Microeconomics Exam 30 Questions
Exam
1. Economics is a:
a. social science that studies goods with no alternative uses. | |
b. natural science that studies goods with no alternative uses. |
c. social science concerned chiefly with how people choose among alternatives. | |
d. social science concerned chiefly with reasons why society has unlimited resources. |
2. Scarcity exists when:
a. a choice must be made among two or more alternatives. | |
b. we face the notion of “all other things unchanged.” |
c. countries and people find themselves facing poverty. | |
d. the notions of normative economics come into play. |
3. A free good is:
a. also a scarce good. | |
b. a relatively abundant good. |
c. a good with no opportunity cost. | |
d. a good with relatively low opportunity cost. |
4. Suppose that voters in your community pass a one-cent sales tax increase to fund education, knowing full well they will have to forgo other goods they typically consume. This primarily addresses the economic question of:
a. How will each good be produced? | |
b. For whom shall the goods be produced? |
c. Why will the resources be used to produce goods? | |
d. What goods and services should a society produce? |
5. A factor of production that has been produced for use in the production of other goods and services is:
a. labor. | |
b. money. |
c. capital. | |
d. natural resources. |
6. The textbook classifies technology as _______ and entrepreneurs as _______ .
a. knowledge; persons who seek profit by finding new ways to organize factors of production | |
b. capital; labor |
c. labor skills; capital | |
d. a factor of production; a factor of production |
7. The production possibilities curve represents the fact that:
a. the economy will automatically end up at full employment. | |
b. an economy’s productive capacity increases proportionally with its population. |
c. if all resources of an economy are being used efficiently, more of one good can be produced only if less of another good is produced. | |
d. economic production possibilities have no limit. |
8. An economy is said to have a comparative advantage in producing a particular good if it:
a. can produce more of all goods than another economy. | |
b. can produce less of all goods than another economy. |
c. has the highest cost for producing that good. | |
d. has the lowest cost for producing that good. |
9. A negative relationship between the quantity demanded and price is called the law of ______.
a. demand | |
b. diminishing marginal returns |
c. market clearing | |
d. supply |
10. If people demand more of product A when the price of B falls, then A and B are:
a. not related. | |
b. substitutes. |
c. complements. | |
d. inferior. |
11. The primary difference between a change in demand and a change in the quantity demanded is:
a. a change in demand is a movement along the demand curve, and a change in quantity demanded is a shift in the demand curve. | |
b. a change in quantity demanded is a movement along the demand curve, and a change in demand is a shift in the demand curve. |
c. both a change in quantity demanded and a change in demand are shifts in the demand curve, only in different directions. | |
d. both a change in quantity demanded and a change in demand are movements along the demand curve, only in different directions. |
12. For most goods, purchases tend to rise with increases in buyers’ incomes and to fall with decreases in buyers’ incomes. Such goods are known as:
a. inferior goods. | |
b. direct goods. |
c. normal goods. | |
d. luxury goods. |
13. A supply curve that is upward sloping means that:
a. demand is being ignored. | |
b. consumers will buy less at lower prices. |
c. suppliers will want to sell more at higher prices. | |
d. suppliers will want to sell less at higher prices. |
14. The demand curve for stocks shows that:
a. at lower prices, less stock will be purchased. | |
b. at lower prices, more people calculate that the expected value of the firm’s future earnings justify the stock’s purchase. |
c. at lower prices, more stock will be offered on the market. | |
d. A and B are true. |
15. The equilibrium price in a market is established subject to the all other things unchanged condition and, therefore, very well may change due to:
a. a change in the price of the good. | |
b. a change in the quantity of the good. |
c. a change in the price of resource inputs used to produce the good. | |
d. any of the above. |
16. Price controls:
a. always increase economic efficiency. | |
b. always lead to more equitable results. |
c. can result in inequitable outcomes. | |
d. all of the above statements are true. |
17. A market price support policy establishes price ________ the market equilibrium.
a. floors below | |
b. floors above |
c. ceilings below | |
d. ceilings above |
18. Elasticity is:
a. the change in a dependent variable divided by the change in an independent variable. | |
b. the ratio of the percentage change in a dependent variable to the percentage change in an independent variable. |
c. the price of a good divided by its quantity. | |
d. the quantity of a good divided by its price. |
19. Assuming the law of demand holds for a good, its price elasticity of demand is:
a. positive. | |
b. greater than 1. |
c. equal to 1. | |
d. negative. |
20. If the price of chocolate-covered peanuts decreases from $1.10 to $0.90 and the quantity demanded increases from 190 bags to 210 bags, this indicates that, if other things are unchanged, the price elasticity of demand is:
a. 0. | |
b. -0.5. |
c. -1. | |
d. -2.
|
21. The price elasticity of demand between points A and B is:
a. elastic, since total revenue falls when price falls from $8 to $6. | |
b. elastic, since total revenue increases when price falls from $8 to $6. | |
c. inelastic, since the percentage change in quantity is less than the percentage change in price when price falls from $8 to $6. | |
d. positive, because the slope is negative. |
22. Economists assume that consumers seek to maximize:
a. usefulness. | |
b. profit. |
c. utility. | |
d. time. |
23. According to the marginal decision rule, if marginal benefit:
a. exceeds marginal cost, an activity should be reduced. | |
b. is less than marginal cost, an activity should be reduced. |
c. is equal to marginal cost, an activity should be reduced. | |
d. exceeds marginal cost, net benefit is maximized. |
24. In order to maximize net benefit, consumers and firms evaluate each activity at the:
a. average. | |
b. top. |
c. margin. | |
d. end. |
25. Suppose that the expected exam scores from studying economics for 0, 1, 2, or 3 hours are 65, 80, 90, and 95 points, respectively, while the expected exam scores for studying 0, 1, 2, or 3 hours of accounting are 50, 65, 70, and 70 points, respectively. With 3 total hours of study time, your combined scores can reach a maximum of _______ points.
a.145 | |
b. 150 |
c. 155 | |
d.165 |
26. An allocation of resources that achieves the maximum net benefit from all activities is:
a. inefficient. | |
b. external. |
c. internal. | |
d. efficient. |
27. The ability of a good to satisfy a want refers to its:
a. utility. | |
b. usefulness. |
c. worthiness. | |
d. necessity. |
28. Marginal utility is best computed as the:
a. change in total utility from an additional unit consumed. | |
b. total utility divided by the total quantity consumed. |
c. change in total utility divided by the total quantity consumed. | |
d. total utility divided by the change in quantity consumed. |
29. If the first four units of a good consumed have marginal utilities of 10, 9, 8, and 7, respectively, this trend is an indication of the:
a. law of diminishing marginal utility. | |
b. minimization of utility. |
c. law of consumer equilibrium. | |
d. law of diminishing consumer surplus. |
30. A change in the ability to purchase a good because its price has increased is most closely related to the:
a. output effect. | |
b. income effect. |
c. nominal effect. | |
d. substitution effect. |
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