Course Introduction
Economic Analysis
Test Preparation
Economic Analysis explores the fundamental concepts and tools used to understand and evaluate economic decision-making at both the individual and collective levels. The course covers key principles of microeconomics and macroeconomics, including supply and demand, market structures, consumer and producer behavior, and efficiency. Students will learn to apply analytical frameworks and quantitative methods to assess resource allocation, costs, benefits, and outcomes in various economic environments. Emphasis is placed on interpreting data, constructing models, and using economic reasoning to solve real-world problems and inform policy decisions.
Recommended Textbook
Microeconomics 10th Edition by William Boyes
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22 Chapters
2295 Verified Questions
2295 Flashcards
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Page 2
Chapter 1: The Wealth of Nations: Ownership and Economic
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87 Verified Questions
87 Flashcards
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Sample Questions
Q1) Scarcity:
A)ensures that people become satisfied with less than what they want.
B)exists only during a recession.
C)exists only in some countries.
D)affects only poor people.
E)requires people to make choices to satisfy their wants.
Answer: E
Q2) Stocks and bonds are examples of:
A)natural resources.
B)financial capital.
C)physical capital.
D)financial labor.
E)internal capital.
Answer: B
Q3) When you work to support your lifestyle, you are making a tradeoff.
A)True
B)False
Answer: True
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Chapter 2: Scarcity and Opportunity Costs
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87 Flashcards
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Sample Questions
Q1) Refer to Figure 2.4 and identify the correct statement.
A)Germany has comparative advantage in the production of cars.
B)Korea has comparative advantage in the production of cars.
C)Germany has comparative advantage in the production of food.
D)Korea has a lower opportunity cost for making cars.
E)Germany has a lower opportunity cost for making food.
Answer: A
Q2) Archie can paint 5 backyard fences or repair 2 cars in 8 hours, while Austin can paint 4 backyard fences or repair 2 cars in 8 hours. Identify the correct statement.
A)Archie is relatively better in repairing cars.
B)Archie is relatively better in painting fences.
C)Austin is relatively better in painting fences.
D)Archie and Austin are equally good in painting fences.
E)Neither Archie not Austin are good in repairing cars.
Answer: B
Q3) According to economists, human activity is unresponsive to changes in costs.
A)True
B)False
Answer: False
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Page 4
Chapter 3: Markets and the Price System
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96 Verified Questions
96 Flashcards
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Sample Questions
Q1) The exchange of goods and services directly without money is called:
A)creative destruction.
B)barter.
C)arbitration.
D)currency trade.
E)illegal trade.
Answer: B
Q2) Based on Figure 3.5, which of the following conditions would most likely move the point of equilibrium from A to B?
A)An increase in the income of a coffee buyer.
B)A decrease in the price of coffee.
C)A drought in Colombia, a major coffee producer, that affects the coffee harvest.
D)A decrease in the price of non-dairy creamers that are consumed along with coffee.
E)An increase in the price of tea, assumed to be a substitute for coffee.
Answer: C
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5
Chapter 4: The Aggregate Economy
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61 Flashcards
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Sample Questions
Q1) Empirical evidence on the U.S. economy suggests that household spending and income have an inverse relationship.
A)True
B)False
Q2) Households and firms pay taxes to the government to:
A)increase their consumption spending.
B)finance the country's import bill.
C)increase their savings.
D)improve their standard of living.
E)finance government expenditures.
Q3) Based on the fact that the companies Ford, IBM, PepsiCo, and McDonald's own and operate producing units in many different countries, they are categorized as:
A)joint ventures.
B)sole proprietorship firms.
C)partnership firms.
D)multinational firms.
E)co-operative firms.
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Chapter 5: Using Economics to Understand the World
Around You
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68 Verified Questions
68 Flashcards
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Sample Questions
Q1) To say that "there is a scarcity of gold" means that:
A)gold prices will plummet.
B)there is not enough gold to satisfy people's demand.
C)there are a very few substitutes for gold.
D)gold is relatively less expensive than other metals.
E)the demand for gold is changing.
Q2) The lowest of the federal or state minimum wage levels prevails in each state.
A)True
B)False
Q3) Refer to figure 5.1. Assume that the economy is initially at point G on the production possibility curve. To consume an amount of luxury good, shown by the distance O to L, the country will have to give up a quantity of necessity good, indicated by the distance
A)G to N<sub>I</sub>
B)G to N
C)N to A
D)A to B
E)N<sub>I</sub> to B
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Chapter 6: Elasticity: Demand and Supply
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133 Flashcards
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Sample Questions
Q1) If 12 candy bars are demanded at $0.30 each and 4 candy bars are demanded at $0.50 each, what is the elasticity of demand over the price range from $0.30 to $0.50?
