Honors Microeconomics Test Bank
Course Introduction
Honors Microeconomics offers an advanced exploration of the principles that govern consumer and producer behavior in market economies. Building on foundational economic concepts, the course delves into the analysis of supply and demand, elasticity, market structures, game theory, and the implications of market failures and government intervention. Emphasis is placed on rigorous theoretical models, mathematical representations, and real-world applications to deepen understanding of resource allocation, pricing mechanisms, and decision-making at the individual and firm levels. Designed for highly motivated students, the course challenges participants to critically evaluate economic issues and develop analytical skills through problem-solving, discussions, and independent research.
Recommended Textbook
Microeconomics 4th Edition by David Besanko
Available Study Resources on Quizplus 17 Chapters
1037 Verified Questions
1037 Flashcards
Source URL: https://quizplus.com/study-set/2902 Page 2
Chapter 1: Analyzing Economic Problems
Available Study Resources on Quizplus for this Chatper
48 Verified Questions
48 Flashcards
Source URL: https://quizplus.com/quiz/57803
Sample Questions
Q1) Movements along a demand curve caused by a change in price probably means that:
A) There has been and endogenous shift in the demand curve.
B) There has been an exogenous shift in the demand curve.
C) There has been a shift in an exogenous factor that affects supply.
D) The supply curve is not shifting.
Answer: C
Q2) Which of the following statements has both positive and normative aspects to it?
A) Reducing taxes on telecommunications will lower the price for consumers and encourage families to communicate with one another more frequently.
B) Reducing the minimum wage will lead to lower unemployment and a lower average wage.
C) Increasing taxes on gasoline will lead to lower fuel consumption and fewer automobiles being sold each year.
D) Taxing alcohol leads to lower alcohol consumption per year.
Answer: A
To view all questions and flashcards with answers, click on the resource link above.
Page 3
Chapter 2: Demand and Supply Analysis
Available Study Resources on Quizplus for this Chatper
69 Verified Questions
69 Flashcards
Source URL: https://quizplus.com/quiz/57804
Sample Questions
Q1) Which of the following statements is true?
A) The price elasticity of demand is positive when there is an inverse relationship between price and quantity demanded.
B) A positive income elasticity indicates that demand for a good rises as consumer income falls.
C) A positive cross-price elasticity for two goods and would arise if and were demand complements.
D) A negative cross-price elasticity for two goods and would arise if and were demand complements.
Answer: D
Q2) Eggs would typically have a
A) low elasticity of demand, probably between -1 and -2
B) low elasticity of demand, probably between 0 and -1
C) high elasticity of demand , probably between -2 and -3
D) low elasticity of demand, probably between -2 and -3
Answer: B
To view all questions and flashcards with answers, click on the resource link above.
Page 4
Chapter 3: Consumer Preferences and the Concept of Utility
Available Study Resources on Quizplus for this Chatper
61 Verified Questions
61 Flashcards
Source URL: https://quizplus.com/quiz/57805
Sample Questions
Q1) Identify the truthfulness of the following statements. I.Ordinal utility gives us information about which basket the consumer prefers and quantitative information about the intensity of the preference.
II.Cardinal utility gives us information about which basket the consumer prefers but not about the intensity of those preferences.
A) Both I and II are true.
B) Both I and II are false.
C) I is true; II is false.
D) I is false; II is true.
Answer: B
Q2) If a consumer is unable two compare two baskets,then this consumer's preferences violate which of the following key assumptions?
A) Completeness.
B) Transitivity.
C) More is better.
D) Both completeness and transitivity.
Answer: A
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: Consumer Choice
Available Study Resources on Quizplus for this Chatper
57 Verified Questions
57 Flashcards
Source URL: https://quizplus.com/quiz/57806
Sample Questions
Q1) Evaluate the truthfulness of the following statements. I.All points to the interior of the budget constraint are affordable.
II.All points that lie on the budget constraint cost the same amount of money.
A) Both I and II are true.
B) Both I and II are false.
C) I is true; II is false.
D) I is false; II is true.
Q2) When analyzing how borrowing and lending affect the consumer's budget constraint,we measure spending in the current time period on the horizontal axis and spending in the future time period on the vertical axis.Assume that the interest rate at which the consumer can lend and borrow is 10% and income in period 1 is $1000 while income in period 2 is $1200.The point of maximum future consumption can be expressed as
A) 1000 + 1200/1.1.
B) 1000(1.1) + 1200.
C) 1000+1200+.1.
D) 1000/1.1 + 1200/1.1 + 1.
