Applied Microeconomics Practice Exam
Course Introduction
Applied Microeconomics explores the practical application of microeconomic theories to real-world situations and problems faced by individuals, businesses, and governments. This course examines concepts such as consumer behavior, firm production and cost analysis, market structure, and pricing strategies, with an emphasis on empirical evidence and case studies. Students learn to use economic models and statistical tools to analyze market outcomes, evaluate public policy impacts, and make informed decisions in various sectors including labor markets, health care, environmental regulation, and industrial organization. The course prepares students to critically assess and solve microeconomic issues using quantitative and qualitative approaches.
Recommended Textbook Principles of Microeconomics 6th Canadain Edition by N. Gregory Mankiw
Available Study Resources on Quizplus
22 Chapters
10021 Verified Questions
10021 Flashcards
Source URL: https://quizplus.com/study-set/850 Page 2
Chapter 1: Ten Principles of Economics
Available Study Resources on Quizplus for this Chatper
349 Verified Questions
349 Flashcards
Source URL: https://quizplus.com/quiz/16926
Sample Questions
Q1) A friend of yours asks you why market prices are better than government-determined prices.Because you understand economic principles,you say that market-determined prices are better because they generally reflect
A) the value of a good to society, but not the cost of making it.
B) the cost of making a good to society, but not its value.
C) both the value of a good to society and the cost of making it.
D) neither the value of a good to society nor the cost of making it.
Answer: C
Q2) In the early 1980s,U.S.economic policy was directed toward reducing inflation.What would you have expected to observe during this short period of time?
A) Inflation fell and unemployment fell.
B) Inflation and unemployment were both unaffected.
C) Inflation fell and unemployment increased.
D) Inflation fell and unemployment was unchanged.
Answer: C
Q3) The cost of an action is measured in terms of foregone opportunities.
A)True
B)False
Answer: True
To view all questions and flashcards with answers, click on the resource link above.
Page 3
Chapter 2: Thinking Like an Economist
Available Study Resources on Quizplus for this Chatper
535 Verified Questions
535 Flashcards
Source URL: https://quizplus.com/quiz/16927
Sample Questions
Q1) Refer to Figure 2-5.The opportunity cost of this economy moving from point D to point B is
A) zero.
B) 50 soccer balls.
C) 60 sweaters.
D) 50 soccer balls and 60 sweaters.
Answer: A
Q2) Points outside the production possibilities frontier represent infeasible levels of production.
A)True
B)False
Answer: True
Q3) Philip wants to create a graph containing the prices of apples and the corresponding quantities of apples demanded by customers.He should use a(n)
A) pie chart.
B) bar graph.
C) time-series graph
D) coordinate system.
Answer: D
To view all questions and flashcards with answers, click on the resource link above.
Page 4
Chapter 3: Interdependence and the Gains from Trade
Available Study Resources on Quizplus for this Chatper
443 Verified Questions
443 Flashcards
Source URL: https://quizplus.com/quiz/16928
Sample Questions
Q1) Refer to Table 3-6.We could use the information in the table to draw a production possibilities frontier for Maya and a second production possibilities frontier for Miguel.If we were to do this,measuring mixers along the horizontal axis,then
A) the slope of Maya's production possibilities frontier would be -1.6 and the slope of Miguel's production possibilities frontier would be -2.
B) the slope of Maya's production possibilities frontier would be -0.625 and the slope of Miguel's production possibilities frontier would be -0.5.
C) the slope of Maya's production possibilities frontier would be 0.625 and the slope of Miguel's production possibilities frontier would be 0.5.
D) the slope of Maya's production possibilities frontier would be 1.6 and the slope of Miguel's production possibilities frontier would be 2.
Answer: A
Q2) Production possibilities frontiers cannot be used to illustrate tradeoffs.
A)True
B)False
Answer: False
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: The Market Forces of Supply and Demand
Available Study Resources on Quizplus for this Chatper
571 Verified Questions
571 Flashcards
Source URL: https://quizplus.com/quiz/16929
Sample Questions
Q1) The quantity supplied of a good or service is the amount that sellers are willing and able to sell at a particular price.
A)True
B)False
Q2) An increase in the price of oranges would lead to
A) an increased supply of oranges.
B) a reduction in the prices of inputs used in orange production.
C) an increased demand for oranges.
D) a movement up and to the right along the supply curve for oranges.
Q3) Refer to Figure 4-1.It is apparent from the figure that the
A) good is inferior.
B) demand for the good decreases as income increases.
C) demand for the good conforms to the law of demand.
