Economics I Exam Preparation Guide
Course Introduction
Economics I is an introductory course that explores the fundamental principles of microeconomics, focusing on how individuals and firms make decisions regarding the allocation of limited resources. Students will examine the functioning of markets, the dynamics of supply and demand, price determination, consumer behavior, and the role of government in the economy. The course also introduces basic concepts such as elasticity, production, and costs, providing a foundation for understanding economic models and real-world applications.
Recommended Textbook
ECON Micro 2 2nd Edition by
William A. McEachern
Available Study Resources on Quizplus
21 Chapters
3947 Verified Questions
3947 Flashcards
Source URL: https://quizplus.com/study-set/3704 Page 2
Chapter 1: The Art and Science of Economic Analysis
Available Study Resources on Quizplus for this Chatper
148 Verified Questions
148 Flashcards
Source URL: https://quizplus.com/quiz/73746
Sample Questions
Q1) Economics is the study of
A) how to get rich by playing the stock market
B) the best ways to reduce people's wants,given the scarcity of resources
C) how rational government officials determine what goods should be produced
D) money and why it is good
E) how people use limited resources to try to satisfy unlimited wants
Answer: E
Q2) All economic models must involve simplifications because
A) economists would be unable to command high salaries if their models were so simple that anyone could understand them
B) human behavior is very erratic and unpredictable
C) reality is too complex to understand in its entirety,so we must reduce it to a level that we can understand
D) they always try to duplicate all possible information and cover all possible variables that might influence decision making
E) we must rely on value judgments and ignore reality
Answer: C
To view all questions and flashcards with answers, click on the resource link above.
3
Chapter 2: Economic Tools and Economics Systems
Available Study Resources on Quizplus for this Chatper
185 Verified Questions
185 Flashcards
Source URL: https://quizplus.com/quiz/73747
Sample Questions
Q1) A production possibilities frontier will shift inward if there is more unemployment of labor.
A)True
B)False
Answer: False
Q2) Inefficiency is a flaw of a command economy because there is less incentive for resources to flow to their highest-valued uses.
A)True
B)False
Answer: True
Q3) If Monica has a comparative advantage in baking and George has a comparative advantage in sewing,then
A) Monica must have an absolute advantage in baking
B) Monica must have an absolute advantage in sewing
C) George must have an absolute advantage in baking
D) George must have an absolute advantage in sewing
E) we can conclude nothing about absolute advantage
Answer: E
To view all questions and flashcards with answers, click on the resource link above.
4
Chapter 3: Economic Decision Makers
Available Study Resources on Quizplus for this Chatper
196 Verified Questions
196 Flashcards
Source URL: https://quizplus.com/quiz/73748
Sample Questions
Q1) The fastest-growing component of U.S.personal consumption is services.
A)True
B)False Answer: True
Q2) The partnership is the least common form of business organization in the United States.
A)True
B)False Answer: True
Q3) As the real wage increases,the opportunity cost of working outside the home increases.
A)True
B)False Answer: True
Q4) One role of government is to promote monopoly power.
A)True
B)False
Answer: False
To view all questions and flashcards with answers, click on the resource link above.
Page 5
Chapter 4: Demand, supply, and Markets
Available Study Resources on Quizplus for this Chatper
222 Verified Questions
222 Flashcards
Source URL: https://quizplus.com/quiz/73749
Sample Questions
Q1) Which of the following statements about markets is not true?
A) A market is an impersonal mechanism.
B) Markets coordinate the independent decisions of buyers and sellers.
C) Markets reduce the transaction costs of exchange.
D) More specialized markets are generally found in urban areas.
E) All markets provide the same amounts of information.
Q2) A decrease in demand will cause a(n)
A) increase in supply
B) decrease in supply
C) increase in quantity supplied
D) increase in equilibrium price
E) decrease in equilibrium price
Q3) If the price of vanilla ice cream decreases,it is likely that
A) demand for vanilla ice cream will increase
B) demand for vanilla ice cream will decrease
C) demand for chocolate ice cream will increase
D) demand for chocolate ice cream will decrease
E) the quantity demanded of vanilla ice cream will decrease
To view all questions and flashcards with answers, click on the resource link above.