To view all questions and flashcards with answers, click on the resource link above.
Page 6
Chapter 5: The Theory of Demand
Available Study Resources on Quizplus for this Chatper
66 Verified Questions
66 Flashcards
Source URL: https://quizplus.com/quiz/57807
Sample Questions
Q1) The concept of compensating variation means
A) the change in income necessary to hold the consumer at the final level of utility as price changes.
B) the change in income necessary to restore the consumer to the initial level of utility as price changes.
C) the income effect.
D) the substitution effect.
Q2) The income effect associated with a change in the price of good x
A) describes the change in the level of consumption as a result of the consumer's change in utility, holding price constant.
B) describes the change in the level of consumption, holding utility constant.
C) describes the change in relative purchasing power.
D) can be either negative or positive.
Q3) As the price of a good increases,holding the consumer's income and the price of the other good constant,the budget line will
A) shift inward toward the origin.
B) shift outward away from the origin.
C) rotate the budget line inward toward the origin.
D) rotate the budget line outward away from the origin.
To view all questions and flashcards with answers, click on the resource link above.
Page 7
Chapter 6: Inputs and Production Functions
Available Study Resources on Quizplus for this Chatper
70 Verified Questions
70 Flashcards
Source URL: https://quizplus.com/quiz/57808
Sample Questions
Q1) An isoquant represents
A) all combinations of inputs that produce a given level of output at the same cost.
B) all combinations of inputs that produce a given level of output.
C) all combinations of output that require the same levels of inputs.
D) all combinations of inputs that cost the same amount.
Q2) If capital cannot easily be substituted for labor,then the elasticity of substitution is A) negative.
B) close to zero.
C) close to one.
D) approaching infinity.
Q3) Increasing marginal returns occur when the total product function is A) decreasing.
B) increasing at a decreasing rate.
C) increasing at a constant rate.
D) Increasing at an increasing rate.
To view all questions and flashcards with answers, click on the resource link above.
8
Chapter 7: Costs and Cost Minimization
Available Study Resources on Quizplus for this Chatper
64 Verified Questions
64 Flashcards
Source URL: https://quizplus.com/quiz/57809
Sample Questions
Q1) Let a firm use labor (L) and capital (K) as its only inputs to produce an output,Q.The cost of labor is w = $5 per labor hour and the cost of capital is r = $15 per machine hour.When capital is measured on the vertical axis and labor on the horizontal axis,what is the slope of an isocost line for this firm?
A) -3.
B) -5.
C) -15.
D) -1/3.
Q2) Consider a production process with two inputs and assume the level of one of the inputs is fixed in the short run.To determine the optimal level of the variable input you should
A) solve the total cost equation for the level of the variable input.
B) solve the total cost equation for the level of the fixed input and substitute that into the production function.
C) solve the production function for the level of the fixed input.
D) solve the production function for the level of the variable input.
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Cost Curves
Available Study Resources on Quizplus for this Chatper
68 Verified Questions
68 Flashcards
Source URL: https://quizplus.com/quiz/57810
Sample Questions
Q1) The output elasticity of total cost is equal to A) the slope of the isocost line.
B) the ratio of marginal cost to average cost.
C) the ratio of average cost to marginal cost.
D) the ratio of average cost to total cost.
Q2) Economies of scope
A) are related to the average cost of producing a good when you double the scale of output.
B) are higher the more specialized a firm is in production.
C) means the rotation of the long-run total cost curve in a downward direction.
D) are a production characteristic in which the total cost of producing given quantities of two goods in the same firm is less than the total cost of producing those quantities in two single-product firm.
Q3) Economies of experience are exhibited when
A) it takes a professor a smaller quantity of time to prepare a lesson for a new class than for the first class he taught.
B) an older professor is more intelligent than a younger professor.
C) a professor goes into business as a consultant.
D) a professor reaches age 65 and begins to get a senior citizen discount.
To view all questions and flashcards with answers, click on the resource link above.
Page 10
Chapter 9: Perfectly Competitive Markets
Available Study Resources on Quizplus for this Chatper
57 Verified Questions
57 Flashcards
Source URL: https://quizplus.com/quiz/57811
Sample Questions
Q1) Which of the following is not a characteristic of perfect competition?
A) The industry is fragmented.
B) Firms produce undifferentiated products.
C) Consumers have imperfect information.
D) Firms have equal access to resources.
Q2) Identify the truthfulness of the following statements. I.A firm can earn a positive accounting profit but a negative economic profit.
II.Opportunity cost is included in the definition of economic profit but not in the definition of accounting profit.
