Advanced Microeconomics Final Exam Questions - 1369 Verified Questions

Advanced Microeconomics

Final Exam Questions

Course Introduction

Advanced Microeconomics delves into the rigorous analysis of individual and firm behavior in markets, exploring topics such as consumer and producer theory, general equilibrium, game theory, uncertainty, and information economics. The course emphasizes mathematical modeling and formal reasoning to analyze how economic agents make decisions, how markets allocate resources, and how policies influence economic outcomes. Through theoretical frameworks and real-world applications, students develop a deeper understanding of strategic interactions, market failures, and the foundational mechanisms that underpin microeconomic analysis.

Recommended Textbook Microeconomics 2nd Edition by B. Douglas Bernheim

Available Study Resources on Quizplus

21 Chapters

1369 Verified Questions

1369 Flashcards

Source URL: https://quizplus.com/study-set/2659

Page 2

Chapter 1: Introduction

Available Study Resources on Quizplus for this Chatper

58 Verified Questions

58 Flashcards

Source URL: https://quizplus.com/quiz/53072

Sample Questions

Q1) Scarcity forces society to confront three critical issues.List those issues and explain how they are related to the problem of scarcity.

Answer: What to Produce: When we produce more of one good,we use up scarce resources.This reduces our ability to produce other goods. How to produce goods: Society must determine a production method for each good that minimizes the use of the scarce resources used to produce the good. Who gets what: A society can produce only a limited amount of goods and services.Each society must therefore develop procedures for allocating those goods among consumers.

Q2) Which of the following top is NOT studied using microeconomics?

A) Ford's decision to introduce a new car model.

B) An individual's decision to get married.

C) A person's decision whether or not to commit a crime.

D) An individual's moral values.

Answer: D

To view all questions and flashcards with answers, click on the resource link above.

3

Chapter 2: Supply and Demand

Available Study Resources on Quizplus for this Chatper

77 Verified Questions

77 Flashcards

Source URL: https://quizplus.com/quiz/53071

Sample Questions

Q1) Suppose the demand function for cable TV service is given by Q_CTV = 15 - 0.25 × P_CTV + 0.0005 × M + 0.3 × P_STV,where Q_CTV is the quantity of cable TV demanded (thousands of households),P_CTV is the price of cable TV,M is income and P_STV is the price of satellite TV service.If consumers' income is $50,000 and the price of satellite TV service is $90,then which of the following gives the demand curve for cable TV?

A) Q_CTV = 17 - 0.25 × P_CTV

B) Q_CTV = 67 - 0.25 × P_CTV

C) Q_CTV = 15 - 0.25 × P_CTV + 0.0005 × M + 0.3 × P_STV

D) Q_CTV = 13 - 0.25 × P_CTV

Answer: B

Q2) An improvement in the technology used to produce cell phones would be shown by a:

A) rightward shift of the supply curve for cell phones.

B) leftward shift of the supply curve for cell phones.

C) rightward shift of the demand curve for cell phones.

D) leftward shift of the demand curve for cell phones.

Answer: A

To view all questions and flashcards with answers, click on the resource link above.

Page 4

Chapter 3: Balancing Benefits and Costs

Available Study Resources on Quizplus for this Chatper

70 Verified Questions

70 Flashcards

Source URL: https://quizplus.com/quiz/53070

Sample Questions

Q1) Suppose that you can schedule a worker for up to 10 hours per day.The total benefit and total cost functions are B(H)= 1200 × H and C(H)= 200H.The corresponding formulas for marginal benefit and marginal cost are MB(H)= 600/ H and MC(H)= 200.How many hours should you schedule the worker?

A) 9 hours

B) 8 hours

C) 4 hours

D) 0 hours

Answer: A

Q2) According to the No Marginal Improvement Principle,if X* is the best choice,then:

A) MB must be greater than MC at X*.

B) MB must be equal to MC at X*.

C) MB must be less than MC at X*.

D) MB must be greater than or equal to MC at X*.

Answer: B

To view all questions and flashcards with answers, click on the resource link above.

Chapter 4: Consumer Preferences

Available Study Resources on Quizplus for this Chatper

71 Verified Questions

71 Flashcards

Source URL: https://quizplus.com/quiz/53069

Sample Questions

Q1) Suppose Joe's MRS for cookies with crackers is 6 crackers per cookie.Also assume that Mary's MRS for cookies with crackers is 3 crackers per cookie.Assuming that these rates of substitution don't depend on the amounts consumed,which of the following trades would make both Joe and Mary better off?

A) Joe gives Mary 5 crackers in exchange for a cookie.

