ordinal measurement is to Vilfredo Paretos concept of: (a) ophelimit. (b) efficiency. (c) the gains
from international trade. (d) mutatis mutandis. (e) ceteris parebus.

156. Not among analytical problems in Vilfredo Paretos development of welfare theory is: (a) the
assumption of nonaugmentable supplies of inputs and outputs. (b) the impossibility of deriving a
positively based social-welfare function. (c) that his model relies on static equilibrium, and omits
the effects of uncertainty. (d) over-reliance on the measurability of interdependence in utility

157. If an economy is Pareto efficient then any change represents, at best, a (a) positive sum game: (b)
prisoners dilemma. (c) zero sum game. (d) tit-for-tat strategy. (e) negative sum game.

158. Vilfredo Pareto utilized ______________s __________________ to illustrate his theory that in the
case of a fixed supply of goods, a welfare optimum in exchange would occur where you can not
make anyone better off without making someone else worse off. (a) Thorstein Veblen, historicism
(b) Francis Y. Edgeworth, indifference curves (c) Karl Marx, class theory (d) Antoine-Augustin
Cournot, duopoly model (e) Alfred Marshall, partial equilibrium analysis

159. Using an ordinal measure instead of a cardinal measure is most obviously the more reasonable
approach when assessing: (a) the respective talents of contestants on American Idol. (b) whether a
conventional diet or the Atkins diet is more effective in helping people lose weight. (c) the relative
prices of ham, tofu, and turkey. (d) the respective productivities of steelworkers in Japan and Brazil.
(e) students percentage scores on this examination..

160. Indifference curves landed in modern economists toolboxes after first being used to illustrate
consumer preferences by Vilfredo Pareto and: (a) Alfred North Whitehead. (b) Bertrand Russell. (c)
Francis Y. Edgeworth. (d) Paul A. Samuelson. (e) Alfred E. Newman.

161. The analytically operational concept of economic efficiency that economists now use most
commonly was first explicitly described by: (a) Aristotle. (b) Chadwick. (c) Nassau Senior. (d)
Vilfredo Pareto. (e) Lon Walras.

162. Vilfredo Pareto illustrated how a welfare optimum would be reached when: (a) voluntary
exchanges have been expanded so far that any further trade would be a zero- or negative-sum
game. (b) all sides would be better off if there had never been any transactions. (c) the marginal
rate of substitution for any pair of goods different for any two individuals who are exchanging
goods. (d) both parties can benefit from further trade.

163. Many people believe redistributing income or wealth to be futile because, they argue, in very little
time, the distribution will revert to levels of inequality similar to that which existed before the
redistribution. This notion was formalized by: (a) Vilfredo Pareto. (b) Ayn Rand. (c) H.K.E. von
Mangoldt. (d) Friedrich Nietzsche. (e) Joseph Schumpeter.

164. This figure depicts a: (a) Phillips curve. (b)

Lorenz curve. (c) Bowley-Edgeworth curve.
(d) Clark-Wicksteed curve. (e) Marshallian
inequality index.
165. The social philosopher who hypothesized
that the economic system or form of
political governance does not affect the
shape of the area of inequality in the long
run, was: (a) Friedrich Nietzche. (b) Karl
Marx. (c) Knut Wicksell. (d) Vilfredo Pareto.
(e) Eugen von Bhm-Bawerk.

166. NOT among the central questions asked by Vilfredo Pareto in specifying efficiency conditions would
be. (a) Who will we sell it to? (b) How much will it cost? (c) What will we produce? (d) How will we
produce it?

167. That the conditions necessary for the optimum distribution of resources given a fixed supply on
inputs is that the marginal rate of technical substitution between any pair of inputs must be the
same for all producers who use both inputs was established by: (a) Lon Walras. (b) Alfred
Marshall. (c) Vilfredo Pareto. (d) David Ricardo. (e) Thomas Malthus.

168. The concept that economic inefficiency exists whenever anyone can be made better off without
reducing the welfare of some other person was first made explicit by (a) Vilfredo Pareto. (b) Lon
Walras. (c) Antoine-Augustin Cournot. (d) A. Jules E. Dupuit . (e) Carl Menger.

169. In addition to his fame as an economist, Vilfredo Pareto, who trained as an engineer, also
contributed significantly to modern: (a) sociology, because his sociological theory complemented
writings by such fascist thinkers as Gaetano Mosca and Roberto Michels. (b) architecture,
because of his influence on the Bauhaus designs of Frank Lloyd Wright, Mies van der Rohe, and I.M.
Pei. (c) ethics, through his influence on the teachings of Mohandas Gandhi and Martin Luther King.
(d) mathematics, because his set theory is central to Kurt Gdels incompleteness theorem, and
influenced the writings of Bertrand Russell and Alfred North Whitehead in Principia Mathematica.

170. The sociologist Roberto Michels generalized from his study of Italian labor unions to argue that
majorities of people want to follow instead of lead, and that, consequently, most organizations are
controlled by manipulative egotists with cynical attitudes about the use of power. His
characterization is known as the: (a) Iron law of Oligarchy. (b) fascist dicta. (d) dictator principle.
(c) taton macoute theory. (e) sheep-goat assumption.

171. In the middle of the 20th Century, Frank Hahn and Nobel Prize winners Gerard Debreu and Kenneth
Arrow, elaborated mathematically on works by Lon Walras and Vilfredo Pareto to show that: (a)
unemployment rises as inflation falls. (b) the demand for money by the aggregate economy will rise
and fall with the prevailing interest rate. (c) voluntary exchange generates an efficient set of prices
in the general equilibrium for a perfectly competitive economy. (d) short run price levels are fixed.

172. Pair the early marginalists with their preferred methodologies. (a) Jevons: empirical verification /
Menger: abstract deductive logic / Walras: mathematics. (b) Marx: comparative dialecticism /
Petty: measurement / Cournot: inductive logic. (c) List: computable general equilibrium / Dupuit:
thermodynamics / Malthus: static calculus. (d) Chadwick: demographic statistics / Clark:
Aristotelian syllogisms / Veblen: anthropology.

173. The proportionately smaller increase in productivity after a certain point in the increase of capital,
labor, etc. is called (a) opportunity cost. (b) diminishing returns. (c) equimarginal principle. (d) labor
theory of value. (e) law of supply and demand.

174. The most renowned American economic theorist of the late 19th Century was (a) Alfred Marshall.
(b) Arthur Cecil Pigou. (c) John Bates Clark. (d) Paul Samuelson.

175. The marginal productivity theory of income distribution was developed by John Bates Clark in the
1890s in part as: (a) a refutation of Karl Maxs view that surplus value, which is the sum of interest,
rent and profit, represents exploitation of labor. (b) an attempt to provide a ethical foundation for
the establishment of socialism. (c) a proposal to amend the US Constitution to permit the
progressive taxation of income. (d) an endorsement of John Lockes theory that property rights are
grounded in the labor theory of value.

176. The American economist who believed it possible to prove scientifically that the distribution of
income in a competitive market system is both fair and in accord with marginal productivity was:
(a) Henry George. (b) Alexander Hamilton. (c) Irving Fisher. (d) John Bates Clark. (e) Herbert

177. According to John Bates Clark, competitive markets cause workers incomes to be strictly based on
the: (a) time put into the work. (b) conditions of the work. (c) wages fund divided by the labor
force. (d) value of their individual marginal products. (e) probability of success.

178. John Bates Clark (1847-1938), the first prominent American economic theorist, developed a
rebuttal to Karl Marxs position that surplus values are expropriated [stolen] from labor. He argued
that the contribution standard for distributing income in a market system is equitable, because in
his model the distribution of income depends on: (a) complete allocations of property rights. (b)
surplus value. (c) marginal productivity. (d) circular flows of income. (e) personal effort alone.

179. The American economist John Bates Clark applied marginalism to the theories of production and
income distribution, adding further weight to critics of Marxism. His analysis of the distribution of
income is known as: (a) marginal utility theory. (b) maximum distribution theory. (c) profit sharing.
(d) marginal productivity theory. (e) the status quo rationale.

180. The Clark-Wicksteed theorem reflects Philip Wicksteeds refinement of John Bates Clarks most
famous theory. This theorem proves that if proportional expansion of all resources expands output
by the same proportion, then competitive product and resource markets yield resource prices and
incomes to resource owners that exactly exhaust income, and relative incomes are determined by:
(a) relative prices of the goods produced. (b) values of marginal products of resources and the
distribution and magnitudes of resource ownership. (c) average tax rates on income. (d) rate of
technological change. (e) marginal propensities to save and invest.

181. Thomas Malthuss population theory did not provide important underpinnings for: (a) Charles
Darwins theory of evolution. (b) David Ricardos theory of income distribution. (c) John Bates
Clarks marginal productivity theory of income distribution. (d) the Social Darwinism of William
Graham Sumner and Herbert Spencer. (e) policies advocated by Green political parties around
the world.

182. Possible exploitation of labor by capitalists was least likely to logically flow from theories developed
by: (a) Thomas Robert Malthus. (b) John Bates Clark. (c) Thorstein Veblen. (d) Karl Marx. (e) Joan

183. According to John Bates Clarke, people should be compensated with income strictly in accord with
the amounts of: (a) labor they provide [wL = PQ]. (b) saving that facilitates the acquisition of
economic capital [iK = PQ]. (c) their productive contributions as reflected in wL + E + rN + iK. (d)
inventions they innovate as entrepreneurs for societys benefit. (e) the marginal productivities of
their labor [P*MPPL = VMP = w].