D) All of the above are correct.
Q4) Which of the following events must result in a higher price in the market for Snickers?
A) Demand for Snickers increases, and supply of Snickers decreases.
B) Demand for Snickers and supply of Snickers both decrease.
C) Demand for Snickers decreases, and supply of Snickers increases.
D) Demand for Snickers and supply of Snickers both increase
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: Elasticity and Its Application
Available Study Resources on Quizplus for this Chatper
510 Verified Questions
510 Flashcards
Source URL: https://quizplus.com/quiz/16930
Sample Questions
Q1) Refer to Scenario 5-2.The equilibrium quantity will
A) increase in both the aged cheddar cheese and bread markets.
B) increase in the aged cheddar cheese market and decrease in the bread market.
C) decrease in the aged cheddar cheese market and increase in the bread market.
D) decrease in both the aged cheddar cheese and bread markets.
Q2) Demand for a good is said to be inelastic if the quantity demanded increases substantially when the price falls by a small amount.
A)True
B)False
Q3) If the price elasticity of supply is 0.8,and price increased by 5%,quantity supplied would
A) increase by 4%.
B) increase by 6.25%.
C) decrease by 4%.
D) decrease by 6.25%.
Q4) Refer to Figure 5-6.Sellers' total revenue would increase if the price
A) increased from $4 to $6.
B) increased from $16 to $18.
C) decreased from $8 to $6.
D) All of the above are correct.
Page 7
To view all questions and flashcards with answers, click on the resource link above.
Chapter 6: Supply, Demand, And Government Policies
Available Study Resources on Quizplus for this Chatper
557 Verified Questions
557 Flashcards
Source URL: https://quizplus.com/quiz/16931
Sample Questions
Q1) In the United States,before OPEC increased the price of crude oil in 1973,there was
A) no price ceiling on gasoline.
B) a nonbinding price ceiling on gasoline.
C) a binding price ceiling on gasoline.
D) a nonbinding price floor on gasoline.
Q2) Refer to Figure 6-1.In which panel(s)of the figure would there be a shortage of the good at the price ceiling?
A) panel (a) only
B) panel (b) only
C) both panel (a) and panel (b)
D) neither panel (a) nor panel (b)
Q3) If the minimum wage exceeds the equilibrium wage,then
A) the quantity demanded of labor will exceed the quantity supplied.
B) the quantity supplied of labor will exceed the quantity demanded.
C) the minimum wage will not be binding.
D) there will be no unemployment.
Q4) Not all sellers benefit from a binding price floor.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Consumers, Producers, and the Efficiency of Markets
Available Study Resources on Quizplus for this Chatper
460 Verified Questions
460 Flashcards
Source URL: https://quizplus.com/quiz/16932
Sample Questions
Q1) In order to conclude that markets are efficient,we assume that they are perfectly competitive.
A)True
B)False
Q2) Refer to Figure 7-19.The equilibrium price is
A) P1.
B) P2.
C) P3.
D) P4.
Q3) Market power and externalities are examples of
A) laissez-faire economics.
B) public policy.
C) market failure.
D) welfare economics.
Q4) Refer to Table 7-11.Both the demand curve and the supply curve are straight lines.At equilibrium,producer surplus is
A) $24.
B) $32.
C) $48.
D) $64.
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Application: The Costs of Taxation
Available Study Resources on Quizplus for this Chatper
424 Verified Questions
424 Flashcards
Source URL: https://quizplus.com/quiz/16933
Sample Questions
Q1) If the tax on a good is tripled,the deadweight loss of the tax
A) remains constant.
B) triples.
C) increases by a factor of 9.
D) increases by a factor of 12.
Q2) Taxes cause deadweight losses because they prevent buyers and sellers from realizing some of the gains from trade.
A)True
B)False
Q3) Refer to Table 8-1.Suppose the government is considering levying a tax in one or more of the markets described in the table.Which of the markets will allow the government to minimize the deadweight loss(es)from the tax?
A) market A only
B) markets A and C only
C) markets B and D only
D) market C only
Q4) Taxes on labor tend to increase the number of hours that people choose to work.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: Application: International Trade
Available Study Resources on Quizplus for this Chatper
410 Verified Questions
410 Flashcards
Source URL: https://quizplus.com/quiz/16934
Sample Questions
Q1) When a country abandons no-trade policies in favor of free-trade policies and becomes an importer of steel,then the domestic price of steel will increase as a result.
A)True
B)False
Q2) Refer to Figure 9-8.When the country for which the figure is drawn allows international trade in cars,
A) consumer surplus increases by the area B.