B) Joe gives Mary 2 crackers in exchange for a cookie.

C) Joe gives Mary 6 crackers in exchange for a cookie.

D) There is not enough information to answer the question.

Q2) The marginal rate of substitution between two goods is given by:

A) the inverse of the slope of an indifference curve.

B) the slope of a line tangent to an indifference curve.

C) negative one times the inverse of the slope of an indifference curve.

D) negative one times the slope of a line tangent to an indifference curve.

Q3) The idea that all potentially available alternatives can be ordered according to a consumer's preferences is called:

A) the consumption principle.

B) the ranking principle.

C) the choice principle.

D) the more-is-better principle.

To view all questions and flashcards with answers, click on the resource link above.

Page 6

Chapter 5: Constraints, Choices, and Demand

Available Study Resources on Quizplus for this Chatper

74 Verified Questions

74 Flashcards

Source URL: https://quizplus.com/quiz/53068

Sample Questions

Q1) The price of CDs is $15 and the price of pizzas is $10.Derek spends all of his income buying 2 CDs and 6 pizzas per week (and nothing else).Determine Derek's income,draw his budget line and represent his utility-maximizing point using an indifference curve.

Q2) If all prices and income change by the same proportion:

A) the budget line shifts out.

B) the budget line shifts in.

C) the budget line rotates outward.

D) the budget line doesn't change.

Q3) Hailey's income is $40 per week.She spends all of it on coffee (C)and doughnuts (D).Coffee costs $2 per cup and doughnuts cost $1 each.Her marginal rate of substitution for coffee with doughnuts is D/C.How many cups of coffee and how many doughnuts will she purchase each week?

A) 15 cups of coffee and 10 doughnuts

B) 10 cups of coffee and 20 doughnuts

C) 20 cups of coffee and 10 doughnuts

D) 5 cups of coffee and 30 doughnuts

Q4) Using carefully-labeled graphs,explain how an individual demand curve is derived from the utility-maximizing behavior of a consumer.

To view all questions and flashcards with answers, click on the resource link above. Page 7

Chapter 6: Demand and Welfare

Available Study Resources on Quizplus for this Chatper

74 Verified Questions

74 Flashcards

Source URL: https://quizplus.com/quiz/53067

Sample Questions

Q1) The relative cost of achieving a fixed standard of living in different situations is called:

A) a cost of living index.

B) compensating variation.

C) real income.

D) consumer surplus.

Q2) Suppose the base year for a Lespeyres index is 2001.The value of the index is 1.3 in 2004 and 1.6 in 2006.By how much did the cost of the bundle increase between 2004 and 2006?

A) 0.3%

B) 23%

C) 0.23%

D) 60%

Q3) For low wages,the labor supply curve slopes ______; for higher wages it slopes ______.

A) upward; downward

B) downward; upward

C) downward; downward

D) upward; upward

To view all questions and flashcards with answers, click on the resource link above.

8

Chapter 7: Technology and Production

Available Study Resources on Quizplus for this Chatper

72 Verified Questions

72 Flashcards

Source URL: https://quizplus.com/quiz/53066

Sample Questions

Q1) According to the Law of Diminishing Marginal Returns,as additional units of one input are employed as all other inputs are held constant,total output will eventually ______.

A) decrease

B) increase at an increasing rate

C) increase at a decreasing rate

D) increase at a constant rate

Q2) A firm's _______ contains all combinations of inputs and outputs that the firm can achieve using efficient production methods.

A) production possibilities set

B) efficient production frontier

C) production function

D) production possibilities curve

Q3) When the marginal product of an input is ______ than the average product,the marginal units of the input _____ the average product.

A) larger; lower

B) smaller; raise

C) smaller; do not affect

D) larger; raise

To view all questions and flashcards with answers, click on the resource link above.

9

Chapter 8: Cost

Available Study Resources on Quizplus for this Chatper

72 Verified Questions

72 Flashcards

Source URL: https://quizplus.com/quiz/53065

Sample Questions

Q1) The marginal cost curve:

A) intersects the average cost curve from above at the efficient scale of production.

B) lies below the average cost curve.

C) intersects the average cost curve from below at the highest point on the average cost curve.

D) intersects the average cost curve from below at the efficient scale of production.

Q2) A firm's ______ connects all the input combinations with the same price.

A) cost function

B) isoquant

C) budget constraint

D) isocost line

Q3) Suppose that MP_L = 50 and MP_K = 30.If W = 25 and R = 10,then a firm:

A) is producing its output at the lowest possible cost.

B) could reduce costs by employing more labor and less capital.