Chapter 5: Elasticity of Demand and Supply
Available Study Resources on Quizplus for this Chatper
238 Verified Questions
238 Flashcards
Source URL: https://quizplus.com/quiz/73750
Sample Questions
Q1) If a tripling of price triples the quantity of a good supplied,the price elasticity of supply is
A) 3
B) 300
C) 1
D) -1
E) -3
Q2) Price elasticity of demand is typically negative because
A) as price decreases,quantity demanded decreases
B) as price decreases,quantity demanded increases
C) as price decreases,demand decreases
D) as price decreases,demand increases
E) consumers rarely respond to a change in price
Q3) Negative cross-price elasticity of demand indicates that
A) the product is an inferior good
B) the product is a necessity
C) the product is a luxury
D) the two products are substitutes
E) the two products are complements
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Consumer Choice and Demand
Available Study Resources on Quizplus for this Chatper
164 Verified Questions
164 Flashcards
Source URL: https://quizplus.com/quiz/73751
Sample Questions
Q1) If Ken is originally at point a in Exhibit 6-9 and then moves to point b due to a reduction in the price of neckties,his expenditure
A) increases from $20 to $25,increasing both consumer surplus and total utility
B) increases from $20 to $25,decreasing both consumer surplus and total utility
C) stays at $20,leaving both consumer surplus and total utility unchanged
D) stays at $20,but both consumer surplus and total utility increase
E) decreases as price falls,increasing both consumer and surplus and total utility
Q2) A measure of consumer surplus in any market is
A) total expenditure on the good
B) the area above the supply curve and below the price
C) the area beneath the demand curve
D) the area beneath the demand curve and above the price
E) the market price
Q3) Consider Exhibit 6-5.Which of the following is true?
A) A fourth can of Pepsi increases total utility by 12,to 126.
B) A fourth can of Pepsi increases total utility by 18,to 114.
C) A fourth can of Pepsi increases total utility by 114.
D) All four cans of Pepsi together yield a total utility of 18.
E) All four cans of Pepsi together yield a total utility of 322.
To view all questions and flashcards with answers, click on the resource link above.
Page 8
Chapter 7: Production and Cost in the Firm
Available Study Resources on Quizplus for this Chatper
202 Verified Questions
202 Flashcards
Source URL: https://quizplus.com/quiz/73752
Sample Questions
Q1) Suppose Guild produces 5,000 guitars per year.Its average total cost is $90,and its fixed cost is $250,000.What is its variable cost?
A) $250,000
B) $450,000
C) $25,000
D) $56,000
E) $200,000
Q2) Suppose a lawyer leaves his $50,000-a-year job and starts his own firm breeding pit bulls.In the first year,his accounting profit is $70,000.The lawyer finances his new business with $100,000 from his savings account,which had earned 10 percent interest.His economic profit is
A) $10,000
B) $60,000
C) $70,000
D) -$80,000
E) -$90,000
Q3) Long-run average costs are the same as long-run total costs
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 9
Chapter 8: Perfect Competition
Available Study Resources on Quizplus for this Chatper
250 Verified Questions
250 Flashcards
Source URL: https://quizplus.com/quiz/73753
Sample Questions
Q1) Suppose a perfectly competitive constant-cost industry is in long-run equilibrium when market demand suddenly falls.What happens to the industry in the long run?
A) It experiences no change form the original equilibrium
B) It experiences a higher equilibrium price and produces more output
C) It experiences a lower equilibrium price but produces more output
D) It experiences the same equilibrium price but produces more output
E) It experiences the same equilibrium price but produces less output
Q2) Suppose that,in the short run,a perfectly competitive firm earns a normal profit.Which of the following is incorrect?
A) MR = price
B) MR = ATC
C) AR \(\times\) Q = TR
D) TR = TC
E) P = AVC
Q3) A firm with positive accounting profit may be suffering an economic loss.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: Amonopoly
Available Study Resources on Quizplus for this Chatper
257 Verified Questions
257 Flashcards
Source URL: https://quizplus.com/quiz/73754
Sample Questions
Q1) Maximum profit for the nondiscriminating monopolist in Exhibit 9-9 is
A) $4
B) $14
C) $3.50
D) $21
E) not measurable with the information given
Q2) What is the relationship between price elasticity of demand and the monopolist's revenue?