184. The notion that capitalists exploit workers is least consistent with the theories of: (a) Joan
Robinson. (b) Karl Marx (c) John Bates Clark. (d) Paul Sweezey. (e) Thorstein Veblen.

185. According to Frank H. Knight profits exist: (a) only when labor is exploited. (b) as a payment for the
use of capital. (c) as unearned rent collected by landowners. (d) as a return for
uncertainty/uninsurable risk borne by an entrepreneur or the owner of a firm.

Topic 8: Austrian Economics

1. Aristotle crudely distinguished between the value in use and the value in exchange of a
good. His concept of value in use is most closely related to: (a) Richard Cantillons
concept of intrinsic value. (b) the Austrian emphasis on subjective value. (c) John Lockes
labor theory of value. (d) prices as determined by both supply and demand, per William
Stanley Jevons. (e) Karl Marxs surplus value.

2. The subjective approach to pricing advocated by Austrian economists suggests that: (a) the value of
anything equals its cost of production. (b) prices should be set by the government. (c) the value of
anything is whatever someone is willing to pay for it. (d) prices should be determined by voting.

3. The English poet Samuel Butlers assertion that The value of a thing is just as much as it will bring is
most compatible with: (a) Austrian economic theory. (b) German historicism. (c) John Lockes theory
of property rights. (d) Adam Smiths theory of the invisible hand. (e) Aristotles Nichomachean Ethics.

4. According to David Ricardo, differences in land rents depend on differences in fertility. Johann H. von
Thnen instead argued that land rents depend far more on: (a) the aesthetics of the scenery. (b)
location. (c) population density. (d) subjective evaluations.

5. David Ricardo believed that land rent depends chiefly on relative fertility. Johann H. von Thnen
argued, instead, that the most important determinant of rent is: (a) population density. (b) aesthetic
attractions. (c) location. (d) subjective individual values.

6. A very early Austrian economist now credited with developing or elaborating early (and sometimes
crude) versions of a number of important aspects of modern theory, such as the concepts of
economic rent, diminishing returns, opportunity costs, the marginal productivity theory of wages,
and the economic theory of location was: (a) Friedrich von Wieser. (b) Karl Marx. (c) Jules Dupuit. (d)
Johann von Thnen.

7. A theory that helps explain why land costs more in downtown Paris than in the French countryside
was developed by: (a) Thomas Malthus. (b) David Ricardo. (c) Johann H. von Thnen. (d) Franois

8. The economics of crime and punishment were not among topics emphasized in the theorizing of:
(a) Edwin Chadwick. (b) Jeremy Bentham. (c) Gary Becker. (d) Johann Heinrich von Thnen.
9. A real estate agent who loudly proclaims that property values depend on first, location; second,
location; and third, location, is echoing a theory formalized into a mathematical equation by the
pioneering economic thinker: (a) David Ricardo (b) Henry George. (c) Johann von Thnen. (d) William
Stanley Jevons. (e) William Petty. (f) Edmund Burke.

10. Of the following schools of economic philosophy, the least hostility to the notion that interest is a
legitimate stream of income was expressed by: (a) classical Greek philosophers. (b) medieval
scholastics. (b) early Arabic-Islamic social philosophers. (c) anarcho-syndicalists. (d) Marxists. (e) early
Austrian marginalists.

11. Of the following economic thinkers, the one who was least hostile to the notion that interest is a
legitimate stream of income was: (a) Thomas Aquinas. (b) Aristotle. (c) Ibn Kaldur. (d) Karl Marx. (e)
Carl Menger.

12. A prizewinning contestant at a bingo parlor is entitled to one year of free pizzas from a major pizza
chain. Carl Menger would have predicted that the pizza chain is unlikely to be asked to deliver 365 or
more pizzas to the prizewinner because of the principle of: (a) subjective preferences. (b) imputation.
(c) intrinsic value. (d) diminishing marginal returns. (e) implicit costs.

13. Losche concluded that the distance-minimizing geometric shape of the territories most firms control
when concentrated in a high traffic area for business is a: (a) triangle. (b) oval. (c) quadrilateral. (d)
hexagon. (c) octagon.

14. One of Hans K.E. von Mangoldts key contributions to economics was his differentiation between
______ and ______, which hinges on the notion of risk taking. (a) the interest rate, the rate of return
on capital (b) consumer surplus, producer surplus (c) laborers, business owners (d) capitalists,

15. Hans K.E. von Mangoldt believed conflict, including wars, to potentially be very productive. He liked
conflict and change as a mechanism for creation. Another economist who felt conflict was crucial to
change was: (a) Joseph Schumpeter. (b) John Bates Clark. (c) Karl Marx. (d) William Stanley Jevons.

16. Thinkers who believed that organized violent conflict, including war, might sometimes contribute
significantly to economic and social progress included: (a) Ludwig Feurbach and John Neville Keynes.
(b) Georg Hegel and Alfred Marshall. (c) Karl Marx and Hans K.E. von Mangoldt. (d) Herbert Spencer
and George Bernard Shaw. (e) William Petty and Robert Owens.

17. The possibility that the technological advances stimulated by armed conflicts might be more valuable
than the resources destroyed during wars was stressed in the writings of: (a) Hermann Gssen. (b) Hans
von Mangoldt. (c) Werner von Braun. (d) Niels Bohr. (e) Mohandas Gandhi.

18. An economist who contended that war provides great opportunities for entrepreneurs to create new
technologies was: (a) Richard Cantillon. (b) Joseph A. Schumpeter. (c) Hans K.E. von Mangoldt. (d)
John Bates Clark. (e) Friedrich List.

19. The theorist most likely to agree with the statements: Wars stimulate technological advance, and
History favors the bold, would be: (a) Hermann Gssen. (b) Jules Dupuit. (c) Hans K.E. von
Mangoldt. (d) Augustin A. Cournot.

20. Hans K.E. von Mangoldt was a pioneer in arguing that human progress arises primarily from: (a)
entrepreneurial innovation. (b) conflicts between socio-economic classes. (c) expansion of the
production data base. (d) a tiny elite group of inventors.

21. Hans K.E. von Mangoldt characterized entrepreneurial profits as the reward for a range of activities
including which of the following: (a) finding particular markets. (b) clever acquisitions of productive
agents. (c) smart combination of factors of production on the right scale. (d) sales policy and
innovation. (e) all of the above.

22. A belief shared by Richard Cantillon and Hans K.E. von Mangoldt is that: (a) interest rates are
unnecessary. (b) demand creates its own supply. (c) large profits are justified because
entrepreneurs are willing to take risks. (d) workers should be paid more than a subsistence level of
wages. (e) the price level is precisely proportional to the quantity of money in an economy.

23. The least likely of the following economists to have viewed entrepreneurs as creeps was: (a) Joan
Robinson. (b) Thorstein Paul Veblen. (c) Paul Sweezey. (d) Hans K.E. von Mangoldt.

24. Numerous Austrian economists differ with the neoclassical macroeconomic model by emphasizing
the idea that: (a) supply creates its own demand [Says law]. (b) wages, prices, and interest rates
are flexible. (c) the entrepreneur is the pivotal agent in economic growth and development. (d)

25. A school of thought containing several members who focused their analysis heavily on the long run
beneficial roles played by entrepreneurs is: (a) Austrian economics. (b) institutionalism. (c)
Marxism. (d) monetarism.

26. The Austrian School of economic thought is widely acknowledged to have been born in the writings
of: (a) Joseph Schumpeter. (b) Leon Walras. (c) Carl Menger. (d) Friedrich von Wieser. (e) Otto von

27. Carl Mengers Principles was intended as a refutation of the school of thought known as: (a)
German historicism. (b) marginalism. (c) neoclassicism. (d) Keynesian theory. (e) logical positivism.
(f) praxeology.

28. The idea that the value of a product depends primarily on the amount a consumer is willing to pay
for it was embraced by: (a) Adam Smith, a Scot. (b) Carl Menger, an Austrian. (c) Francois Quesnay, a
Frenchman. (d) Richard Cantillon, an Irishman who also held French citizenship. (e) Aristotle and
other early Greek philosophers.

29. Adam Smith and Carl Menger agreed that the governments involvement in the economy should be
very limited. However, Menger and his Austrian colleagues probably believed this in part because
they perceived markets to be efficient, and in part because: (a) they believed in the power of the
invisible hand as a mechanism that would overcome raw political power. (b) most were born into
the politically-conservative Austrian or German aristocracy. (c) they were early libertarians who
emphasized freedom above all else. (d) they viewed all government activity as inherently socialistic.
(d) they were quite liberal politically and favored worker participation in managerial decisions, and
thought individuals should be able to participate in a free market system.

30. Carl Menger and other early Austrian theorists were most vehemently opposed to: (a) socialism. (b)
unrestricted international trade. (c) libertarianism. (d) war as a mechanism for solving international
issues. (e) laissez faire capitalism.

31. The theorist who expanded upon Carl Mengers earlier assertions about pricing with a basic
statement of the general law of value and who also invented the term marginal utility was (a)
Eugen von Bhm-Bawerk. (b) H. K. E. von Mangoldt. (c) Friedrich von Wieser. (d) Antoine-Augustin

32. The Austrian theorist who coined the term marginal utility though he called it grenznutzen was: (a)
Carl Menger. (b) Johann H. von Thnen. (c) Friedrich von Wieser. (d) Hans K.E. von Mangoldt. (e)
Eugen von Bhm-Bawerk.