C) could reduce costs by employing more capital and less labor.

D) could minimize costs by employing more of both inputs.

Q4) Using a graph,explain the relationship between average cost and marginal cost.

To view all questions and flashcards with answers, click on the resource link above.

Page 10

Chapter 9: Profit Maximization

Available Study Resources on Quizplus for this Chatper

72 Verified Questions

72 Flashcards

Source URL: https://quizplus.com/quiz/53064

Sample Questions

Q1) Define producer surplus.Using a graph,illustrate producer surplus for a firm with an avoidable fixed cost.Why is it convenient to focus on producer surplus when analyzing policy changes?

Q2) Jessica owns a company that makes pre-packaged sandwiches for convenience stores.The market price for a sandwich is $5 and Jessica is a price-taker.Her daily variable cost for making sandwiches is C(Q)= 2.5Q + (Q²/40)and her marginal cost is MC = 2.5 + (Q/20).She is currently producing sandwiches according to the quantity rule.What should Jessica do if she has an avoidable fixed cost of $50 a day?

A) She should keep producing sandwiches because the price is greater than the minimum of average fixed cost.

B) She should keep producing sandwiches because she is maximizing profit at the current quantity.

C) She should shut down production because the price is greater than the minimum of average cost.

D) She should shut down production because the fixed cost can be avoided if she does.

Q3) Using a graph,explain why the law of supply holds for a competitive firm.

To view all questions and flashcards with answers, click on the resource link above.

11

Chapter 10: Choices Involving Time

Available Study Resources on Quizplus for this Chatper

72 Verified Questions

72 Flashcards

Source URL: https://quizplus.com/quiz/53063

Sample Questions

Q1) Suppose the interest rate is 6% and compounded annually.What is the present discounted value of 6 future annual payments of $150?

A) $634.46

B) $737.60

C) $849.06

D) $900.00

Q2) A bond's internal rate of return is also known as its: A) coupon.

B) payback period.

C) duration.

D) yield to maturity.

Q3) Which of the following is NOT a reason why an increase in the interest rate usually makes investment projects less attractive?

A) At a higher rate, future dollars are worth less compared to current dollars.

B) A typical investment project incurs the majority of its costs early in its life.

C) A typical investment project receives a disproportionate fraction of its revenue early in its life.

D) At a higher rate, putting money into the bank is more attractive.

To view all questions and flashcards with answers, click on the resource link above.

Chapter 11: Choices Involving Risk

Available Study Resources on Quizplus for this Chatper

58 Verified Questions

58 Flashcards

Source URL: https://quizplus.com/quiz/53062

Sample Questions

Q1) What is the expected payoff of an investment that yields $1,000,000 with a probability of 0.001 and $0 with a probability of 0.999?

A) $1,000,000

B) $1,000

C) $10,000

D) $500,000

Q2) What would be the actuarially fair premium for an insurance policy that pays $1,000 in the event of a loss that has a 25% chance of occurring?

A) $250

B) $750

C) $1,250

D) $500

Q3) What is the expected payoff of an investment that yields $5,000 with a probability of 0.15 and $500 with a probability of 0.85?

A) $325

B) $5,500

C) $1,175

D) $2,750

To view all questions and flashcards with answers, click on the resource link above.

13

Chapter 12: Choices Involving Strategy

Available Study Resources on Quizplus for this Chatper

62 Verified Questions

62 Flashcards

Source URL: https://quizplus.com/quiz/53061

Sample Questions

Q1) Which of the following is true about games in which people have different information?

A) Participants in these games can sometimes learn important information from the behavior of others.

B) Participants in these games never act in a way contrary to his immediate interests.

C) Participants in these games always act in a way contrary to his immediate interests.

D) These games always have a Nash equilibrium.

Q2) A repeated game:

A) can be finite or infinite.

B) is formed by playing a simpler game many times in succession.

C) is a multiple-stage game.

D) All of these are true about repeated games.

Q3) Reputations:

A) are generally not important in economic decisions.

B) influence a wide variety of important economic decisions.

C) represent manifestations of the winner's curse.

D) always lead to Nash disequilibriums.

To view all questions and flashcards with answers, click on the resource link above.

14

Chapter 13: Behavioral Economics

Available Study Resources on Quizplus for this Chatper

57 Verified Questions

57 Flashcards

Source URL: https://quizplus.com/quiz/53060

Sample Questions

Q1) Narrow framing:

A) refers to the observation that people tend to value something more highly when they own it than when they don't.

B) refers to the observation that people tend to value something more highly when they don't own it than when they do.