B) producer surplus decreases by the area B + D.
C) total surplus increases by the area D.
D) All of the above are correct.
Q3) Economists agree that trade ought to be restricted if free trade means that domestic jobs might be lost because of foreign competition.
A)True
B)False
Q4) GATT is an example of a successful unilateral approach to achieving free trade. A)True
B)False
Q5) How does an import quota differ from an equivalent tariff?
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Externalities
Available Study Resources on Quizplus for this Chatper
441 Verified Questions
441 Flashcards
Source URL: https://quizplus.com/quiz/16935
Sample Questions
Q1) Suppose that large-scale pork production has the potential to create ground water pollution.Why might this type of pollution be considered an externality?
A) The groundwater pollution reduces the cost of large-scale pork production.
B) The economic impact of a large-scale pork production facility is localized in a small geographic area.
C) The pollution has the potential for creating a health risk for water users in the region surrounding the pork production facility.
D) Consumers will not reap the benefits of lower production cost from large-scale pork production.
Q2) Refer to Figure 10-17.How large would a corrective tax need to be to move this market from the equilibrium outcome to the socially-optimal outcome?
A) An amount equal to P' minus P.
B) An amount equal to P'.
C) An amount equal to P.
D) An amount equal to the external cost.
Q3) Corrective taxes cause deadweight losses,reducing economic efficiency.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Public Goods and Common Resources
Available Study Resources on Quizplus for this Chatper
349 Verified Questions
349 Flashcards
Source URL: https://quizplus.com/quiz/16936
Sample Questions
Q1) Refer to Figure 11-1.Which of the following statements is correct?
A) A congested toll road is an example of the type of good represented by Box B.
B) An uncongested toll road is an example of the type of good represented by Box D.
C) A congested nontoll road is an example of the type of good represented by Box C.
D) An uncongested nontoll road is an example of the type of good represented by Box A.
Q2) Which of the following is not a public good?
A) national defense
B) patented technological knowledge
C) general knowledge
D) the elimination of poverty
Q3) To achieve the optimal provision of public goods,the
A) market should be allowed to arrive at an equilibrium without government intervention.
B) government must limit the provision of the goods.
C) government must tax producers of the goods.
D) government must either provide the goods or subsidize their production.
To view all questions and flashcards with answers, click on the resource link above.
13
Chapter 12: The Design of the Tax System
Available Study Resources on Quizplus for this Chatper
478 Verified Questions
478 Flashcards
Source URL: https://quizplus.com/quiz/16937
Sample Questions
Q1) Individual income taxes generate roughly 25% of the tax revenue for the federal government.
A)True
B)False
Q2) Refer to Table 12-10.For an individual who earned $80,000 of taxable income in 2009,what was the individual's average tax rate in 2009?
A) 12.7%
B) 15.0%
C) 16.1%
D) 16.9%
Q3) Special tax treatment given to specific types of behavior are called A) tax avoidance.
B) tax evasion.
C) tax loopholes.
D) tax burden.
Q4) If the government imposes a tax of $3,000 on everyone,the tax would be A) an income tax.
B) a consumption tax.
C) a lump-sum tax.
D) a marginal tax.
Page 14
To view all questions and flashcards with answers, click on the resource link above.
Chapter 13: The Costs of Production
Available Study Resources on Quizplus for this Chatper
533 Verified Questions
533 Flashcards
Source URL: https://quizplus.com/quiz/16938
Sample Questions
Q1) Refer to Figure 13-9.At output levels greater than N,the firm experiences
A) economies of scale.
B) constant returns to scale.
C) diseconomies of scale.
D) minimum efficient scale.
Q2) The firm's efficient scale is the quantity of output that minimizes
A) average total cost.
B) average fixed cost.
C) average variable cost.
D) marginal cost.
Q3) Refer to Table 13-7.What is the value of J?
A) $25
B) $50
C) $110
D) $220
Q4) Which of the following expressions is correct?
A) accounting profit = total revenue - explicit costs
B) economic profit = total revenue - implicit costs
C) economic profit = total revenue - explicit costs
D) Both a and b are correct.
Page 15
To view all questions and flashcards with answers, click on the resource link above.
Chapter 14: Firms in Competitive Markets
Available Study Resources on Quizplus for this Chatper
478 Verified Questions
478 Flashcards
Source URL: https://quizplus.com/quiz/16939
Sample Questions
Q1) Refer to Figure 14-13.If the price is P1 in the short run,what will happen in the long run?
A) Nothing. The price is consistent with zero economic profits, so there is no incentive for firms to enter or exit the industry.