33. Friedrich von Wieser is most renowned for his elaborations and extensions of the theories of: (a)
Hermann H. Gssen, by grounding the theory of consumption in the marginal principle. (b) Carl
Mengers ideas on utility, value, and input-output. (c) Antoine Augustin Cournots law of demand. (d)
Jules Dupuit, in his theories

34. The phrase marginal utility was coined by the Austrian economist: (a) Carl Menger. (b) Eugen von
Bhm-Bawerk. (c) Friedrich von Wieser. (d) Jules Dupuit.

35. Applications of marginal utility to the theory of demand first appeared in the work of A. Jules. E.
Dupuit. The Austrian economic theorist who, until recently, erroneously received credit for
originating the analysis of demand using the concept of marginal utility was: (a) Johann H. von
Thnen. (b) Hans K.E. von Mangoldt. (c) Carl Menger. (d) Hermann Gssen. (e) Friedrich von Wieser.

36. An Austrian economist focused primarily on capital accumulation and roundabout production
was: (a) Carl Menger. (b) Von Wieser. (c) Eugen von Bohm-Bawerk. (d) William Stanley Jevons. (e)
Jules Dupuit.

37. Eugen Bohm-Bawerks concept of roundabout production entails: (a) maximization of the production
of capital goods during each production period. (b) investing in capital goods by postponing
consumption, thereby enabling the production of greater amounts of consumer goods in the future.
(c) outsourcing of intermediate goods by a firm that is not fully integrated. (d) maximizing r + i + =
surplus value.

38. Eugen von Bhm-Bawerks Capital and Interest. (German, 1884) criticized socialists exploitation
theories of interest and profit as unscientific and incorrect. He termed the exploitation doctrine: (a)
the Worst Fallacy. (b) Pathetic Obscurantism. (c) Hypocritical Dogma. (d) Economic Theology.
(e) Nattering Nabobbery.

39. Eugen von Bhm-Bawerk extensively researched and published a three-volume set of books that
focused primarily on: (a) national income and unemployment (b) marginal utility and Aggregate
Demand. (c) capital and interest. (d) economic equity and efficiency. (e) inflation and the quantity
theory of money.

40. Eugen von Bhm-Bawerks contributions to economic theory did not include the notion that: (a)
capital reproduces itself [i.e., it breeds]. (b) demand is based on marginal utility. (c) interest is a
reward for postponing production. (d) economic capital facilitates increased output through
roundabout production.

41. In The Positive Theory of Capital, Eugen von Bhm-Bawerk elaborated a theory of interest based on
the notion that current goods are subjectively worth more than future goods of the same kind. This
theory suggests that an individual will prefer:. (a) $1 today over $1 tomorrow. . (b) $1 next year over
$1 this year. . (c) $3 next year over $1 yesterday. (d) $20 in 1950 over $200 in 2004.

42. Eugen von Bhm-Bawerk suggested that the production period should be measured as an: (a)
average production period where inputs are weighted according to their proximity to point outputs.
(b) absolute production period where length of production is measured from beginning to the end.
(c) approximate point production period where a certain point in production is picked to determine
what the production period may be.

43. According to Eugen von Bohm-Bawerk , among factors that determines the interest rate is: (a)
average preferences for goods now over goods in the future. (b) the interest rate on treasury
bonds. (c) the FEDs open-market operations. (d) the condition of the stock market.

44. The thinker who would most strongly have disagreed with a statement that charging interest on
loans is unethical because loans do not facilitate the production of valuable goods would have
been: (a) Karl Marx. (b) Eugen von Bhm-Bawerk. (c) Thorstein Veblen. (d) Aristotle. (e) Thomas

45. According to Eugene von Bhm-Bawerk, the province of the Austrian economist is: (a) theory. (b)
history. (c) utility. (d) calculus.

46. The theory of interest was not among areas in which significant contributions were made by: (a)
Eugen von Bhm-Bawerk. (b) Frank H. Knight. (c) Knut Wicksell. (d) David Ricardo. (e) Herbert

47. The economist least closely associated with Carl Menger and the Austrian school would be: (a)
Alfred Marshall. (b) Friedrich von Wieser. (c) Eugene Bhm-Bawerk. (d) Ludwig von Mises. (e)
Joseph Schumpeter.

48. Austrian economics is fundamentally opposed to the measurement concept pioneered by the
mercantilist thinker William Petty because, in the Austrian view: (a) aggregated economic statistics
are flawed because of biases in reporting, among other difficulties. (b) economic statistics must be
used to support good abstract theories. (c) good abstract theories must be consistent with
historical events. (d) effective macroeconomic planning depends on solid statistical analysis.

49. Members of the Austrian school of thought do not: (a) focus on the subjective nature of demand.
(b) view the supply of capital as positively related to the interest rate. (c) assume that people act in
purposeful ways to accomplish their goals. (d) view Joseph Schumpeter and Eugen von Bhm-
Bawerk as its founders. (e) ever use calculus to illustrate their models.

50. One foundation of Austrian economics is radical subjectivism, which does not include an
assumption that: (a) entrepreneurial decision-making lies at the heart of innovation. (b) human
choice is the foundation of permanent relations. (c) people typically share uniform knowledge and
expectations about market conditions. (d) knowledge and interpretations form the basis for and
individuals tastes and preferences.

51. Austrian economics departs most sharply from neoclassical value theory. (e.g., Jevons and
Marshall) on assumptions about: (a) marginal utility. (b) opportunity costs. (c) maximization
processes. (d) the subjectivity of utility.

52. Among distinguishing features of Austrian economics is an assumption that human action is
purposiveindividuals make decisions with goals in mind, even though sometimes frustrated by
errors and imperfect knowledge. This idea is least consistent with the view of behavior expressed
by: (a) William Stanley Jevons. (b) Alfred Marshall. (c) Joseph Schumpeter. (d) Jeremy Bentham.

53. The entrepreneur is the chief agent of change in a competitive economy, or the persona causa of
economic development, according to the Austrian economist: (a) Joseph A. Schumpeter. (b)
Ludwig von Mises. (c) Friedrich A. Hayek. (d) Oskar Morgenstern.

54. An economist who followed in the tradition of Richard Cantillon and Hans K.E. von Mangoldt in
glorifying entrepreneurs as the driving forces in economic development, and who also suggested
that as democracy increases, socialism will tend to displace capitalism, was: (a) Johann H. von
Thnen. (b) Ludwig von Mises. (c) Friedrich Hayek. (d) Jon von Neumann. (e) Wernher von Braun. (f)
Claudius von Disputandum. (g) Joseph Schumpeter.

55. Of the following thinkers, the role of entrepreneurs as fomenters of economic and social change
was least central to theories expressed by: (a) H.K.E. von Mangoldt. (b) Edmund S. Phelps. (c)
George Gilder. (d) Richard Cantillon. (e) Adam Smith. (f) Ayn Rand.

56. Capitalism continually revitalizes itself through creative destruction, in which entrepreneurial
innovations obliterate obsolete technologies and institutions and pave the road to progress,
according to the writings of: (a) Joseph A. Schumpeter. (b) Herbert Spencer. (c) John R. Commons.
(d) William Stanley Jevons

57. One Austrian economist, when young, agreed to head a commission to study the nationalization of
industry for the newly socialist German government. When questioned about how someone who
so praised capitalism and individual enterprise could take part, he answered, If someone wants to
commit suicide, it is a good thing if a doctor is present. He was: (a) Carl Menger. (b) Friedrich von
Wieser. (c) Eugen bon Bhm-Bawerk. (d) Joseph Alois Schumpeter. (e) Friedrich List.

58. In Joseph Schumpeters The Theory of Economic Development, business cycles and irregular
economic growth are described as among the consequences of: (a) technical and financial
innovations of entrepreneurs. (b) erratic growth of the money supply. (c) class conflict. (d)
overinvestment in capital. (e) underconsumption caused by inequality in the distribution of income.

59. Joseph Schumpeters principle of creative destruction is not exemplified by: (a) the loss of
secretarial jobs after the advent of computing. (b) the growth of tire and oil industries after the
invention of the internal combustion engine. (c) the emerging obsolescence of VHS. (d) the
concentration of industry in large multinationals.

60. The idea that capitalism cannot survive in the long run is a central conclusion in the theories of Karl
Marx and: (a) Joseph Schumpeter. (b) Carl Menger. (c) Thorstein Veblen. (d) Eugen von Bhm-
Bawerk. (e) Friedrich Hayek.

61. Karl Marx and Joseph Schumpeter had very different perceptions about the virtues of capitalism,
but their views are in accord in predicting that: (a) social forces will cause capitalism to be replaced
by socialism. (b) economic progress depends on ambitious entrepreneurs. (c) the working class will
eventually resort to armed conflict to overthrow the government. (d) the gold standard was
doomed by unavoidable inflationary pressure.

62. Most modern economists would identify as the worlds two most influential economic theorists
over the period 1900-1950 to have been: (a) John Maynard Keynes and Joseph Schumpeter. (b)
Joan Robinson and Edwin Chamberlin. (c) Ludwig von Mises and Thorstein Veblen. (d) John
Commons and Wesley Clair Mitchell.