A) Both I and II are true.
B) Both I and II are false.
C) I is true; II is false.
D) I is false; II is true.
Q3) A decreasing-cost industry is characterized by
A) more firms than an increasing-cost industry.
B) some type of economies of scale.
C) accounting profit net of the minimum return on invested capital demanded by the firm's investors.
D) some type of diseconomies of scale.
To view all questions and flashcards with answers, click on the resource link above.
Page 11
Chapter 10: Competitive Markets
Available Study Resources on Quizplus for this Chatper
67 Verified Questions
67 Flashcards
Source URL: https://quizplus.com/quiz/57812
Sample Questions
Q1) The incidence of a tax depends on
A) whom the tax is levied upon.
B) the relative elasticities of supply and demand.
C) the elasticity of government revenues.
D) the income elasticity of demand for the product.
Q2) If the government decides to subsidize a good,it will typically do all of the following except:
A) add to consumer surplus.
B) add to producer surplus.
C) have a positive impact on the government's budget.
D) create a deadweight loss.
Q3) **Determine the level of producer surplus at the market equilibrium.
A) 16,875
B) 11,250
C) 7,500
D) 3,750
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Monopoly and Monopsony
Available Study Resources on Quizplus for this Chatper
66 Verified Questions
66 Flashcards
Source URL: https://quizplus.com/quiz/57813
Sample Questions
Q1) **The total economic benefit under perfect competition would be
A) 2,700
B) 1,350
C) 675
D) 500
Q2) A monopolist owns two plants in which to produce a product which has inverse demand P = (770/3) - 3Q.The monopolist has marginal cost curves of MC<sub>1</sub> = 20+3Q<sub>1</sub> and MC<sub>2</sub> = 10+6Q<sub>2</sub> in the two plants,respectively.Which of the following represents the optimal outputs in the two plants,Q<sub>1</sub> and Q<sub>2</sub> and the market price?
A) Q<sub>1</sub> = 170/9; Q<sub>2</sub> = 100/9; P = 500/3.
B) Q<sub>1</sub> = 100/9; Q<sub>2</sub> = 170/9; P = 500/3.
C) Q<sub>1</sub> = 500/3; Q<sub>2</sub> = 170/9; P = 100/9.
D) Q<sub>1</sub> = 500/3; Q<sub>2</sub> = 100/9; P = 170/9.
Q3) **The deadweight loss under monopoly would be
A) 75
B) 150
C) 225
D) 300
To view all questions and flashcards with answers, click on the resource link above.
Page 13
Chapter 12: Capturing Surplus
Available Study Resources on Quizplus for this Chatper
58 Verified Questions
58 Flashcards
Source URL: https://quizplus.com/quiz/57814
Sample Questions
Q1) What is the difference between uniform pricing and price discrimination?
A) Uniform pricing and price discrimination are the same.
B) With uniform pricing firms charge different prices for the same good or service and with price discrimination firms charge the same price for the same good or service.
C) With uniform pricing firms charge the same price for the same good or service and with price discrimination the firms charge different prices for the same good or service.
D) The uniform price is always higher than the discriminated price.
Q2) With second-degree price discrimination
A) the firm tries to price each unit at the consumer's reservation price.
B) the firm offers consumers a quantity discount.
C) the firm charges different consumer groups or market segments a different price.
D) a buyer can only purchase one product by agreeing to purchase some other product as well.
To view all questions and flashcards with answers, click on the resource link above.
14
Chapter 13: Market Structure and Competition
Available Study Resources on Quizplus for this Chatper
61 Verified Questions
61 Flashcards
Source URL: https://quizplus.com/quiz/57815
Sample Questions
Q1) Identify the truthfulness of the following statements. I.Cournot firms do not attain the monopoly or collusive equilibrium.
II.The equilibrium output in a Cournot oligopoly market does not maximize industry profit.
A) Both I and II are true.
B) Both I and II are false.
C) I is true; II is false.
D) I is false; II is true.
Q2) Suppose that firms A and B are Cournot duopolists in the computer industry.Firm A's best response function
A) lists firm B's profit-maximizing choice of output given any level of output by firm A.
B) lists firm A's profit-maximizing choice of output given any level of output by firm B.
C) lists firm B's profit-maximizing choice of price given any level of price by firm A.
D) lists firm B's profit-maximizing choice of price given any level of price by firm B.
To view all questions and flashcards with answers, click on the resource link above.