A) marginal revenue is maximized where demand is unit elastic.
B) average revenue is maximized where demand is unit elastic.
C) marginal revenue is negative where demand is inelastic.
D) average revenue is negative where demand is inelastic.
E) marginal revenue is lowest where demand is unit elastic.
Q3) The demand curve a monopolist faces
A) is more elastic than a perfectly competitive firm's demand curve
B) is the market demand curve
C) is as elastic as a perfectly competitive firm's demand curve
D) is not affected by the prices of complements
E) will not shift in response to a change in consumer tastes
To view all questions and flashcards with answers, click on the resource link above.
Page 11
Chapter 10: Monopolistic Competition and Oligopoly
Available Study Resources on Quizplus for this Chatper
219 Verified Questions
219 Flashcards
Source URL: https://quizplus.com/quiz/73755
Sample Questions
Q1) In which market structure(s) might firms produce an undifferentiated product?
A) perfect competition only
B) perfect competition and oligopoly
C) monopolistic competition only
D) perfect competition and monopolistic competition
E) monopoly only
Q2) A permanent decrease in demand for convenience store services is likely to cause which of the following in the long run?
A) an economic loss for each firm
B) a higher price for each firm's output
C) fewer firms in the industry
D) more firms in the industry
E) economic profit for each firm
Q3) In the long run,a monopolistically competitive firm will
A) produce a greater variety of goods than do firms in other market structures
B) produce a greater output level than would a perfectly competitive firm
C) produce where price equals average total cost
D) earn an economic profit
E) suffer a loss because of its advertising budget
To view all questions and flashcards with answers, click on the resource link above.
Page 12
Chapter 11: Resource Markets
Available Study Resources on Quizplus for this Chatper
210 Verified Questions
210 Flashcards
Source URL: https://quizplus.com/quiz/73756
Sample Questions
Q1) A firm will purchase additional units of a resource as long as each unit's
A) marginal revenue product is greater than zero
B) marginal revenue product equals the product price
C) marginal revenue product is greater than or equal to its marginal resource cost
D) marginal revenue product is less than its marginal resource cost
E) total revenue product is greater than its marginal resource cost
Q2) A firm's demand for a resource is a(n)
A) final demand
B) derived demand
C) secondary demand
D) induced demand
E) marginal demand
Q3) The formula for optimal employment of two resources,x and y,is
A) MP<sub>x</sub> - MP<sub>y</sub>
B) MRP<sub>x</sub> = MRP<sub>y</sub>
C) MP<sub>x</sub> \(\times\) P<sub>x</sub> = MP<sub>y</sub> \(\times\) P<sub>y</sub>
D) MRC<sub>x</sub> = MRC<sub>y</sub>
E) MRP<sub>x</sub>/MRC<sub>x</sub> = MRP<sub>y</sub>/MRC<sub>y</sub> = 1
To view all questions and flashcards with answers, click on the resource link above.
Page 13
Chapter 12: Labor Markets and Labor Unions
Available Study Resources on Quizplus for this Chatper
211 Verified Questions
211 Flashcards
Source URL: https://quizplus.com/quiz/73757
Sample Questions
Q1) Caroline Jahn has a professional degree and is 51 years old.Bob Rubate also has a professional degree and is 29 years old.On average,Caroline most likely earns
A) 75 percent less than Bob
B) 7 percent less than Bob
C) 75 percent more than Bob
D) 7 percent more than Bob
E) the same amount as Bob
Q2) The relationship between income and education is clear.At every age,those with more education earn more.
A)True
B)False
Q3) Other things equal,the supply of labor will be lower to a job that
A) offers more prestige
B) offers valuable on-the-job training
C) requires advanced skills or education
D) provides a climate-controlled work environment
E) allows for flexible work schedules
To view all questions and flashcards with answers, click on the resource link above.