63. Which set of economists is out of chronological order? (a) Ricardo / Marx / Jevons / Veblen (b)
Mandeville / Smith / Walras / Keynes. (c) Malthus / Mill / Edgeworth / Fisher (d) Hume / Aquinas /
Marshall / Schumpeter.

64. The Socialist Calculation Debate refers to a disagreement between Austrian theorists and
advocates of socialism about whether capitalism: (a) must eventually evolve into socialism. (b) or
socialism allocates resources more efficiently. (c) or socialism is more compatible with maximizing
freedom. (d) is a necessary stage in the long run transition to socialism. (e) yields more rapid
economic growth than would socialism.

65. Ludwig von Mises disagreed with the neoclassical conclusion that money is a veil, arguing that
inflation: (a) drives up the transaction costs of international trade. (b) is an uneven process that
disrupts planning by consumers and business investors. (c) offsets wage-price stickiness, facilitating
equilibration of relative prices. (d) confuses people about the real value of money in the market

66. Ludwig von Mises rejected the neoclassical conclusion that money is a veil, arguing instead that:
(a) the money supply directly impacts natural resources. (b) inflation matters because it is uneven
and causes uncertainty (c) uneven foreign exchange rates reduce the gains from international
trade. (d) a barter system is more efficient than a monetary system.

67. The Austrian economist least single-mindedly focused on microeconomic aspects of resource
allocation was: (a) Ludwig von Mises. (b) Carl Menger. (c) Gossen. (d) Leon Walras. (e) Friedrich von

68. Austrian monetary theory and Austrian value theory were first reconciled and most completely
integrated by: (a) Carl Menger. (b) Ludwig von Mises. (c) Thorstein Veblen. (d) Murray Rothbard.

69. Austrian economists view costs as all of the following EXCEPT: (a) a decision. (b) subjective. (c)
perceived by the chooser. (d) an event or thing. (e) subordinate to utility.

70. The view that events affect costs is contrary to the ideas of: (a) Austrian economics. (b) Walrasian
general equilibrium. (c) Joan Robinsons theories of oligopoly. (d) Marshallian partial equilibrium
analysis. (e) Keynesian macroeconomics. (f) Marxist theory. (g) public choice analysis.

71. Joseph Schumpeters version of the Austrian school of economic thought emphasizes that major
disruptions to "purely" competitive markets arise from: (a) profit maximization by imitative firms. (b)
entrepreneurial innovations. (c) job training by workers. (d) laissez-faire government policies.

72. Not one of Schumpeters three corresponding pairs of opposites would be: (a) entrepreneurship vs.
management. (b) static vs. dynamics. (c) circular flow vs. change in economic routine. (d) evolution
vs. determinism.

73. The economist who became finance minister of the Austria while quite young, emigrated to the
United States to avoid Hitler, and who was a student of Eugen von Bhm-Bawerk was: (a) Joseph
Schumpeter. (b) Max Weber. (c) Claude Levi-Strauss. (d) Arthur C. Pigou.

74. Emerging modern theories of how a backward economy can shift to a path of dynamic growth rely
most heavily on insights into entrepreneurship and capitalism written by: (a) Irving Fisher. (b) Joan
Robinson. (c) Joseph A. Schumpeter. (d) John Bates Clark. (e) Leon Walras.

75. The writer who described capitalism as a process of creative destruction and called the
entrepreneur the white hot fire that drives capitalism forward was (a) John Stuart Mill (b) Carl
Menger. (c) St. Thomas Aquinas. (d) Joseph A. Schumpeter. (e) William Stanley Jevons.

76. According to Joseph Schumpeter, entrepreneurs who launch major innovations spark economic
activity primarily by stimulating: (a) huge profits for capitalists. (b) related inventions and
innovations, and new industries. (c) long waves. (d) business optimism. (e) monopoly power that
exploits workers, thereby accelerating investment by capitalists.

77. Important works by Joseph Alois Schumpeter do not include: (a) Capitalism, Socialism, and Democracy.
(b) Individualism and Economic Order. (c) A History of Economic Analysis. (d) The Theory of Economic

78. In Business Cycles. (1939), Joseph Schumpeter argued that innovations tend to be bunched at certain
times one leading to another creating large _________ booms that promote long periods of
prosperity.: (a) productivity. (b) capital spending. (c) consumer spending. (d) savings. (e) investment.

79. Joseph Schumpeters theory of creative destruction the idea that the discovery of new, beneficial
technologies will also result in the loss of jobs and equipment in obsolete industries was viewed by
Schumpeter as one of the prices we pay for the dynamic progress possible under: (a) capitalism. (b)
Marxism. (c) socialism. (d) libertarianism. (e) industrialism.

80. Joseph Schumpeters theory that capitalism continually revitalizes itself by replacing old
products, technologies, organizations, and leaders with new is known as: (a) creative response.
(b) economic replacement. (c) creative destruction. (d) economic displacement. (e) creative
81. Schumpeter believed the success of capitalism in producing massive amounts of goods and services
would ultimately result in: (a) explosive business cycles in post-modern capitalist economies. (b) ever-
increasing concentration in capital-intensive industries. (c) the gradual erosion of entrepreneurship and
eventual triumph of socialism. (d) ever worsening immiseration of workers. (e) sudden shocks in
oversupplies of goods and services.

82. The term creative destruction was used by Schumpeter when celebrating the virtues of: (a) socialism.
(b) libertarianism. (c) monopolies. (d) capitalism.

83. Important works by Joseph Alois Schumpeter do not include: (a) Capitalism, Socialism, and
Democracy. (b) The General Theory of Employment, Interest and Money. (c) The Theory of Economic
Development. (d) A History of Economic Analysis. (e) Business Cycles.

84. Say that, after examining the writings of Jules Vern and the life of Jacques Cousteau, we advance a
theory of exploration stating that it is only those daring few adventurous spirits (Ferdinand Magellan,
Sir Edmund Hillary, Neil Armstrong) who expand the environments which humans are bold
enough/able to inhabit. This theory of exploration (lets call it the Growth in Habitable
Environments Theory) is most similar to the theory of economic growth associated with: (a) Adam
Smith. (b) Joseph Schumpeter. (c) endogenous growth theory. (d) Robert Merton Solow. (e) John
Stuart Mill.

85. Which person below would George Gilder probably most admire for his vision of a changed world?
(a) George Bush for fighting terrorists. (b) Sadam Hussein for rallying al Qaeda and refusing to step
down. (c) Bill Gates and his vision of Microsoft software being used in every home. (d) Donald Trump
for his vision of a real estate empire.

86. A 20th century debate between Keynes and Schumpeter about desirable roles for government echoed
positions from earlier schools of thought. Keynes perception of a need for government stabilization
reflected calls for market management voiced earlier by __________. Similarly, Schumpeters reliance
on freedom and entrepreneurship. (although he recognized its dangers) is reflected in __________.: (a)
classical economics / institutionalists. (b) historicists / Ancient Greeks. (c) classical economics /
scholastics. (d) scholastics / socialists. (e) the Ancient Greeks / neoclassical economics.

87. The second-generation Austrian economist who was a teacher of Friedrich Hayek was: (a) Ludwig
von Mises. (b) Fritz Machlup. (c) Joseph Schumpeter. (d) Ludwig Lachmann.

88. NOT one of the five major points that distinguish Austrian economics from mainstream neoclassical
analysis is: (a) radical subjectivism. (b) methodological essentialism. (c) casual-geneticism. (d)
methodological individualism. (e) societal purpose.

89. Basic to the Austrian approach is the conviction that all underlying permanent relations of
economic theory are consequences of: (a) societal patterns. (b) consumer needs. (c) demand
theory. (d) market demand. (e) human choice.

90. The Austrian concept least congruent with the strict Marshallian tradition would be the idea that:
(a) costs are subjective. (b) prices are objective. (c) general equilibrium analysis is more incisive and
insightful that partial equilibrium analysis. (d) the consumer has total power over market prices.

91. Austrian economists would probably disagree most vigorously with the basic methodology and
premises of the philosophy of: (a) Immanuel Kant. (b) William Stanley Jevons. (c) Aristotle. (d)
Jeremy Bentham. (e) Carl Menger. (f) Aristotle

92. A feature of Ludwig von Mises version of Austrian money theory distinguishing it from theories
advanced earlier by John Locke and David Hume is his: (a) recognition of the uniqueness of money
to facilitate immediate exchange [spot markets]. (b) view that, in general equilibrium, money is
indistinguishable from non-money goods. (c) observation that money is unique in its intertemporal
exchangeability. (e) theory assumes that money is worthless due to the volatility of its value.

93. Ludwig von Mises did not cite as a source of the value of money: (a) subjective perceptions of
money as having value. (b) the goods it can buy. (c) the interest it can generate. (d) the question is
misleading because von Mises did not address the value of money.

94. Ludwig von Mises called the characteristic ability of money to be exchanged for other things,
moneys (a) subjective exchange value. (b) objective exchange value. (c) solitary exchange value. (d)
neutrality exchange value. (e) transaction exchange value.

95. Ludwig von Mises claimed that there is a failure to explain the mechanism of variations in the
value of money in the: (a) game theory approach to monetary exchange. (b) quantity theory of
money. (c) Ricardian theory of money. (d) utility theory of money. (e) scholastic theory of money.

