Foundations of Economics Final Exam Questions
Course Introduction
Foundations of Economics introduces students to the core principles of microeconomics and macroeconomics, providing a comprehensive understanding of how individuals, businesses, and governments make choices in the allocation of scarce resources. The course explores fundamental concepts such as supply and demand, market equilibrium, elasticity, consumer and producer behavior, and the role of government in the economy. Additionally, students will examine economic growth, business cycles, inflation, unemployment, and international trade. Through real-world examples and analytical tools, this course equips students with the essential skills to analyze economic issues and understand the economic forces that shape society.
Recommended Textbook Principles of Microeconomics 9th Edition by John Sayre Alan Morris
Available Study Resources on Quizplus
13 Chapters
2093 Verified Questions
2093 Flashcards
Source URL: https://quizplus.com/study-set/3268 Page 2
Chapter 1: The Economic Problem
Available Study Resources on Quizplus for this Chatper
157 Verified Questions
157 Flashcards
Source URL: https://quizplus.com/quiz/64898
Sample Questions
Q1) Refer to the table above to answer this question.If Aipotu produces 60 beans,how much rice can it produce?
A)20 rice
B)100 rice
C)130 rice
D)280 rice
Answer: D
Q2) Refer to the table above to answer this question.If Erewhon is producing 23 units of cheese,approximately how many units of wine can it produce?
A)5 units of wine
B)9 units of wine
C)14 units of wine
D)19 units of wine
Answer: C
Q3) Opportunity cost is the value of the next-best alternative that is given up as a result of making a particular choice.
A)True
B)False
Answer: True
To view all questions and flashcards with answers, click on the resource link above.
Page 3
Chapter 2: Demand and Supply: An Introduction
Available Study Resources on Quizplus for this Chatper
185 Verified Questions
185 Flashcards
Source URL: https://quizplus.com/quiz/64897
Sample Questions
Q1) Which of the following is a result of the greater availability of electronic communication?
A)There is more emphasis on personal service in the market.
B)Markets are becoming smaller.
C)Markets are becoming inefficient.
D)Markets are becoming more efficient.
Answer: D
Q2) All of the following,except one,is demand.Which is the exception?
A)The quantities which consumers are willing and able to buy per period of time at various prices.
B)The relationship between various prices and quantities demanded for a product.
C)A hypothetical construct which expresses the desire and ability to purchase,not at a single price,but over a range of prices.
D)The quantities which consumers want to buy.
Answer: D
Q3) Distinguish between demand and quantity demanded.
Answer: Demand refers to the whole range of quantities that are demanded at various prices as depicted by a demand curve.The quantity demanded refers to a particular quantity demanded at a particular price,i.e. ,a point on a demand curve.
To view all questions and flashcards with answers, click on the resource link above.
Page 4
Chapter 3: Demand and Supply: An Elaboration
Available Study Resources on Quizplus for this Chatper
139 Verified Questions
139 Flashcards
Source URL: https://quizplus.com/quiz/64896
Sample Questions
Q1) All of the following,except one,are examples of price ceilings.Which is the exception?
A)Minimum-wage legislation.
B)Rent controls.
C)Wartime price controls on the price of consumer necessities.
D)A freeze on credit card interest rates.
Answer: A
Q2) Refer to the graph above to answer this question.If the government imposes an effective price ceiling of $4,what will be the illegal market price and quantity traded in the market?
A)$5 and 30 units.
B)$6 and 30 units.
C)$6 and 35 units.
D)$6 and 40 units.
Answer: B
Q3) If the demand increases and the supply decreases,it is impossible to say what will happen to the price.
A)True
B)False
Answer: False
To view all questions and flashcards with answers, click on the resource link above.
Page 5
Chapter 4: Elasticity
Available Study Resources on Quizplus for this Chatper
195 Verified Questions
195 Flashcards
Source URL: https://quizplus.com/quiz/64895
Sample Questions
Q1) A major determinant of demand elasticity is the number of complementary products available.
A)True
B)False
Q2) What is the likely effect of the government reducing the supply of illegal drugs?
A)The total amount spent on drugs will decrease.
B)The total amount spent on drugs will increase.
C)The quantity of drugs consumed will remain unchanged.
D)The demand for drugs will fall.
E)The demand for drugs will increase.
Q3) Suppose that the value of the income elasticity of demand for a product is 2 and average incomes increase by 16%.What will happen to the quantity demanded?
A)It will increase by 8%.
B)It will increase by 32%.
C)It will decrease by 8%.
