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Unit 1 Which one of the following is NOT the economic condition that capitalism system is based on? Select one: A. Private properties are protected by law B. Industrial revolution and rapid growth of productivity C. Free exchange of production factors, such as labor and capital D. Firms can be established under legal protection Unit 2 Which one of the following about economic modelling is correct? * A. Economic modelling should be able to precisely predict stock market price B. Technology change will never change relative price of production factors C. Malthus' model did not account for technology change D. Shumpetarian rent arises whenever relative price of factors changes Yes, that statement is correct. Malthusian economic theory, developed by Thomas Malthus in the late 18th and early 19th centuries, focused on the relationship between population growth and food supply. Malthus argued that population growth would inevitably outstrip the ability of the land to produce enough food, leading to famine and other forms of hardship. However, Malthus' theory did not take into account the potential for technological progress to increase agricultural productivity and improve the efficiency of food production. This is one of the key criticisms of Malthusianism and a reason why many economists consider it to be an incomplete model of economic growth and development. Which one of the following statements is correct? Select one: A. MRT provides a description of physical aspect of production function, and it's always fixed ( 后半句错了 ) B. MRS describes personal preference, and it's always a constant number C. Income effect does NOT reflect trade-off of the choice D. Substitution effect reflect the changes in utility level Unit 3

Social dilemma Which one of the following is NOT a remedy of social dilemma? A. Introducing repeated game B. Introducing social norm(reputation) C. Introducing Ultimatum Game D. Introducing enforceable contract/peer punishment E. Introducing social preference/altruism C. Introducing Ultimatum Game is not a remedy for social dilemma. The Ultimatum Game is a game used in experimental economics to study how people make decisions in situations where they must share a limited resource. It is not a remedy for social dilemmas but rather a tool for studying human behavior in these situations. The other options listed are remedies for social dilemmas: A. Introducing repeated game - involves playing the same game repeatedly, which can help establish cooperation and trust among players over time. B. Introducing social norm(reputation) - individuals may be more likely to cooperate if they believe that their behavior will be observed and evaluated by others. D. Introducing enforceable contract/peer punishment - can provide incentives for individuals to cooperate by ensuring that those who defect or fail to cooperate will face consequences. E. Introducing social preference/altruism - individuals may be more likely to cooperate if they have a sense of empathy or concern for the well-being of others. Firm-worker relationship Which one of the following does NOT properly describe firm-worker relationship? * A. Director board hires manager as their agent B. Manager decides which worker to hire C. Firm always wish to pay the lowest wage possible D. Interest confliction and information asymmetry gives rise to principle-agent problem C. Firm always wishes to pay the lowest wage possible. Explanation:

While firms may seek to minimize labor costs, it is not always the case that they wish to pay the lowest wage possible. Paying workers too little may result in high turnover, low morale, and reduced productivity. In some cases, paying workers a higher wage may be necessary to attract and retain skilled employees. Therefore, statement C does not properly describe the firm- worker relationship. Unit 4 The firm's decision 1. Which one of the following about the firm's decision is correct? * A. The firm sets the price in order to maximize social surplus B. The firm sets the wage in order to minimize worker's salary C. The firm sets the wage in order to minimize the principle-agent problem D. The firm hires the manager in order to maximize market price C. The firm sets the wage in order to minimize the principal-agent problem. This is because the principal-agent problem arises when the interests of the owners (the principals) and the employees (the agents) may not be aligned. In order to align their interests, the firm needs to design compensation packages (including wages) that incentivize employees to act in the best interests of the firm. By doing so, the firm can minimize the principal-agent problem and improve overall performance. Maximizing social surplus, minimizing worker's salary, and maximizing market price are not necessarily the primary objectives of a firm's decision-making process. Competitive equilibrium 1. Which one of the following does NOT belong to features of competitive equilibrium? * A. Everyone take the price at given B. Market clears C. Firms charge MC and earn 0 economic profit in the long run D. Everyone is self-interested, i.e., no altruism E. The framework also incorporate search costs

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Suppose when wage increases, we observe that workers deliver less working hours. This means Select one: A. Substitution effect dominates B. Income effect dominates C. Substitution effect and income effect are in the same direction D. The government reduced income tax A café sells 100 cups of coffee per day at a price of $3 each. When it increases the price to $3.50, the number of cups of coffee sold falls to 80 per day. Which of the following statements are correct? Select one: A. When the price increases from $3 to $3.50, demand decreases by 15%. B. The demand for coffee is inelastic. C. The demand for coffee is elastic. D. The elasticity of demand is approximately 0.75. Consider a market in which bakeries supply bread to the restaurant trade. A new technology becomes available to the bakeries, shifting the supply curve as shown in the figure below. Which of the following is correct about equilibrium price? Select one: A. The price will increase because bakeries have more bargaining power B. The price will decrease because bakeries are willing to share the new technology C. The price will first increase and then decrease because restaurants are willing to test the new technology D. None of the listed options Suppose Aldi and Woolworth are involved in a price war. Which of the following is correct? Select one: A. This is a static game by its nature. B. This is a repeated prisoners’ dilemma game. C. The process cannot be formulated as a game. D. None of the listed options Prisoners' dilemma is a game with all the following characteristics except one. Which one not a feature of a prisoners' dilemma? Select one: A. Players cooperate in arriving at their strategies. B. Both players have a dominant strategy C. Both players would be better off if neither chose their dominant strategy. D. The payoff from a strategy depends on the choice made by the other player. According to the Pareto criterion, which of the following statements is true? Select one: A. An allocation is Pareto efficient if it is preferred by everyone involved in the interaction. B. An allocation dominates another allocation if at least one party is worse off with the former.

C. Pareto efficiency means that there is only one technically feasible allocation in which everyone is better off. D. Pareto efficiency does not consider fairness in the allocation of resources.

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