Page 14
Chapter 13: Capital, interest, and Corporate Finance
Available Study Resources on Quizplus for this Chatper
183 Verified Questions
183 Flashcards
Source URL: https://quizplus.com/quiz/73758
Sample Questions
Q1) Exhibit 13-5 shows data on the various dough-mixing machines that a donut shop is considering buying.The marginal resource cost of the machine with the three-quart mixing bowl is
A) $50
B) $100
C) $1,000
D) $3,000
E) $550
Q2) Exhibit 13-4 shows data gathered by Memo Co.as it prepares to purchase personal computers for its sales offices.Given the data in Exhibit 13-4,the price of personal computers must be
A) $5,000 each
B) $500 each
C) $250 each
D) $200 each
E) increasing as Memo Co.purchases more personal computers
Q3) The present value of a promise to pay $100 one year from now would be greater if the interest rate were higher.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: Transaction Costs, imperfect Information, and Market Behavior
Available Study Resources on Quizplus for this Chatper
178 Verified Questions
178 Flashcards
Source URL: https://quizplus.com/quiz/73759
Sample Questions
Q1) If perfect competition existed everywhere,along with frictionless exchange,perfect information,and constant returns to scale,
A) consumers would carry out transactions directly with resource suppliers
B) firms would not have the information necessary to calculate marginal productivities of resources
C) entrepreneurs would be needed to collect information
D) consumers would produce output and then engage in barter
E) the economy would be organized into one large firm
Q2) Wendy's must decide whether to grow its own potatoes for French fries.Growing potatoes is a very different process from running a fast-food restaurant.Based on this information alone,should Wendy's grow its own potatoes?
A) No,because Wendy's managers have bounded rationality.
B) Yes,because Wendy's managers have bounded rationality.
C) No,because there is a small number of potato suppliers.
D) Yes,because there is a small number of potato suppliers.
E) No,because it is easy to observe the quality of potatoes.
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: Economic Regulation and Antitrust Policy
Available Study Resources on Quizplus for this Chatper
170 Verified Questions
170 Flashcards
Source URL: https://quizplus.com/quiz/73760
Sample Questions
Q1) The research of William Shepherd suggests that since World War II,the three main reasons for increased competition in U.S.industries are international trade,deregulation,and antitrust activity.
A)True
B)False
Q2) If the electric company is allowed by regulators to earn only a normal profit,it will produce at the point where
A) MR = MC
B) P = MC
C) MC = quantity demanded
D) P = AC
E) MR = AC
Q3) Which of the following markets would have the highest Herfindahl index? A market with
A) ten firms of widely different sizes
B) ten firms of approximately the same size
C) five firms of widely different sizes
D) five firms of approximately the same size
E) eight firms exactly the same size
To view all questions and flashcards with answers, click on the resource link above.
Page 17
Chapter 16: Public Goods and Public Choice
Available Study Resources on Quizplus for this Chatper
119 Verified Questions
119 Flashcards
Source URL: https://quizplus.com/quiz/73761
Sample Questions
Q1) In a direct,majority-rule vote,
A) all voters get what they want
B) a majority of voters get exactly what they want
C) only the median voter is completely satisfied
D) a minority of voters are dissatisfied
E) only the median voter is dissatisfied
Q2) The term underground economy refers to
A) the coal-mining industry
B) all ore mining
C) the subway system
D) purely illegal activity
E) market activity not reported to the government
Q3) Government bureaus,unlike private firms,
A) derive their revenue by selling output to the government
B) have incentives to respond to consumers' desires
C) price their output by equating marginal cost and marginal revenue
D) attempt to achieve zero profit
E) receive little consumer feedback
To view all questions and flashcards with answers, click on the resource link above. Page 18
Chapter 17: Externalities and the Environment
Available Study Resources on Quizplus for this Chatper
187 Verified Questions
187 Flashcards
Source URL: https://quizplus.com/quiz/73762
Sample Questions
Q1) Society's total cost of producing a good
A) includes only the cost to the firm
B) includes only the external cost
C) includes all private and external costs
D) equals the value of the output level that maximizes the firm's profit
E) equals the value of the output level that minimizes the firm's loss
Q2) Coase argued that the free market should be able to solve the externality problem without assigning property rights.