D)It will decrease by 32%.
E)It cannot be determined without further information.
Q4) "A linear demand curve implies constant elasticity." Evaluate this statement.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 5: Consumer Choice
Available Study Resources on Quizplus for this Chatper
144 Verified Questions
144 Flashcards
Source URL: https://quizplus.com/quiz/64894
Sample Questions
Q1) Refer to Table 5.16 to answer this question.If Ketta has a budget of $15 and the price of both coffees and croissants are $3,what will be her optimal purchase?
A)5 croissants.
B)1 coffee and 4 croissants.
C)2 coffees and 3 croissants.
D)3 coffees and 2 croissants.
E)4 coffees and 1 croissant.
Q2) In which book is the diamond-water paradox first mentioned?
A)Marx's Das Kapital.
B)Keynes's General Theory.
C)Ricardo's Principles of Political Economy and Taxation.
D)Adam Smith's Wealth of Nations.
E)Marshall's Principles of Economics.
Q3) What is the correct formula for MCS (marginal consumer surplus)?
A)$MU-price.
B)Price-$MU.
C)$TU-price.
D)\(\Delta\)TU/price.
E)\(\Delta\)TU/\(\Delta\)quantity.
Q4) What is the significance of the marginal utility being equal to zero?
Page 7
To view all questions and flashcards with answers, click on the resource link above.
Chapter 6: A Firms Production Decisions and Costs in the
Short Run
Available Study Resources on Quizplus for this Chatper
179 Verified Questions
179 Flashcards
Source URL: https://quizplus.com/quiz/64893
Sample Questions
Q1) In a diagram,how is the effect of an increase in the price of a variable input illustrated?
A)The MC,AVC,ATC and AFC curves would shift down.
B)The MC,AVC,ATC and AFC curves would shift up.
C)Only the MC,AVC,and ATC curves would shift down.
D)Only the MC,AVC,and ATC curves would shift up.
Q2) Refer to the information above to answer this question.If total variable cost decreases by 20% at all levels of output,what is AVC when output is 20?
A)$4
B)$6
C)$6.95
D)$16
E)$20
Q3) What is the sum of the marginal cost of all of the units produced?
A)Total cost.
B)Average cost.
C)Total variable cost.
D)Total variable cost less total fixed cost.
E)Total variable cost plus fixed cost.
Page 8
To view all questions and flashcards with answers, click on the resource link above.
Chapter 7: Costs in the Long Run
Available Study Resources on Quizplus for this Chatper
132 Verified Questions
132 Flashcards
Source URL: https://quizplus.com/quiz/64892
Sample Questions
Q1) State whether each of the following scenarios shows economies of scale or diseconomies of scale.
a)Increase firm size leads to greater problems in communication between the firms major stakeholders.
b)Increase firm size creates coordination problems among departments.
c)Increase firm size leads to greater specialization of management.
d)Increase firm size enables greater division of labour.
Q2) "An industry will have a large variety of different size of firms when the industry experiences economies of scale." Evaluate this statement.
Q3) If a firm builds a larger plant and diseconomies of scale apply,which of the following statements is correct?
A)The economic capacity output of the larger plant has a lower average cost.
B)The economic capacity output of the larger plant has the same average cost.
C)The economic capacity output of the larger plant has higher average cost.
D)The LRAC cost curve will decrease as output increases.
Q4) Economies of scale is the situation in which average costs increase as a firm grows in size.
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
172 Verified Questions
172 Flashcards
Source URL: https://quizplus.com/quiz/64891
Sample Questions
Q1) Answer the following questions with respect to falling prices:
a)What will the firm in a perfect competitive industry do if the price of the product drops?
b)When is a firm still profitable?
c)When does the firm experience a loss?
d)When should the firm shutdown?
Q2) In a perfectly competitive market,all buyers and sellers are price takers.
A)True
B)False
Q3) What is the shape of the competitive firm's supply curve?
A)Horizontal and equal to its marginal revenue curve.
B)Horizontal and equal to its average revenue curve.
C)Downward-sloping and equal to its marginal cost curve.
D)Upward-sloping.
Q4) Refer to the information above to answer this question.If the firm's average variable costs exceed the price,what should the firm do?
A)1.
B)2.
C)3.
D)4.
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: An Evaluation of Competitive Markets
Available Study Resources on Quizplus for this Chatper
149 Verified Questions
149 Flashcards
Source URL: https://quizplus.com/quiz/64890
Sample Questions
Q1) Refer to the above information to answer this question.In an effort to increase the number of daycare spaces,suppose the authorities give daycare operators a subsidy of $150 for each child registered.What will be the new equilibrium quantity?