A)2
B)1.67
C)0.5
D)7.5
E)0.4
Q2) The point elasticity is a measure of the sensitivity of consumers to a large price change - a range from one price to another.
A)True
B)False
Q3) When the price of hot dogs at the supermarket increases, the quantity demanded of hot dog buns declines. This situation describes:
A)the income elasticity of demand for hot dogs.
B)the income elasticity of demand for hot dog buns.
C)the price elasticity of supply for hot dogs.
D)the negative cross-price elasticity of demand for hot dogs and hot dog buns.
E)the positive cross-price elasticity of supply for hot dogs and hot dog buns.
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Chapter 7: Demand: Consumer Choice
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142 Verified Questions
142 Flashcards
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Sample Questions
Q1) In utility analysis, it is assumed that marginal utility diminishes as consumption of a product decreases.
A)True
B)False
Q2) Assume that a consumer purchases a combination of products X and Y and MU<sub>x</sub> / P<sub>x</sub> = 75 utils per dollar and MU<sub>y</sub> / P<sub>y</sub> = 50 utils per dollar. To maximize utility without spending more dollars, the consumer should buy:
A)more of both X and Y.
B)less of Y only if the price of Y increases.
C)more of Y and less of X.
D)more of X and less of Y.
E)less of both X and Y.
Q3) As one moves downward on an indifference curve, the:
A)total utility from the consumption of a good decreases.
B)total utility from the consumption of a good increases.
C)the total satisfaction from consumption remains the same.
D)the marginal utility from the consumption of a good increases.
E)the total satisfaction from consumption decreases.
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Page 9
Chapter 8: Supply: the Costs of Doing Business
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105 Verified Questions
105 Flashcards
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Sample Questions
Q1) In the long run, the total variable cost of a firm:
A)is equal to its total fixed cost.
B)is equal to its total cost.
C)is equal to its average fixed cost.
D)is more than its total fixed cost.
E)is less than its total cost.
Q2) All these factors can lead to economies of scale in production, except:
A)division of labor that helps in specialization.
B)merger of two firms.
C)hiring larger machines which are more efficient than the smaller ones.
D)increase in overhead expenses.
E)research and development.
Q3) A firm gets less efficient as it gets bigger, if it is experiencing:
A)economies of scale.
B)constant returns to scale.
C)increasing returns to factors.
D)diseconomies of scale.
E)a period of post war recovery.
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Chapter 9: Profit Maximization
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121 Flashcards
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Sample Questions
Q1) The accounting profit of a business firm is also called:
A)royalty income.
B)net income from equity.
C)compensatory income.
D)windfall gain.
E)net operating income.
Q2) Why does a monopolist face the market demand curve?
A)Presence of a large number of substitutes
B)Presence of a large number of buyers in the market
C)Barred entry of any new firm in the market
D)Produces a homogeneous product
E)Consumers have perfect knowledge of the market
Q3) Refer to Figure 9.1. At price P<sub>1</sub> , the firm sells quantity Q<sub>1</sub>, and total cost is shown by:
A)the rectangle ABCD.
B)the rectangle ABEF.
C)the rectangle FECD.
D)the distance AB.
E)the distance BC.
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Chapter 10: Perfect Competition
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135 Verified Questions
135 Flashcards
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Sample Questions
Q1) In Figure 10.3, the profit maximizing output of the firm is _____ units.
A)4
B)16
C)11
D)7
E)14
Q2) In long-run equilibrium in perfect competition, the entry and exit of firms will drive economic profits to zero.
A)True
B)False
Q3) Suppose Atlas Publishing, a perfectly competitive firm, currently produces 2,000 maps per day at a total cost of $1,600. At its current level of output, Atlas is producing where the marginal revenue curve intersects a rising marginal-cost curve. Which of the following can be concluded about Atlas Publishing?
A)It is maximizing profit.
B)It should produce more to maximize profit.
C)It is incurring losses.
D)It should produce less to maximize profit.
E)It should produce more to break-even.
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Page 12
Chapter 11: Monopoly
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118 Flashcards
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Sample Questions
Q1) For a monopolist with a linear demand curve, total revenue is maximum when:
A)marginal revenue is positive.
B)marginal revenue is at its maximum.
C)the price elasticity of demand is greater than unity.