A)True
B)False
Q3) The Coase theorem says that,if the appropriate property right is assigned to _____,an efficient solution to an externality problem will be achieved.
A) the party causing the externality
B) the victim of the externality
C) the party that can avoid the externality at the higher cost
D) the party that can avoid the externality at the lower cost
E) either one of the parties involved
To view all questions and flashcards with answers, click on the resource link above.
19
Chapter 18: Income Distribution and Poverty
Available Study Resources on Quizplus for this Chatper
118 Verified Questions
118 Flashcards
Source URL: https://quizplus.com/quiz/73763
Sample Questions
Q1) If the fraction of the population that is below the official poverty level has decreased,then
A) the number of poor must have increased
B) the number of poor must have decreased
C) the population must have increased
D) the number of poor may have increased or decreased
E) the number of people above the official poverty level must have increased
Q2) The distribution of income
A) is about the same in most countries
B) tends to be more equal in developing countries than in developed countries
C) is more concentrated in the United States than in Canada or Japan
D) is more even in developing countries than in the Russia
E) is not related to a country's level of development
Q3) The households in the top tenth of income distribution earn ten percent of total income.
A)True
B)False
Q4) Food stamps and Medicaid are in-kind transfer programs.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 20
Chapter 19: International Trade
Available Study Resources on Quizplus for this Chatper
161 Verified Questions
161 Flashcards
Source URL: https://quizplus.com/quiz/73764
Sample Questions
Q1) The difference between the effect of an import quota when quota rights are given away and the effect of a tariff is that
A) only the tariff results in a higher domestic price
B) only the quota decreases the amount of goods imported
C) the decrease in producer surplus is smaller with the quota
D) under a quota,part of the decrease in consumer surplus is redistributed to foreign producers;under a tariff,it is redistributed to the domestic government
E) under a tariff,part of the decrease in consumer surplus is redistributed to foreign producers;under a quota,it is redistributed to the domestic government
Q2) If a country has an absolute advantage in the production of every good,it cannot benefit from trade with other countries.
A)True
B)False
Q3) It is possible for one country to have a comparative advantage in the production of all products.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 21
Chapter 20: International Finance
Available Study Resources on Quizplus for this Chatper
224 Verified Questions
224 Flashcards
Source URL: https://quizplus.com/quiz/73765
Sample Questions
Q1) The demand curve for foreign exchange
A) slopes downward
B) slopes upward
C) is horizontal,because no individual country can influence the price of foreign exchange
D) is vertical,because no individual country can influence the price of foreign exchange
E) may slope downward or upward
Q2) Suppose that U.S.incomes rise relative to British incomes.Then,
A) the dollar will appreciate and the pound will depreciate
B) the dollar will depreciate and the pound will appreciate
C) the dollar will depreciate and the pound's value will remain constant
D) the dollar will appreciate and the pound's value will remain constant
E) neither the dollar nor the pound will be affected
Q3) The U.S.dollar will appreciate if
A) the U.S.demand for foreign exchange decreases
B) the U.S.demand for foreign exchange increases
C) the U.S.supply of foreign exchange decreases
D) Americans want to buy more foreign goods
E) foreigners want fewer American goods
To view all questions and flashcards with answers, click on the resource link above.
Page 22
Chapter 21: Developing and Transitional Economies
Available Study Resources on Quizplus for this Chatper
105 Verified Questions
105 Flashcards
Source URL: https://quizplus.com/quiz/73766
Sample Questions
Q1) Education makes people more receptive t new ideas and methods,which leads to economic development.
A)True
B)False
Q2) Around the world,once-socialist countries have replaced central plans with
A) foreign aid
B) budgets
C) special interests
D) markets
E) capital equipment
Q3) The economic system that includes private ownership of most resources and the coordination of economic activity by price signals generated by market forces is
A) capitalism
B) socialism
C) communism
D) mercantilism
E) progressivism
To view all questions and flashcards with answers, click on the resource link above.
Page 23