A)3,000.
B)5,000.
C)7,000.
D)8,000.
E)9,000.
Q2) Refer to the above graph to answer this question.If buyers of this product were subsidized by an amount equal to the external benefits,what would be the equilibrium values of price and quantity?
A)$80 and 40.
B)$100 and 30.
C)$100 and 80.
D)$120 and 70.
E)$120 and 80.
Q3) The figure below shows the demand and supply of a certain product.
Q4) Explain how a competitive market might experience a breakdown in competition.
Q5) Explain why competitive markets encourage technological change?
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Monopoly
Available Study Resources on Quizplus for this Chatper
179 Verified Questions
179 Flashcards
Source URL: https://quizplus.com/quiz/64889
Sample Questions
Q1) Refer to Table 10.4 to answer this question.What is the level of profits at the profit-maximizing output?
A)0.
B)$7.
C)$15.
D)$20.
E)$120.
Q2) Refer to the graph above to answer this question.What is the total revenue at the monopolist's profit-maximizing output?
A)$80.
B)$160.
C)$180.
D)$288.
E)$300.
Q3) What is a natural monopoly?
Q4) Suppose a monopolist can divide its market into two segments and it is able to practice price discrimination.If the two segments do not have the same price elasticity of demand,will the monopolist charge a higher or lower price in the market where the demand is relatively more inelastic?
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Imperfect Competition
Available Study Resources on Quizplus for this Chatper
145 Verified Questions
145 Flashcards
Source URL: https://quizplus.com/quiz/64888
Sample Questions
Q1) According to Galbraith,why might modern corporations not attempt to maximize profits?
A)Because the managers are more interested in maximizing their own incomes.
B)They are afraid of the reaction of their consumers.
C)They are afraid of the reaction of rival companies.
D)They are afraid of the reaction of the government.
Q2) A monopolistic competitive firm is producing 30 units when MR = MC = $30.At that level of output,the price is $60,average total cost is $75,and average variable cost is $65.How much economic profit is the monopolistic competitive firm making? Should the firm continue to operate?
Q3) Most economic theory is based on the assumption that firms have one goal.Which of the following is that goal?
A)Profit maximization.
B)Continued growth of the corporation's sales and size of operations.
C)The achievement of management autonomy in decision making.
D)Development of state-of-the art technology.
E)Enhancement of the company's image and the management's pride.
Q4) "A monopolistically competitive firm earns zero economic profits and has no excess capacity in the long-run." Evaluate this statement.
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: The Factors of Production
Available Study Resources on Quizplus for this Chatper
151 Verified Questions
151 Flashcards
Source URL: https://quizplus.com/quiz/64887
Sample Questions
Q1) Refer to the above information to answer this question.What quantity of labour is Nearly Done Inc.employing when the marginal product of labour is maximized?
A)2.
B)4.
C)6.
D)8.
E)Cannot be determined.
Q2) Suppose that the current price of oil is $60 a barrel and the present interest rate is 3%.Further,suppose that the interest rate remains unchanged and no new discoveries of oil are made.If the economist for the National Petroleum company believes that the rate of oil extraction is exactly right,what should be the price for a barrel of oil one year from now?
A)$60
B)$61.8
C)$63
D)$65.5
Q3) Distinguish between the real wage and the nominal wage.
Q4) Through the use of a graph,illustrate the relationship between common property resources and deadweight loss
To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 13: International Trade
Available Study Resources on Quizplus for this Chatper
166 Verified Questions
166 Flashcards
Source URL: https://quizplus.com/quiz/64886
Sample Questions
Q1) What is meant by the infant-industry argument?
A)A country should be self-sufficient in children's products.
B)It is to a country's benefit to buy infant products as cheaply as possible.
C)A country should protect its strategic industries from foreign competition.
D)A country should assist newer industries which are not yet mature enough to compete with foreign industries.
Q2) What is the term for restrictions imposed by a government limiting the amount of foreign currencies which can be obtained?
A)Tariffs.
B)Taxes.
C)Quotas.
D)Exchange controls.
Q3) What is a quota?
A)A limit imposed on the production or sale of a product.
B)A restriction placed on the importation of foreign products.
C)A tax levied on imports.
D)A maximum or minimum price placed on a product by government regulation.
Q4) "According to the theory of comparative advantage,trade is always mutually beneficially." Evaluate this statement.
To view all questions and flashcards with answers, click on the resource link above. Page 15