C) is the psychological tendency to group related items into categories and in making a choice, to consider other items in the same category while ignoring items in different categories.

D) refers to the observation that people must make choices in the presence of uncertainty.

Q2) Which of the following concepts should be LEAST associated with behavior economics?

A) Choices that are hard to reconcile with standard economic theory

B) Rejection of highly-mathematical economic models

C) The use of laboratory experiments

D) Neuroeconomics

To view all questions and flashcards with answers, click on the resource link above. Page 15

Chapter 14: Equilibrium and Efficiency

Available Study Resources on Quizplus for this Chatper

57 Verified Questions

57 Flashcards

Source URL: https://quizplus.com/quiz/53059

Sample Questions

Q1) The market demand function for ice cream is Q^d = 10 - 2P and the market supply function for ice cream is Q^s = 4P - 2,where both quantities are measured in millions of gallons per year.What is the producer surplus at the competitive market equilibrium?

A) $1.5 million

B) $4.5 million

C) $9 million

D) $13.5 million

Q2) The market demand function for ice cream is Q^d = 10 - 2P and the market supply function for ice cream is Q^s = 4P - 2,where both quantities are measured in millions of gallons per year.What is the aggregate surplus at the competitive market equilibrium?

A) $4.5 million

B) $9 million

C) $13.5 million

D) $27 million

Q3) Discuss some of the changes in the organization of the economic systems of countries transitioning from communism to capitalism.How does this type of market reform increase economic efficiency?

To view all questions and flashcards with answers, click on the resource link above.

Page 16

Chapter 15: Market Intervention

Available Study Resources on Quizplus for this Chatper

58 Verified Questions

58 Flashcards

Source URL: https://quizplus.com/quiz/53058

Sample Questions

Q1) The market demand function for wheat is Q^d = 10 - 2P and the market supply function is Q^s = 4P - 2,both measured in billions of bushels per year.Suppose the government wants to increase the price of wheat to $3/bushel and they impose a voluntary production reduction program to achieve their goal.How much would the government have to pay farmers?

A) $1.5 billion

B) $3 billion

C) $4.5 billion

D) $18 billion

Q2) With a price floor:

A) consumer surplus falls and producer surplus falls.

B) consumer surplus increases and producer surplus falls.

C) consumer surplus falls and producer surplus can increase or decrease.

D) consumer surplus increases and producer surplus increases.

Q3) The incidence of a tax:

A) falls entirely on consumers if supply is perfectly inelastic.

B) falls entirely on consumers if demand is perfectly elastic.

C) is shared by suppliers and consumers if demand is perfectly elastic.

D) falls entirely on suppliers if demand is perfectly elastic.

To view all questions and flashcards with answers, click on the resource link above.

Page 17

Chapter 16: General Equilibrium, Efficiency, and Equity

Available Study Resources on Quizplus for this Chatper

57 Verified Questions

57 Flashcards

Source URL: https://quizplus.com/quiz/53057

Sample Questions

Q1) Suppose milk and cereal are compliments and the demand for milk is Q^d_m = 40 - 6P_m - 2P_c,where Q^d_m stands for millions of gallons of milk demanded,P_m stands for the price of milk and P_c stands for the price of cereal.The supply of milk is Q^s_m = 6P_m - 8,where Q^s_m stands for millions of gallons of milk supplied.The demand and supply of cereal are Q^d_c = 905P_c - P_m and Q^s_c = 5P_c - 10,respectively,where Q^d_c stands for millions of boxes of cereal demanded and Q^s_c stands for millions of boxes of cereal supplied.Suppose the government imposes a $2.00 per gallon tax on milk.The new general equilibrium price of milk is:

A) $2.37.

B) $4.37.

C) $0.37.

D) $3.39.

Q2) Compare and contrast the principles of utilitarianism,Rawlsianism and egalitarianism.Discuss the assumptions of each and the difficulties societies might face while trying to conform to them.

To view all questions and flashcards with answers, click on the resource link above.

Page 18

Chapter 17: Monopoly

Available Study Resources on Quizplus for this Chatper

62 Verified Questions

62 Flashcards

Source URL: https://quizplus.com/quiz/53056

Sample Questions

Q1) The Solo Coal Mine is the only employer in the small town of Way out there.The market supply of coal miners is Q^s = 0.02W - 400 and Q^d = 500 - 0.02W,where W is the annual wage of a coal miner and Q is the number of coal miners.What is the profit maximizing number of coal miners for the coal mine to hire?

A) 300

B) 150

C) 100

D) 33.33

Q2) A loss leader:

A) is a product that is sold at a price above its direct marginal cost to encourage sales of a complementary product.