96. The theoretical attack launched by Austrian economists in the 1920s against central planning and
socialism in the USSR was initially spearheaded by: (a) Friedrich Hayek. (b) H. L. Mencken. (c)
Ludwig von Mises. (d) Iosif Djugashvili. (e) Lev Davidovitch Bronstein. (f) Vladimir Ulyanov.

97. Ludwig von Mises theory of money set the stage for Friedrich Hayek to develop his: (a) monetary
analysis. (b) valuation analysis. (c) dynamic analysis (d) theory of business cycles. (b) natural rate

98. Friedrich Hayek argued that equilibrium in capital markets results from interactions between the
activities of: (a) stockholders and bondholders. (b) savers and investors. (c) lender and borrowers.
(d) managers and unions.

99. The economist would have been considered part of the Vienna circle along with Ludwig von
Mises would be: (a) Carl Menger. (b) Joseph A. Schumpeter. (c) Karl Marx. (d) Gustav Schmoller. (e)
Werner Erhardt.

100. Austrian economists identified five major points that distinguished Austrian economics from
mainstream neoclassical analysis. The assertion that Austrian economics emphasizes essences
rather than functional relationships is called: (a) radical subjectivism. (b) purposiveness in human
action. (c) methodological individualism. (d) casual geneticism.

101. The school of thought that embraces the ideas of methodological individualism and radical subjectivism
as keys for relevant economic analysis is: (a) Keynesian theory. (b) modern monetarism. (c) Austrian
economics. (d) neoclassical monetarism.

102. One of five major points distinguishing Austrian economics from neoclassical analysis is
methodological individualism. This point carries with it the assertion that: (a) economic phenomena
should be studied at individual level. (b) neoclassical economics is nonscientific. (c) all decisions are
subjective. (d) essences are emphasized rather than functional relationships.

103. The Austrian concept of radical subjectivism can be best defined as: (a) the claim that the study of
humans is non-scientific. (b) subjecting the public to taxes. (c) economics properly places emphasis
on essences. (d) in economics, all decisions are subjective.

104. The Austrian economist who argued most vociferously that applying principles from natural science
to the study of humans is inherently unscientific was: (a) Max Weber. (b) Eugen von Bhm-Bawerk.
(c) Carl Menger. (d) Friedrich A. Hayek.

105. The word scientism coined by Friedrich A. Hayek refers to a common practice, disparaged by
Austrian theorists, of: (a) integrating biological sciences to facilitate a useful historical framework.
(b) applying concepts from the natural sciences to the study of human beings. (c) using supply and
demand curves to illustrate equilibrium in markets. (d) applying hedonic or felicific calculus to the
theory of value.

106. In The Road to Serfdom, Friedrich von Hayek most vehemently asserted that: (a) Keynesian
thought and capitalism are well-suited for each other. (b) socialism and freedom are not
compatible. (c) foreign aid speeds the course of industrialization. (d) openness and economic
reforms are bunk. (e) marginal analysis is not important.

107. The growth of government was called The Road to Serfdom in a book by: (a) Eugen von Bhm-
Bawerk. (b) Ludwig von Mises. (c) Milton Friedman. (d) Friedrich Hayek. (e) Oskar Morgenstern.

108. In Economics and Knowledge [1937], Friedrich A. von Hayek elaborated the idea that: (a) behavior
in markets is a process of discovery. (b) knowledge derived from markets help identify the best
government policies . (c) economies of scale create inefficiencies . (d) economics serves as a guide
to establish future government policy.

109. The Austrian economist who integrated his monetary theory with Austrian value theory, and who
viewed the gold standard as the best form of money because he was skeptical of governments
ability to show monetary restraint over long periods, was: (a) Baron Ludwig von Clausewitz. (b)
Ludwig von Mises. (c) Eugen von Bhm-Bawerk. (d) Murray Rothbard.

110. Ludwig von Mises argued strongly against expansion of money supply because he believed inflation
was always a: (a) zero-sum game. (b) competitive gamble. (c) prisoners dilemma. (d) negative sum
game. (e) destabilizing cause of war.

111. Ludwig von Mises integrated monetary theory and _________ by founding both on the principle of the
marginal utility of subjective individual wants. (a) cost analysis. (b) rent seeking. (c) value theory. (d)
macroeconomic theory. (e) consumption theory.

112. Ludwig von Mises, along with other Austrian economists, favored an approach to economics known as
the: (a) macroeconomics approach. (b) over-consumption approach. (c) microeconomics approach. (d)
individualistic approach.

113. Ludwig von Mises work on the relationship between monetary theory and the Austrian theory of value
led to Fredrick Hayeks: (a) business-cycle theory. (b) welfare theory. (c) demand theory. (d) wages-fund
theory. (e) general theory of value.

114. Well known Austrian economists would not include: (a) Wilhelm Stanislaus Jevons. (b) Joseph A.
Schumpeter. (c) Carl Menger. (d) Ludwig von Mises.

115. Friedrich von Hayeks theory that when the supply of money changes interest rates are reduced below
equilibrium, which eventually causes a rise in the price of capital goods and a fall in the price of
consumption goods, is an example of a: (a) supply-side theory of microeconomics. (b) game theory. (c)
theory of imputation. (d) business-cycle theory.

116. The theory that increases in the money stock do not affect the economy uniformly, but instead cause
prices to rise at uneven rates across different sectors of the economy, was developed by: (a) Thorstein
Veblen. (b) Carl Menger. (c) Milton Friedman. (d) Ludwig von Mises. (e) Eric von Stroheim.

117. The Austrian theory of business cycles based on changes in the supply of money that was originally
developed by Ludwig von Mises was later elaborated by: (a) Friedrich Hayek. (b) GordonTulloch. (c) Max
Weber. (d) Oscar Lange.

118. An Austrian theory of business cycles based on changes in the supply of money and credit was
developed and elaborated by: (a) Joseph Schumpeter and Joaquim von Ribbentrop. (b) Thorstein
Veblen and Ambrose Bierce. (c) Ludwig von Mises and Friedrich Hayek. (d) Karl Marx and Friedrich

119. Joseph Schumpeter argued that major long run business cycles are triggered by irregularly occurring
waves of creative destruction that originate in the activities of: (a) military leaders. (b) entrepreneurs.
(c) political leaders. (d) labor leaders who challenge the authority of corporate managers. (e) worldly
philosophers whose ideas become popular, and then fail to perform, and then eventually reemerge.

120. Market capitalism generates business cycles in part because of a process of creative destruction
according to a theory developed by: (a) Adam Smith. (b) John Maynard Keynes. (c) Reverend Thomas
Robert Malthus. (c) William Stanley Jevons. (e) Joseph Schumpeter.

Topic 9: Institutionalism

German Historicism

1. Alexander Hamiltons advocacy of tariffs to protect infant industries was later echoed in the
works of: (a) German historicists. (b) mercantilists. (c) American institutionalists. (d) David Hume.
(e) French physiocrats.
2. The implicit assumptions of classical and neoclassical economic theorists that culture and historical
time are irrelevant for useful economic analysis was most emphatically rejected by: (a)
utilitarianianism. (b) German historicism and American Institutionalism. (c) mercantilism. (d)
physiocracy. (e) logical positivism.
3. The German historical school had the most in common methodologically with: (a) American
Institutionalism. (b) Austrian economics. (c) classical economics. (d) orthodox Marxism.
4. A school of thought that emphatically rejected the claim of neoclassical theorists that culture and
historical time are irrelevant for useful economic analysis is: (a) utilitarianianism. (b) German
historicism. (c) mercantilism. (d) physiocracy. (a) logical positivism.
5. Mercantilist doctrines assumed that balance of trade surpluses create national wealth. Alexander
Hamilton argued that industrialization required protecting infant American industries from mature
foreign competitors. Lou Dobbs asserts that immigration and the increasing globalization of
economic activity harm blue-collar workers and middle-class Americans. Policies derived from the
preceding sets of positions on international trade are most consistent with: (a) characterizations of
bourgeoisie economic development written by Karl Marx and Friedrich Engels in The Communist
Manifesto. (b) Franois Quesnays theory of the circular flow of income. (c) the nationalism
underpinning analyses by German historicists. (d) David Ricardos theory of comparative advantage.
(e) the regulation of business practices advocated by John Rogers Commons.

6. Early developers of a theoretical rationale for American protectionism would include: (a) Thorstein
Veblen and John R. Commons. (b) Richard Nixon and Spiro Agnew. (c) John Bates Clark and Irving
Fisher. (d) Alexander Hamilton and Friedrich List. (e) John Philip Sousa and John Kenneth Galbraith.
7. At the end of the 19th century American graduate students pursuing PhDs in economics abroad
would have been most densely clustered in: (a) Austria. (b) Paris. (c) Germany. (d) Cambridge,
England. (e) Sweden.
8. A famous debate about the relative merits of historical analysis versus abstract modeling
featured arguments between: (a) Friedrich List and Antoine-Augustin Cournot. (b) Edwin
Chadwick and Simon Newcomb. (c) Carl Menger and Gustav von Schmller. (d) Karl Marx
and John Stuart Mill. (e) Alfred Marshall and Vilfredo Pareto.

American Institutionalism
9. Thomas Robert Malthus population theory influenced pre-marginalist classical macrotheory in a
manner paralleling the way: (a) Charles Darwins theory of evolution influenced the institutionalist
interpretation of change. (b) Sigmund Freuds Interpretation of Dreams shaped core concepts in
modern public choice theory. (c) Zenos theory of a stable universe influenced German historicists
views of free trade. (d) Thorstein Veblens theory of conspicuous consumption influenced Microsoft
marketing strategies developed by Bill Gates. (e) Albert Einsteins theory of relativity influenced the
mathematical economics of Francis Ysidro Edgeworth.