B) Individual firms will earn positive economic profits in the short run, which will entice other firms to enter the industry.
C) Individual firms will earn negative economic profits in the short run, which will cause some firms to exit the industry.
D) Because the price is below the firm's average variable costs, the firms will shut down.
Q2) Refer to Table 14-12.What is the average revenue when 4 units are sold?
A) $0
B) $68
C) $80
D) $400
Q3) Firms operating in perfectly competitive markets try to maximize profits.
A)True
B)False
Q4) List and describe the characteristics of a perfectly competitive market.
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: Monopoly
Available Study Resources on Quizplus for this Chatper
526 Verified Questions
526 Flashcards
Source URL: https://quizplus.com/quiz/16940
Sample Questions
Q1) One problem with regulating a monopolist on the basis of cost is that
A) by focusing on costs, the regulators ignore profits.
B) it does not provide an incentive for the monopolist to reduce its cost.
C) a monopolist's costs, by definition, are higher than costs of perfectly competitive firms.
D) a monopolist is still able to generate excessive economic profits.
Q2) Which of the following formulas would correctly calculate a monopolist's profit?
A) profit = price - marginal cost
B) profit = price - average total cost
C) profit = (price - marginal cost) * quantity
D) profit = (price - average total cost) * quantity
Q3) A fundamental source of monopoly market power arises from
A) perfectly elastic demand.
B) perfectly inelastic demand.
C) barriers to entry.
D) availability of "free" natural resources, such as water or air.
Q4) Price discrimination is prohibited by antitrust laws.
A)True
B)False
Q5) Give some examples of the benefits and costs of antitrust laws.
Page 17
To view all questions and flashcards with answers, click on the resource link above.
Chapter 16: Monopolistic Competition
Available Study Resources on Quizplus for this Chatper
497 Verified Questions
497 Flashcards
Source URL: https://quizplus.com/quiz/16941
Sample Questions
Q1) Refer to Figure 16-2.At the profit-maximizing level of output,what is this firm's total cost of production?
A) $1,200
B) $1,400
C) $1,600
D) $1,875
Q2) Refer to Table 16-6.If the government forced Traci's to produce at the efficient scale of output,what is the maximum profit Traci's could earn?
A) $77
B) $80
C) $84
D) $96
Q3) Refer to Figure 16-4.Which of the graphs depicts a short-run equilibrium that will encourage the exit of some firms from a monopolistically competitive industry?
A) panel a
B) panel b
C) panel c
D) panel d
To view all questions and flashcards with answers, click on the resource link above.
18
Chapter 17: Oligopoly
Available Study Resources on Quizplus for this Chatper
410 Verified Questions
410 Flashcards
Source URL: https://quizplus.com/quiz/16942
Sample Questions
Q1) Which of the following statements is correct?
A) If duopolists successfully collude, then their combined output will be equal to the output that would be observed if the market were a monopoly.
B) Although the logic of self-interest decreases a duopoly's price below the monopoly price, it does not push the duopolists to reach the competitive price.
C) Although the logic of self-interest increases a duopoly's level of output above the monopoly level, it does not push the duopolists to reach the competitive level.
D) All of the above are correct.
Q2) In an oligopoly,each firm knows that its profits
A) depend only on how much output it produces.
B) depend only on how much output its rival firms produce.
C) depend on both how much output it produces and how much output its rival firms produce.
D) will be zero in the long run because of free entry.
Q3) Oligopolies produce more when they collude then when they do not.
A)True
B)False
Q4) Explain the practice of tying and discuss why it is controversial.
To view all questions and flashcards with answers, click on the resource link above.
Page 19
Chapter 18: The Market For the Factors of Production
Available Study Resources on Quizplus for this Chatper
463 Verified Questions
463 Flashcards
Source URL: https://quizplus.com/quiz/16943
Sample Questions
Q1) A profit-maximizing competitive firm will hire workers up to the point at which the wage equals the price of the final good.
A)True
B)False
Q2) If a worker respond to an increase in the opportunity cost of leisure by taking less leisure,then his labor supply curve is
A) horizontal.
B) vertical.
C) backward sloping.
D) upward sloping.
Q3) Refer to Figure 18-8.Which of the following is a possible explanation of the shift of the labor-demand curve from D to D ?
A) The wage earned by automobile workers increased.
B) The price of automobiles increased.
C) The opportunity cost of leisure, as perceived by automobile workers, decreased.
D) Large segments of the population changed their tastes regarding leisure versus work.