B) is a product that is sold at a price below its direct marginal cost to encourage sales of a substitutable good.

C) is a product that is sold at a price below its direct marginal cost to encourage sales of a complementary good.

D) is a product that is sold at a price below its direct marginal cost to encourage sales of a substitutable and complementary good.

To view all questions and flashcards with answers, click on the resource link above.

Page 19

Chapter 18: Pricing Policies

Available Study Resources on Quizplus for this Chatper

57 Verified Questions

57 Flashcards

Source URL: https://quizplus.com/quiz/53055

Sample Questions

Q1) A movie monopolist sells to students and adults.The demand function for students is Q^d_S = 600 - 100P and the demand function for adults is Q^d_A = 1,200 - 100P.The marginal cost is $2 per ticket.Suppose the movie theater can price discriminate.What is the monopolist's profit from students?

A) $400

B) $2400

C) $2500

D) $0

Q2) Suppose Always There Wireless serves 100 high-demand wireless consumers,who each have a monthly demand curve for wireless minutes of Q^d_H = 200 - 100P,and 300 low-demand consumers,who each have a monthly demand curve for wireless minutes of Q^d_L = 100 - 100P,where P is the per-minute price in dollars.The marginal cost is $0.25 per minute.Suppose Always There Wireless charges $0.30 per minute.How many minutes will low-demand consumers purchase?

A) 60

B) 30

C) 70

D) 170

To view all questions and flashcards with answers, click on the resource link above.

Page 20

Chapter 19: Oligopoly

Available Study Resources on Quizplus for this Chatper

62 Verified Questions

62 Flashcards

Source URL: https://quizplus.com/quiz/53054

Sample Questions

Q1) Suppose the demand in a certain duopoly market with homogenous goods is Q^d = 8,000 - 100P.The two firms in the market are firm V and firm W,and the marginal cost of producing the goods in question is equal to $25.Which of the following describes the Nash equilibrium in this market?

A) Q_V + Q_W = 2,750

B) One of the firms produces 5,500 units of output, and one of the firms does not produce.

C) Q_V = Q_W = 5,500

D) Q_V = Q_W = 2,750

Q2) Which of the following is not one of the laws that provides the foundation for antitrust policy in the U.S.?

A) The Sherman Act

B) The Cargill Act

C) The Clayton Act

D) The Federal Trade Commission Act

Q3) Compare and contrast the Bertrand and Cournot models of oligopoly.Your discussion should include assumptions made,goals of the firms and the resulting outcomes.

To view all questions and flashcards with answers, click on the resource link above.

21

Chapter 20: Externalities and Public Goods

Available Study Resources on Quizplus for this Chatper

62 Verified Questions

62 Flashcards

Source URL: https://quizplus.com/quiz/53053

Sample Questions

Q1) A private good:

A) is a good for which consumption involves perfect rivalry.

B) is nonexcludable.

C) is often provided by the government.

D) is a good for which consumption involves perfect rivalry and is nonexcludable.

Q2) A public recreation area that has become unpleasantly crowded is exhibiting a negative externality that is frequently associated with:

A) bargaining.

B) Pigouvian policies.

C) public goods.

D) common property resources.

Q3) A common property resource is:

A) a resource that only one person can use.

B) a resource that anyone can use for a fixed fee.

C) a resource that more than one person is free to use without payment.

D) a resource that only one person can use free of charge.

Q4) Why might bargaining break down when parties negotiate to remedy a market failure and its associated externality?

To view all questions and flashcards with answers, click on the resource link above. Page 22

Chapter 21: Asymmetric Information

Available Study Resources on Quizplus for this Chatper

65 Verified Questions

65 Flashcards

Source URL: https://quizplus.com/quiz/53052

Sample Questions

Q1) Which of the following explains why a compensation contract designed to combat employee moral hazard that features strong incentives might be worse than having no incentive scheme at all?

A) Generally, an employee's effort and ability are the only two determinants of the employee's performance.

B) Employers are generally pretty skilled at measuring the aspects of job performance in which they are the most interested.

C) Workers may choose to concentrate only on the most measurable aspects of job performance at the expense at those aspects that are less easily measured.

D) Compensation contracts with strong incentives are never efficient in the presence of moral hazard.

Q2) In many cases,signaling offers a partial solution to problems that arise from:

A) adverse selection.

B) moral hazard.

C) separating equilibria.

D) market unraveling.

Q3) Explain the differences and similarities between screening and signaling.Is one better than the other?

To view all questions and flashcards with answers, click on the resource link above.