10. The institutions in American institutionalism refer to: (a) public and private institutions. (b)
technical and ceremonial institutions. (c) market and non-market institutions. (d) for-profit and
non-profit institutions. (e) educational and business institutions.

11. Thorstein Veblen would have been most likely to have condemned as a largely ceremonial
institution the: (a) U.S. electoral college. (b) U.S. Congress. (c) U.S. Supreme Court. (d)
U.S. Bureau of Prisons. (e) Federal Reserve System.

12. In assessing the debate between Zeno and Heraclites about whether stability of the universe permits
reasonably accurate forecasts of the future, the group most likely to side with Heraclites would have
been: (a) the Veblen wing of institutionalism. (b) neoclassical economists. (c) public choice theorists. (d)
Keynesians. (e) Austrian marginalists.

13. Thorstein Veblens view of human nature and economic behavior in many ways echoes: (a)
Benthamite utilitarianism. (b) Auguste Comtes logical positivism (c) Christian socialism. (d) Marxist
socialism. (e) Darwian evolutionary thought.

14. Thorstein Veblen developed an evolutionary economics based on human adaptations to ever-
changing institutions, and categorized institutions as either: (a) sectarian or humanitarian. (b)
anthropological or historical. (c) technological or ceremonial. (d) spiritual or materialistic.
15. A school of economic thought that developed in part as a reaction to the behavior of such
successful people as J. P. Morgan, John D. Rockefeller, and the Astor and Vanderbilt families was:
(a) Fabian socialism. (b) American institutionalism. (c) neoclassical marginalism. (d) modern

16. Karl Marxs views were most completely echoed by the institutionalist: (a) Thorstein Veblen. (b)
John Kenneth Galbraith. (c) Clarence Ayers. (d) Wesley Clair Mitchell. (e) John Roger Commons.
17. Karl Marxs views were altered only slightly by Thorstein Veblen when Veblen asserted that
government: (a) is crucial for efficient production processes. (b) suppresses the business class
through unfair engineering advantages. (c) favors parasitic businessmen (the bourgeoisie) by
oppressing the engineering (working) class. (d) understood the important role of engineers in profit
18. The economist who taught at the University of Chicago but who developed theories that were most
antithetical to the views of the 20th Century Chicago School of thought was: (a) Joan Robinson. (b)
Thorstein Veblen. (c) Irving Fisher. (d) George Stigler. (e) Friedrich Hayek.
19. The idea that the desire of people to buy goods is culturally determined as opposed to price
determined is the view of: (a) Antoine Augustin Cournot. (b) Thorstein Veblen. (c) Karl Marx. (d)
Ludwig von Mises. (e) Irving Fisher.
20. The motives and behavior of wealthy people who drive luxurious gas-guzzlers, wear flashy clothing
and jewelry, cruise in sumptuous yachts, and own enormous homes were addressed in The Theory
of the Leisure Class, a book authored by: (a) David Ricardo. (b) Thorstein Veblen. (c) Jeremy
Bentham (d) Thomas Robert Malthus. (e) Talcott Parsons.
21. Show-offs who flaunt their extravagant spending patterns are practicing behavior that Thorstein
Veblen condemned as: (a) conspicuous consumption. (b) snob appeal. (c) keeping up with the
Joneses. (d) tomfoolery. (e) exploitation.
22. The quote But the rule holds with but slight exceptions that, whether warriors or priests, the
upper classes are exempt from industrial employments, and this exemption is the economic
expression of their superior rank, identifies ideas expressed in: (a) Karl Marxs Das Kapital. (b)
Adam Smiths Wealth of Nations. (c) John Maynard Keynes The Economic Consequences of the
Peace. (d) Thorstein Veblens Theory of the Leisure Class.
23. Thorstein Veblen criticized neoclassical theory as: (a) excessively theoretical and inconsistent with
self interested behavior. (b) based on nonscientific assumptions. (c) excessively influenced by
theories from psychology, sociology, and history. (d) requiring significant adjustments because it
was based on outdated assumptions. (e) suitable for studying isolated individuals, but insufficiently
general to explain interactions between economic and social institutions.
24. Thorstein Veblens Theory of Business Enterprise stereotypes engineers in a way similar to Karl
Marxs characterizations of: (a) industrial proletariat. (b) petite bourgeois. (c) such robber barons as
J.P. Morgan, Andrew Carnegie, and John D. Rockefeller. (d) MBA students. (e) female homemakers.
25. Thorstein Veblen would have viewed modern investment bankers as: (a) members of the
proletariat. (b) entrepreneurs. (c) sophisticated bean counters. (d) financial engineers. (e) parasites.
26. A cultural relativist with respect to his views on modern culture and its assumed superiority was the
notably eccentric: (a) Thorstein Veblen. (b) Thomas Malthus. (c) Carl Menger. (d) Wesley Clair
Mitchell. (e) John Kenneth Galbraith.
27. The most vehement objections to the use of marginal utility theory were voiced by: (a) Thorstein
Veblen. (b) Friedrich von Wieser. (c) John Bates Clark. (d) Milton Freidman. (e) John R. Commons.
28. The thinker most likely to have vehemently opposed using complex mathematics as a way to
describe economic behavior would have been: (a) Adam Smith. (b) Vilfredo Pareto. (c) Leon Walras.
(d) Irving Fisher. (e) William Stanley Jevons. (f) Thorstein Veblen.

29. Belief that incessant and unpredictable change renders useless the analyses of deterministic
orthodox economics was central to critiques of the conventional wisdom by: (a) Karl Marx. (b) Leon
Walrus. (c) Thorstein Veblen. (d) Alfred Marshall.
30. Thorstein Veblens view that deterministic orthodox economic analysis is not useful because
technological changes and incessant and unpredictable behavioral adjustments based on erratic
sociological and cultural factors is most compatible with a view of the universe first expressed by:
(a) Zeno. (b) Plato. (c) Aristotle. (d) Heraclites. (e) Aphrodite.
31. The major difference between Thorstein Veblen and his orthodox contemporaries is his view that:
(a) biological and cultural change are equally important when studying evolution. (b) evolutionary
change is almost exclusively biological. (c) evolutionary change is due to lots of factors. (d)
evolutionary change is almost exclusively cultural.
32. Thorstein Veblen viewed human behavior as dominated by: (a) perfectionism. (b) the quest for
wealth. (c) instinctive behavior and habits. (d) charitable needs to help one another. (e) desires to
33. The individual most adamant in condemning the notion that utilitarian calculation is the foundation
for human behavior would have been: (a) Jeremy Bentham. (a) Friedrich Wieser. (c) Alfred
Marshall. (d) Thorstein Veblen. (e) Jules Dupuit.
34. Anthropological and sociological theories underpinned many of the views of the American
philosopher: (a) John Dewey. (b) Benjamin Franklin. (c) Thomas Jefferson. (d) Alexander Hamilton.
(e) Thorstein Veblen. (f) William James. (g) John Bates Clark.
35. Thorstein Veblen viewed social and economic relations as ultimately dominated by: (a) evolutionary
biology. (b) the evolution of ceremonial and technological institutions. (c) variations in laws and
regulations. (d) desires for wealth. (e) progress driven by entrepreneurial innovations.
36. The ideas of Karl Marx and Thorstein Veblen are least consistent on the issue of whether capitalism
is: (a) plagued by boom-bust business cycles. (b) efficient and equitable. (c) doomed to end in a
violent revolution. (d) beneficial to capitalists in the short run. (e) likely to create widening gaps
between the rich and the poor.
37. According to Thorstein Veblen, a communitys cultural institutions and their world view are most
heavily influenced by: (a) technology. (b) philosophy. (c) religion. (d) politics.
38. The view that people are not merely lightning fast calculators, but instead are creatures of instinct
and habit was central to the theories of: (a) Lon Walras. (b) Jeremy Bentham. (c) Thorstein Veblen. (d)
Wesley Mitchell. (e) Herbert Spencer.
39. Where classical theorists viewed people as rational calculators of pleasure and pain Veblen viewed
people as (a) profit maximizing entrepreneurs. (b) money hungry capitalists. (c) risk adverse price
takers. (d) masses of individuals making up collective demand. (e) creatively curious, creatures of
propensities, conformity, and habits.
40. Thorstein Veblen launched a detailed inquiry into the practice of consumption and the formation of
tastes in his: (a) The Theory of Liquidity Preference. (b) The Theory of the Leisure Class. (c) The
Theory of Value. (d) Inconsistencies Between The Theory of Money and Human Values.(e) The Real
Wealth of Nations.
41. Thorstein Veblens theory of consumption as grounded in basic human instincts reflects his
rejection of the theory of: (a) emulation. (b) self preservation. (c) utility maximization. (d)
conspicuous consumption. (e) social aggrandizement of the self.