To view all questions and flashcards with answers, click on the resource link above. Page 20
Chapter 19: Earnings and Discrimination
Available Study Resources on Quizplus for this Chatper
398 Verified Questions
398 Flashcards
Source URL: https://quizplus.com/quiz/16944
Sample Questions
Q1) Joan is a white 23-year-old female,and Marcia is a black 23-year-old female.Both Joan and Marica are economics majors,and they graduated from the same college in the same year with the same GPA.Joan and Marcia both got jobs at a brokerage firm after graduating from college.They both work equally hard.Joan earns $38,000 a year,and Marcia earns $30,000 a year.Select the best explanation for this wage difference.
A) Joan has less human capital than Marcia.
B) Joan receives a compensating wage differential that Marcia does not.
C) Joan has been discriminated against because she is white.
D) Marcia has been discriminated against because she is black.
Q2) Economists found evidence of discrimination in each of the following markets except A) 1960s baseball games
B) baseball cards
C) live basketball games in the 1980s
D) current era baseball games
Q3) Explain the role that consumers play in perpetuating discrimination in labor markets.
Q4) Explain the role of job experience in explaining the differences between the average wages of men and women.
To view all questions and flashcards with answers, click on the resource link above.
Page 21
Chapter 20: Income Inequality and Poverty
Available Study Resources on Quizplus for this Chatper
374 Verified Questions
374 Flashcards
Source URL: https://quizplus.com/quiz/16945
Sample Questions
Q1) Utilitarians believe that the proper goal of the government is to maximize the sum of the utilities of everyone in society.
A)True
B)False
Q2) In 2008,what percentage of U.S.families had income levels above $113,205?
A) 5 percent
B) 20 percent
C) 80 percent
D) 95 percent
Q3) A goal of libertarians is to provide citizens with equal opportunities rather than to ensure equal outcomes.
A)True
B)False
Q4) Diminishing marginal utility suggests that
A) more is always preferred to less.
B) the well-being of society is maximized when the distribution of income is equal.
C) the poor are less efficient at spending money than the rich.
D) the poor receive more satisfaction from the last dollar spent than the rich.
Q5) Explain the relationship between labor earnings and the distribution of income.
To view all questions and flashcards with answers, click on the resource link above. Page 22
Chapter 21: The Theory of Consumer Choice
Available Study Resources on Quizplus for this Chatper
462 Verified Questions
462 Flashcards
Source URL: https://quizplus.com/quiz/16946
Sample Questions
Q1) When two goods are perfect complements,the indifference curves are
A) positively sloped.
B) negatively sloped.
C) straight lines.
D) right angles.
Q2) Assume that a person consumes two goods,Coke and Snickers.Use a graph to demonstrate how the consumer adjusts his/her optimal consumption bundle when the price of Coke decreases.Carefully label all curves and axes.What will happen to consumption if Coke is a normal good? What will happen to consumption if Coke is an inferior good? (Remember to explain the possible change when the income effect dominates and when the substitution effect dominates.)
Q3) Refer to Figure 21-21.If the consumer is currently at point A in the figure,a movement to point B as a result of a decrease in the price of potato chips represents the A) substitution effect. B) income effect.
C) budget effect. D) price effect.
Q4) List and briefly explain each of the four properties of indifference curves.
To view all questions and flashcards with answers, click on the resource link above.
Page 23
Chapter 22: Frontiers in Microeconomics
Available Study Resources on Quizplus for this Chatper
353 Verified Questions
353 Flashcards
Source URL: https://quizplus.com/quiz/16947
Sample Questions
Q1) Most economic models
A) incorporate the assumption of rational behavior on the part of economic actors.
B) incorporate the notion that people are usually reluctant to change their minds.
C) are meant to precisely duplicate reality.
D) assume that people often make sub-optimal choices.
Q2) Suppose that residents of a town are asked to vote on the best way to improve the safety of an intersection.The three choices are: a stoplight,a 4-way stop,and a 2-way stop.When the mayor asks the residents to choose between a stoplight and a 4-way stop,the residents choose a 4-way stop.Then,when the mayor asks them to choose between a 4-way stop and a 2-way stop,they choose a 2-way stop.However,if the mayor firsts asks the residents to choose between a 4-way stop and a 2-way stop,they choose a 2-way stop.Then,when the mayor asks the residents to choose between a 2-way stop and a stoplight,they choose a stoplight.What does this example illustrate?
A) Arrow's impossibility theorem
B) the Condorcet paradox
C) a Borda count
D) the median voter theorem
To view all questions and flashcards with answers, click on the resource link above. Page 24