D)the price elasticity of demand is equal to unity.
E)marginal revenue is at its minimum.
Q2) A monopolist's demand curve is less elastic than a perfect competitor's demand curve.
A)True
B)False
Q3) What price will the profit-maximizing firm, described in Table 11.3 charge, if the firm is earning a positive economic profit?
A)$1,500
B)$1,400
C)$1,350
D)$1,300
E)$1,550
Q4) A monopolist earns only normal profits in the long run.
A)True
B)False
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Chapter 12: Monopolistic Competition and Oligopoly
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114 Flashcards
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Sample Questions
Q1) Actions that allow oligopoly firms to coordinate their pricing behavior without explicit collusion are referred to as _____.
A)strategic behavior
B)differential pricing strategies
C)facilitating practices
D)duopoly price discrimination mechanisms
E)independent practices
Q2) According to Figure 12.1, the firm:
A)will shut down temporarily at any price below A.
B)will operate at a price below A, as long as it is greater than marginal cost.
C)will shut down at a price below A only in the long run.
D)will break-even at the price level C.
E)will shut down if the price falls below E.
Q3) A consumer becomes loyal to a product when:
A)the good is available at a very low price.
B)the product is as good as its substitutes.
C)the product comes with a gift occasionally.
D)he/she has had a positive experience with that good.
E)discounts are offered periodically.
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Page 14
Chapter 13: Markets and Government
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113 Verified Questions
113 Flashcards
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Sample Questions
Q1) One cause of market failure may be the absence of clearly defined property rights.
A)True
B)False
Q2) The commons problem refers to:
A)a problem that arises when everything is privately owned.
B)a situation when the resources are owned by the government and the common people have limited access to them.
C)a problem that arises when government takes incorrect measures which adversely affect common people.
D)a problem that arises when everyone has access to a particular resource.
E)the adverse situation that arises when the government fails to take adequate measures to solve common problems.
Q3) Consumers in used car markets can very easily differentiate between high-quality and low-quality cars.
A)True
B)False
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Chapter 14: Antitrust and Regulation
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88 Flashcards
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Sample Questions
Q1) According to Figure 14.2, the total clean up cost after the regulation is the:
A)area 0FIQ<sub>2</sub>.
B)area 0FGQ<sub>1</sub>.
C)area BEC.
D)area BEP<sub>1</sub>.
E)area BEGF.
Q2) Economic freedom refers to the freedom of the government to control resources and labor in a country.
A)True
B)False
Q3) Which of the following is true of Antitrust policy?
A)Antitrust policy prohibits agreements that allow free trade.
B)Antitrust policy restricts abusive behavior by a firm dominating a market.
C)Antitrust policy allows anti-competitive practices.
D)Antitrust policy restricts subsidies in goods and services.
E)Antitrust policy creates trade barriers like tariffs and quota.
Q4) The Social Security tax structure in the United States is regressive in nature.
A)True
B)False
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Chapter 15: Resource Markets
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110 Verified Questions
110 Flashcards
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Sample Questions
Q1) A monopsonist firm pays a price to a factor that is:
A)equal to the marginal revenue product of the factor.
B)greater than the marginal revenue product of the factor.
C)equal to the marginal factor cost.
D)greater than the marginal factor cost.
E)less than the marginal revenue product of the factor.
Q2) A firm will demand more units of a resource if:
A)the resource adds more to revenues than it costs.
B)the firm experiences diseconomies of scale.
C)the price of the good that uses the resource declines.
D)the resource has many substitutes.
E)the resource has few substitutes.
Q3) In a perfectly competitive labor market, a profit-maximizing firm that is also perfectly competitive in the product market will:
A)face a perfectly inelastic supply curve of labor.
B)pay a wage that is equal to the price of the product.
C)pay a wage that is equal to the marginal product of labor.
D)hire more units of labor than would a firm that sells its output in a monopoly market.
E)pay a wage equal to the marginal factor cost.
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Page 17
Chapter 16: The Labor Market
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Sample Questions
Q1) If the supply of skilled workers is increased such that it is equal to the supply of unskilled workers, we can expect:
A)wages of skilled workers to be equal to wages of unskilled workers.
B)wages of skilled workers to be lower than wages of unskilled workers.
C)wages of skilled workers to be higher than wages of unskilled workers.
D)wages of unskilled workers to fall from its current level.
E)wages of both skilled and unskilled workers to remain unaffected.
Q2) Which of the following is not a reason for compensating wage differentials?