42. Thorstein Veblens concept of conspicuous consumption suggests that: (a) people consume goods
in direct proportion to the amount of income they receive. (b) people consume goods based solely
on their biological needs. (c) decisionmakers consumption patterns accommodate the needs of
their families. (d) the snob effect may cause some peoples demand curves for some high-status
goods to be upward sloping because of the psychic income people these receive by showcasing
their wealth through ceremonial extravagance. (e) goods will be purchased only if priced lower
than goods that generate as much marginal utility.
43. That some women would prefer extremely expensive real fur coats to much cheaper but
indistinguishable faux fur coats. (made of, e.g., polyester) of even higher quality is most reasonably an
example of: (a) Adam Smiths theory of self-interest. (b) the snob (or Veblen) effect. (c) a Utopian
socialist distribution mechanisms. (d) John Stuart Mills social theory. (e) Austrian value theory.
44. The upward sloping Veblenian demand curve implies that prices are often influenced by: (a) a
producers inclination to supply more at higher prices. (b) the spending habits and bargain
instincts of consumers. (c) technological displacement caused by innovation. (d) a consumers
notion of other peoples values.
45. Not among major premises of Thorstein Veblens writings is the idea that: (a) property acquisition is
a significant activity in the quest for social esteem. (b) businessmen are parasites who acquire
unjust shares of the income produced by engineers. (c) institutions are either technologically
productive or ceremonial. (d) capitalism will succumb to national socialism as society advances. (e)
people use conspicuous consumption as a mechanism to enhance their positions in the social
pecking order.
46. Thorstein Veblen would tend to most strongly reject: (a) Says law. (b) Marxs theory of business cycles.
(c) Malthus belief that underconsumption is possible. (d) Adam Smiths assertion that people are self-
interested. (e) widespread irritation in the US about corporate scandals centered on fraudulent
47. In his The Theory of Business Enterprise, Thorstein Veblen categorized the working class as
comprising: (a) engineers and business people. (b) masters and slaves. (c) blue collar and white
collar cadres. (d) line workers and supervisors. (e) production workers and service workers.
48. A conscientious withdrawal of efficiency, according to Veblen, occurs when businesses: (a) increase
output. (b) use blind variation. (c) reduce output to the most profitable level. (d) increase
production so that supply equals demand. (e) reduce output to match that of its competitors.
49. Conscientious withdrawal from efficiency, a term coined by Thorstein Veblen, suggested that
business firms: (a) reduce output to lower competition among themselves. (b) increase output to
create inefficiency in the market. (c) reduce output to the most profitable levels. (d) create a
monopoly in the market place. (e) exit markets when profits are low.
50. Thorstein Veblens theory of pecuniary emulation hypothesizes that, in striving for pecuniary
achievement: (a) productive work becomes viewed as a mark of mental infirmity. (b) leisure
becomes a consumption good. (c) a leisure class develops. (d) all of the above.
51. The prediction that engineering majors from N.C. State are more likely to be efficient production
managers than are business majors from UNC is most consistent with the views of: (a) Joseph
Schumpeter. (b) Eugen Bohm-Bawerk. (c) Thorstein Veblen. (d) H.K. von Mangoldt. (e) H.H. Gossen.
52. The theorist who, if alive today, would be least likely to join a fan club for any entrepreneur, was: (a)
Van Mangoldt. (b) Richard Cantillon. (c) Joseph Schumpeter. (d) Thorstein Veblen.

53. What, according to Thorstein Veblen, resulted in an upward sloping demand curve? (a) conspicuous
consumption. (b) Inordinately high luxury taxes. (c) Inelasticity of goods. (d) High interest rates on
home loans.
54. An economist who vigorously disputed the idea that people are lightning fast calculators of pleasure
and pain was: (a) John Maynard Keynes. (b) Thorstein Veblen. (c) John Stuart Mill. (d) William Stanley
55. Thorstein Veblen would be most likely to argue that: (a) culture and institutions are evolving towards
an unpredictable end. (b) culture and institutions are evolving towards a predictable end. (c) culture
and institutions are not evolving, per se. (d) culture and institutions are regressing towards an anarchy
56. The views of Thorstein Veblen most closely resemble important parts of the theories of: (a) Adam
Smith. (b) Karl Marx. (c) John Stuart Mill. (d) John Maynard Keynes.
57. Thorstein Veblen argued that Neoclassical Economics were largely irrelevant by his time due to the
central focus on _______ and lack of concentration on _________.: (a) society; individual. (b) individual;
corporation. (c) individual; society. (d) corporation; society.
58. Thorstein Veblen did not use the term fictitious commodities to refer to: (a) land. (b) labor. (c) capital.
(d) agricultural products.
59. The institutionalist never promoted above assistant professor who gave all his students Cs to prevent
any of them from being eligible to join Phi Beta Kappa was: (a) Thorstein Veblen. (b) Wesley C. Mitchell.
(c) John Kenneth Galbraith. (d) John Commons. (e) Clarence Ayers.
60. Conspicuous consumption, conspicuous leisure, and pecuniary emulation are terms best
associated with: (a) Thorstein Veblen. (b) John Commons. (c) Beatrice Webb. (d) Eugen Bohm-Bawerk.
(e) Richard Tawney.
61. The idea that profit-seeking firms restrict output through monopoly, thereby holding back technological
development, was discussed in length in The Theory of Business Enterprise. (1904) by: (a) John
Commons. (b) Thorstein Veblen. (c) Beatrice Webb. (d) Richard Thaler. (e) Richard Tawney.
62. Which of the following works was least influential in the development of modern economic theory as it
is understood today? (a) Adam Smith: Wealth of Nations. (b) Karl Marx: Capital. (c) John Maynard
Keynes: The General Theory of Employment, Interest and Money. (d) Thorstein Veblen: The Theory of
the Leisure Class.
63. The American institutionalist who focused on and furthered Veblens views on technology was: (a) John
Rogers Commons. (b) Wesley Clair Mitchell. (c) John Kenneth Galbraith. (d) Clarence Ayers.
64. The thinker whose ideas are least consistent with broad libertarian principles is: (a) Milton Friedman.
(b) Ayn Rand. (c) Friedrich Hayek. (d) John Rogers Commons. (e) David Ricardo.
65. John R. Commons agenda of reforms for American labor markets did not include laws mandating: (a)
overtime pay. (b) workers compensation. (c) job safety. (d) unemployment compensation. (e) the
permissibility of collective bargaining.
66. John Commons was not an advocate of: (a) worker compensation for on-the-job injuries. (b) peaceful
collective bargaining. (c) unemployment insurance. (d) the marginal productivity theory of income
67. Much of the New Deal legislation of the 1930s, including public utility regulation, collective bargaining,
and labor dispute mediation, was built from the regulatory framework pioneered by: (a) John Rogers
Commons. (b) Karl Marx. (c) Paul Samuelson. (d) Mary Wollstonecraft. (e) Jane Addams.

68. John Commons notably believed that important production and distribution processes that were
natural monopolies: (a) would generate only normal profits for the owners. (b) should be owned by
society and run by government. (c) produce inefficiently if they price discriminate. (d) tend to have
variable costs that exceed fixed costs. (e) should charge a single uniform price equal to average cost.
69. Not among the scholars working in Europe who were pivotal in the marginalist revolution was the
great economist: (a) Leon Walras. (b) Jules Dupuit. (c) Antoine-Augustin Cournot. (d) Carl Menger.
(e) John Rogers Commons.

70. Much of the thrust of modern business regulation, municipal ownership of many public utilities, and
price discrimination in utilities rate structures, are among the legacies of the economic thinker: (a) Joan
Robinson. (b) Thorstein Veblen. (c) John Rogers Commons. (d) Sidney Webb. (e) Jean Claude Belmondo.
71. The American institutionalist who most prominently and successfully championed social and economic
reform through regulation was: (a) John Rogers Commons. (b) Wesley Clair Mitchell. (c) Thorstein
Veblen. (d) Clarence Ayers.
72. Beginning in the 1970s, deregulation of numerous industries was increasingly advocated by both
Democrats and Republicans; which represented a shift away from the ideas and ideals of: (a)
traditional conservatism. (b) 19th Century liberalism. (c) avant-garde socialism. (d) supply-side
economics. (e) institutionalists who powerfully shaped microeconomic aspects of New Deal
liberalism. (f) neo-conservatism.
73. The institutionalist who established the National Bureau of Economic Research to provide
economics with a sounder statistical foundation was: (a) John Commons. (b) Wesley Clair Mitchell.
(c) Clarence Ayers. (d) Galbraith. (e) Robinson.
74. The institutional economist who established the National Bureau for Economic Research, an agency
originally focused on the study of economic performance, was: (a) Wesley Clair Mitchell. (b) John
Kenneth Galbraith. (c) Alfred E, Newman. (d) John R. Commons.
75. The American institutionalist who analyzed business cycles exhaustively using then-modern statistical
techniques, and who established the National Bureau of Economic Research, was: (a) John Rogers
Commons. (b) Wesley Clair Mitchell. (c) Thorstein Veblen. (d) Clarence Ayers.
76. The well-publicized principal-agent problems [bezzle] that plagued giant corporations in the early
2000s were originally described in 1932 by Adolph A. Berle and Gardiner Means as problems
associated with. (a) separation of ownership from control. (b) bureaucratic red tape. (c) command
and coordination. (d) conflicting class interests. (e) technostructure.
77. In The Modern Corporation and Private Property. (1932), Adolph Berle and Gardiner Means
documented the dominant position of the large corporation in the modern economy, the growing
dispersion of ownership of common stock, and the separation of ownership from control. These last
two developments brought to light a particular sort of moral hazard dilemma called: (a) Pareto
efficiency. (b) bureaucratic gambling. (c) adverse selection. (d) the principal-agent problem. (e)
regulatory forbearance.
78. The thinkers least likely to have been surprised when informed that prizes for conformity of cows or
bulls to aesthetic standards are unrelated to the animals likely production of either meat or milk would
have been: (a) neoclassical macroeconomic theorists. (b) game theorists. (c) American institutionalists.
(d) Austrian economists. (b) French engineers.