15
Chapter 14: Game Theory and Strategic Behavior
Available Study Resources on Quizplus for this Chatper
51 Verified Questions
51 Flashcards
Source URL: https://quizplus.com/quiz/57816
Sample Questions
Q1) The likelihood of a cooperative outcome in a repeated prisoners' dilemma type game decreases when
A) they value payoffs in future periods much less than they value payoffs in the current period.
B) interactions between the players are frequent.
C) cheating is easy to detect.
D) the one-time gain from cheating is small in comparison to the eventual cost of cheating.
Q2) *In Game 5 above,in the Nash equilibrium in mixed strategies
A) player B chooses B1 with a 30% probability.
B) player B chooses B1 with a 50% probability.
C) player B chooses B1 with a 60% probability.
D) player B chooses B1 with a 75% probability.
Q3) *Game 9 has the structure of a
A) prisoner's dilemma.
B) sequential game.
C) game of chicken.
D) tit-for-tat game
To view all questions and flashcards with answers, click on the resource link above.
16
Chapter 15: Risk and Information
Available Study Resources on Quizplus for this Chatper
63 Verified Questions
63 Flashcards
Source URL: https://quizplus.com/quiz/57817
Sample Questions
Q1) Consider a fairly-priced insurance policy that fully indemnifies the purchaser against their loss.This insurance policy would most likely be purchased by
A) a risk-loving decision maker.
B) a risk-neutral decision maker.
C) a risk-averse decision maker.
D) all decision makers
Q2) Adverse selection in auto insurance might refer to
A) an auto owner failing to maintain the car, increasing the likelihood of an accident.
B) an insured party driving faster than an uninsured party.
C) an applicant lying on their application form about their health history.
D) an insured driver using the car to conduct driving lessons for new learners.
Q3) Consider four lotteries,A,B,C,and D,all with an expected value of $100.The associated standard deviations of the lotteries are: A is 10,B is 15,C is 5,and D is 20.Which lottery is the riskiest?
A) Lottery A
B) Lottery B
C) Lottery C
D) Lottery D
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 16: General Equilibrium Theory
Available Study Resources on Quizplus for this Chatper
56 Verified Questions
56 Flashcards
Source URL: https://quizplus.com/quiz/57818
Sample Questions
Q1) Let the demand and supply for two linked products,say corn and soy,be the following: Q<sub>c</sub><sup>d</sup>= 12 - 2p<sub>c</sub> + p<sub>s</sub>; Q<sub>c</sub><sup>s</sup> = 4+p<sub>c</sub>; Q<sub>s</sub><sup>d</sup> = 6-4p<sub>s</sub> + p<sub>c</sub>; Q<sub>s</sub><sup>s</sup> = 4 + p<sub>s</sub>.The superscript refers to "demand" (d) or "supply" (s) and the subscript refers to corn (c) or soy (s).Now,suppose that the demand for corn shifts to Q<sub>c</sub><sup>d</sup> = 18 - 2p<sub>c</sub> + p<sub>s</sub>.If the price of soy is free to adjust in response to this shift,what are the new equilibrium prices of corn and soy?
A) p<sub>c</sub> = 5.14; p<sub>s</sub> =1.43
B) p<sub>c</sub> = 6.20; p<sub>s</sub> =2.15
C) p<sub>c</sub> = 2.50; p<sub>s</sub> =2.50
D) p<sub>c</sub> = 4.35; p<sub>s</sub> =2.00
Q2) Your textbook discussed a model of a simple economy with four markets: labor,capital,energy,and food.Which of the following statements is inconsistent with a general equilibrium for this simple economy?
A) The household demand for energy equals the industry supply of energy.
B) The household demand for food equals the industry supply of food.
C) The household demand for labor equals the industry supply of labor.
D) The household supply of capital equals the industry demand for capital.
To view all questions and flashcards with answers, click on the resource link above. Page 18
Chapter 17: Externalities and Public Goods
Available Study Resources on Quizplus for this Chatper
55 Verified Questions
55 Flashcards
Source URL: https://quizplus.com/quiz/57819
Sample Questions
Q1) Negative externalities
A) create a deadweight loss as do positive externalities.
B) move the economy closer to the social optimum.
C) create a deadweight loss and move the equilibrium away from the social optimum.
D) should be eliminated completely to move to the social optimum.
Q2) A congestion toll is
A) like an emissions fee.
B) like an emissions standard.
C) like a negative externality.
D) like common property.
Q3) A non-rival good
A) is also nonexclusive.
B) is also exclusive.
C) must be free.
D) is one where the consumption of the good by one person does not reduce the quantity available for consumption by another person.
To view all questions and flashcards with answers, click on the resource link above. Page 19