A)The risk involved in certain jobs
B)An excess supply of workers in some industries
C)A high probability of staying away from home
D)To attract more laborers in risky professions
E)Unpleasant working consditions
Q3) If the tax rate remains the same as the base increases, the income tax structure is said to be:
A)proportional.
B)lump-sum.
C)negatively skewed.
D)progressive.
E)regressive.
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Chapter 17: The Capital Market
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110 Flashcards
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Sample Questions
Q1) If $30 is paid for a share of stock and the earning per share is $3, how long will it take for the firm's earnings to add up to the purchase price?
A)30 years
B)3 years
C)27 years
D)10 years
E)90 years
Q2) Consider a mutual fund with a 6 percent back-end load that decreases to 0 percent in the seventh year. How much of the load will an investor have to bear if she sells it off in the seventh year?
A)1 percent of the load
B)0 percent of the load
C)2 percent of the load
D)6 percent of the load
E)4 percent of the load
Q3) The equity market is said to be an efficient market because it is difficult for an investor to continually earn above-normal profits.
A)True
B)False
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Page 19
Chapter 18: The Land Market and Natural Resources
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Sample Questions
Q1) The earnings of which of the following resources comprises entirely of economic rent?
A)Unskilled labor
B)Coal
C)Timber
D)Water
E)Biomass
Q2) The supply curve of land, in the market for uses of land, is:
A)perfectly inelastic.
B)nonexistent.
C)perfectly elastic.
D)positively sloped.
E)negatively sloped.
Q3) If a hydel power plant expects the interest rate to rise in near future, it might resort to installation of more turbines and dynamos in its firm in the present period.
A)True
B)False
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Chapter 19: Current Issues: Income, Income Distribution,
Poverty, and Government Policy
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Sample Questions
Q1) The poverty threshold is often determined in terms of the expenditure on meals that meet a predetermined nutritional standard.
A)True
B)False
Q2) Assume that any given percentage of the population earns an equal percentage of real GDP. This percentage of population will be represented by:
A)a point below the line of income equality.
B)a line lying below the line of income equality.
C)a point on the line of income equality.
D)a line lying above the line of income equality.
E)a point above the line of income equality.
Q3) The main transfer programs of the U.S. government include each of the following, except:
A)social insurance.
B)cash welfare or public assistance.
C)in-kind transfers.
D)veterans' benefits.
E)employment programs.
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Chapter 20: World Trade Equilibrium
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Sample Questions
Q1) The simultaneous import and export of goods in the same industry by a particular country is known as interindustry trade.
A)True
B)False
Q2) International trade permits greater consumption than would be possible from the domestic production alone.
A)True
B)False
Q3) Which of the following countries receives the largest share of U.S. exports?
A)Mexico
B)Germany
C)Japan
D)Canada
E)United Kingdom
Q4) Countries tend to export different goods and services because of:
A)differences in their comparative advantage.
B)differences in their tastes and technological needs.
C)differences in income.
D)similarities in resource endowment.
E)differences in the exchange rates.
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Chapter 21: International Trade Restrictions
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Sample Questions
Q1) The effect of an import quota on the domestic market is to shift the:
A)demand curve to the right by the amount of the quota.
B)demand curve to the left by the amount of the quota.
C)supply curve to the right by the amount of the quota.
D)supply curve to the left by the amount of the quota.
E)consumers' marginal utility curves if they prefer foreign goods to domestic goods.
Q2) According to Figure 21.2, if the world price per bushel of wheat is $25, what is the domestic production?
A)300 bushels
B)450 bushels
C)400 bushels
D)150 bushels
E)200 bushels
Q3) Since individual consumers do not know how much of the price they pay for a commodity is due to trade protection, consumers rarely lobby their political representatives to eliminate protection and reduce prices.
A)True
B)False
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Chapter 22: Exchange Rates and Financial Links Between Countries
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Sample Questions
Q1) What is a currency board?
A)A fixed exchange rate that, by law, exchanges domestic currency for a specified foreign currency at a fixed exchange rate.
B)A floating exchange rate.
C)A managed floating exchange-rate policy that the government adjusts periodically according to some economic indicator.
D)A laissez-faire exchange-rate policy.
E)An interventionist exchange-rate policy.
Q2) A downward-sloping demand curve for Korean won in terms of Canadian dollars indicates that the higher the dollar price of Korean won, the more won will be demanded.
A)True
B)False
Q3) Appreciation of the dollar means that now it takes more dollars to buy one unit of foreign currency.
A)True
B)False
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