79. Thorstein Veblens concept of conspicuous consumption in The Theory of the Leisure
Class had the greatest influence on: (a) advocacy of survival of the fittest by William
Graham Sumner and Herbert Spencer. (b) John Kenneth Galbraiths central themes in his
The Affluent Society. (c) John Maynard Keynes The General Theory of Employment,
Interest, and Money. (d) Joan Robinsons The Theory of Imperfect Competition. (e)
development of the structure conduct performance paradigm.

80. The American institutionalist who focused on the crucial role of advertising in creating and
manipulating demand for consumer goods was: (a) John Rogers Commons. (b) Wesley Clair Mitchell. (c)
John Kenneth Galbraith. (d) Clarence Ayers. (e) Steven leavitt.
81. Not among John Kenneth Galbraiths ideas would be the notion that: (a) society benefits most
when the governments goal is economic growth and greater output. (b) producers influence the
decisions of consumers through advertising and salesmanship. (c) giant corporations manipulate
markets and sometimes dominate government policies. (d) wasteful private consumption comes at
the expense of social and public goods.
82. The idea that advertising artificially and undesirably inflates consumer demand is the key point of: (a)
Monopoly Capitalism, by Paul Baran and Paul Sweezey. (b) Thomas Carlyles The Age of the Economist.
(c) Robert Heilbronners The Unworldly Philosophy of Economics. (d) The Affluent Society, by John
Kenneth Galbraith.
83. The economist who proposed countervailing power as a remedy for abuses of power in his book
American Capitalism is: (a) John Kenneth Galbraith. (b) Alfred Marshall. (c) Carl Menger. (d) William
Stanley Jevons. (e) Thorstein Veblen.
84. In The Great Crash, John Kenneth Galbraith theorized that regulation and deregulation are cyclical
phenomena. Prosperity is accompanied by deregulation and increases in corporate fraud, while
economic downturns lead to the exposure of corporate improprieties, resulting in new regulation,
which is then moderated during the next prosperous period, and so on. Galbraith labeled corporate
fraud the: (a) bilk. (b) bamboozle. (c) bungle. (d) bunco. (e) bezzle.
85. A 69 economist highly critical of the economic power of big business and an advocate of a new
socialism through government supervision despite the immense prosperity of the past six decades
was: (a) Gordon Tullock. (b) John Kenneth Galbraith. (c) Eli Hechscher. (d) Paul A. Samuelson.
86. John Kenneth Galbraith believed that the effect on demand of pervasive and exorbitant advertising
is: (a) inconsequential because consumers are driven solely by self-interest. (b) insignificant
because consumers become numb after being inundated with so many marketing gimmicks. (c)
beneficial in properly aligning true market quantity supplied and quantity demanded. (d) to lead
many people to believe they need things they really dont. (e) to shift demands from private goods
to excessive reliance on social and public goods.
87. The American institutionalist who developed the notion of countervailing power and who argued that
income inequality distorts the use of resources was: (a) John Maynard Keynes. (b) John Kenneth
Galbraith. (c) Karl Marx. (d) John Rogers Commons. (e) Clarence Ayers.
88. The idea that in a market economy, many peoples desires to buy certain goods are far more culturally
determined than merely price determined is a view shared by: (a) A. Jules E. Dupuit and Antoine
Augustin Cournot. (b) John Kenneth Galbraith and Thorstein Veblen. (c) Karl Marx and Cornelius
Vanderbilt. (d) Carl Menger and Ludwig von Mises. (e) Irving Fisher and Milton Friedman. (f) Hugo
Grotius and John Locke. (g) John Commons and Richard Cantillon.

89. The Affluent Society (1958) by social critic John Kenneth Galbraith attacks the _________ that economic
growth and greater output are necessarily a good thing.: (a) quid pro quo. (b) conventional wisdom. (c)
supply side theory. (d) incomprehensibly stupid left-wing liberal idea. (e) none of the above.
90. In The Affluent Society, John Kenneth Galbraith argues that private individuals demand curves do not
reflect marginal personal benefits because excesses of consumer goods are purchased instead of social
goods because of: (a) international tariffs. (b) marketing and advertising. (c) lack of anti-trust
enforcement. (d) poor public educational options.
91. The view that American capitalism has left too many people impoverished while enriching the fortunate
few, with the result that private goods are consumed relatively too much and public goods relatively
too little, was central to the views of: (a) John Kenneth Galbraith. (b) Milton Friedman. (c) Paul
Samuelson. (d) Joan Robinson. (e) George Stigler.
92. An American institutionalist coined numerous terms, including: [1] acquisitive society [to explain
systematic underfunding of government projects and the expansion of private conspicuous
consumption; [2] conventional wisdom [for incorrect but popular theories]; [3] bezzle [for the
monetary amount of bookkeeping mischief within big business]; [4] countervailing power (for the idea
that social welfare is enhanced by competition between such power blocs as big labor and big
business); and [5] technostructure [for managerial and other professionals who dominate decisions in
huge bureaucracies]. This very tall economist is: (a) Thorstein Veblen. (b) Wesley Clair Mitchell. (c) John
Commons. (d) John Kenneth Galbraith. (e) Clarence Ayres.
93. John Kenneth Galbraiths bezzle concept would apply least well to: (a) exaggerated official statistics
on the USSRs economic growth during 1929-1985. (b) Sadaam Husseins refusal to honor agreements
allowing access by UN arms inspectors during 1994-2002. (c) the Annual Reports of Enron and
WorldCom during 1990-2002. (d) widespread corporate shenanigans prior to establishment of the
Securities and Exchange Commission [SEC] in 1933. (e) high pressure sales of corporate stocks by
operators and employees of boiler rooms.
94. The theory that the magnitude of bezzle [corporate fraud] and pressure for deregulation are both
positively related to the level of prosperity in a country, and that the discovery and prosecution of
bezzle and pressure for more regulation emerge during downturns in economic activity was
authored by: (a) John Kenneth Galbraith. (b) John Maynard Keynes. (c) Paul Samuelson. (d) Milton
Friedman. (e) Myron Scholes.
95. In The Affluent Society, John Kenneth Galbraith asserted that advertising is a major force in causing:
(a) private wealth and public poverty. (b) government to be controlled by special interest groups.
(c) lower transaction costs. (d) industry growth. (e) business cycles.

96. Not among the works of John Kenneth Galbraith was: (a) The New Industrial State. (b) The Affluent
Society. (c) Economics and The Public Purpose. (d) The General Theory of Income, Employment, and
97. The thinker least likely to defend the fairness of the marginal productivity theory of income
distribution would have been: (a) Herbert Spencer. (b) John Bates Clark. (c) Ayn Rand. (d) John
Kenneth Galbraith. (e) H.K.E. von Mangoldt.
98. A John whose ideas are least consistent with the American institutionalist paradigm was: (a) John
Bates Clark. (b) John Maurice Clark. (c) John Kenneth Galbraith. (d) John Commons.
99. A list of heterodox economists would be least likely to include: (a) Arthur Cecil Pigou. (b) John
Rogers Commons. (c) Wesley Clair Mitchell. (d) Thorstein Bunde Veblen.

100. Which of the following is not one of the four basic transactions found in an economy as
described by John Commons: (a) managerial transactions. (b) rationing transactions. (c) bargaining
transactions. (d) exchange transactions.

101. A list of prominent American institutionalists would not include: (a) John Kenneth Galbraith.
(b) John Commons. (c) Thorstein Veblen. (d) Edwin Hastings Chamberlin. (e) Clarence Ayres.

102. Materialistic accumulation and consumption were most central to the goals of: (a) Socrates,
Plato, and Aristotle. (b) Abu Hamid al-Ghazali, Ibn Khaldun, and other early Islamic thinkers. (c)
Albertus Magnus, Thomas Aquinas, and other medieval scholastics. (d) Gautama Buddha,
Mohandas Gandhi, and E.F. Schumacher. (e) Jay Gould, Jim Fisk, Cornelius Vanderbilt, and other
robber barons whose activities were described by, among others, Thorstein Veblen.

103. In the early 2000s, many stockholders and resource suppliers to such firms as Enron and
Global Crossing became victims of a phenomenon that John Kenneth Galbraith characterized as: (a)
the iron law of wages. (b) corporate downsizing. (c) bezzle. (d) monopolistic competition. (e) the
iron law of oligarchy.

104. Rolex watches, Harley Davidson motorcycles, ostentatious bling, full-sleeve tattoos, and
custom-tailored suits and ties are all reasonably good examples of: (a) bandwagon goods. (b)
positional goods. (c) institutional goods. (d) Veblen goods. (e) inferior goods.

105. After the collapse of the Soviet Union in the late 1980s, Jeffrey Sachs advised several former
Soviet satellites to rapidly privatize former state enterprises. The results were often catastrophic.
Consequently, Sachs began to consider cultural and sociological forces when designing
recommendations for development in less developed nations. This approach relies heavily on
notions that once characterized: (a) socioeconomics. (b) sociobiology. (c) institutionalism. (d)
ethnocentrism. (e) fiscal anthropology.