Intermediate Microeconomics
Final Exam
Course Introduction
Intermediate Microeconomics delves into the foundational theories and analytical tools used to understand individual and firm decision-making in various market environments. The course explores consumer behavior, production and cost functions, market structures such as perfect competition, monopoly, and oligopoly, and the implications of government intervention. Emphasis is placed on graphical and mathematical models to analyze market outcomes, welfare optimization, and strategic interactions, providing students with a robust framework for interpreting real-world economic phenomena.
Recommended Textbook
Microeconomics 10th Edition by Stephen Slavin
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20 Chapters
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Chapter 1: A Brief Economic History of the United States
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Sample Questions
Q1) Which of the following statements is false?
A)In the early 19th century, the United States suffered from a scarcity of labor-relative to land.
B)At the time of the American Revolution, about nine of every ten Americans lived on a farm.
C)The transcontinental railroads completed in the 1880s brought railroads to every region of the country.
D)Between 1939 and 1944, federal government spending rose by 400 percent.
Answer: C
Q2) Statement I. The baby boom after World War II, along with low gas prices, accelerated the trend toward suburbanization. Statement II. The Japanese and West German industrial production was so damaged or destroyed after World War II that it wasn't until 1960 that these nations could effectively compete in the world market.
A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.
Answer: C
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Chapter 2: Resource Utilization
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Sample Questions
Q1) Which statement is true?
A)Scarcity is simply a lack of money.
B)Our society has been so affluent in the last 50 years that scarcity is only a minor problem.
C)The economic problem refers to the problem of poverty.
D)If scarcity did not exist there would be no need to economize.
Answer: D
Q2) If the economy produces 12 capital goods and 40 consumer goods,
A)it is producing outside its production possibilities curve.
B)this combination of output will most likely result in economic growth.
C)the ability to produce more consumer goods can only be realized by sacrificing capital goods.
D)this economy has some unemployed resources.
Answer: D
Q3) If the country represented in this graph now can produce a maximum of 12 units of guns if it shifts all resources to gun production and could produce a maximum of 9 units of butter if it used all its resources for butter production then it would have experienced
Answer: economic decline (or inward shift in the production possibilities curve)
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Page 4
Chapter 3: The Mixed Economy
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Sample Questions
Q1) The U.S. economy does a very good job with respect to
A)both equity and efficiency.
B)equity, but not efficiency.
C)efficiency, but not equity.
D)neither equity nor efficiency.
Answer: C
Q2) Already the world's largest exporter, __________ passed Japan in 2009 to become the number one automobile producers.
A)the United States
B)Canada
C)India
D)China
Answer: D
Q3) Raising taxes on gasoline __________ the price of gasoline and __________ the number of gallons purchased.
Answer: raises; lowers
Q4) The development of the polio vaccine would be considered a(n) _____________________ to society.
Answer: external benefit
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Chapter 4: Supply and Demand
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Sample Questions
Q1) An increase in equilibrium quantity will result from each of the following except
A)an increase in supply and an increase in demand.
B)an increase in demand and no change in supply.
C)an increase in supply and no change in demand.
D)a decrease in demand and a decrease in supply.
Q2) If the government set a price floor at $18
A)there would be a temporary surplus, then prices would fall to equilibrium.
B)the price floor would not have any effect on this market.
C)then quantity demanded would be greater than quantity supplied.
D)there would be a permanent surplus, at least until the price floor was lifted.
Q3) Interest rates would __________ if the supply of loanable funds decreased.
A)stay the same
B)decline
C)rise
Q4) When a price floor that has an impact is imposed, the quantity
A)demanded will decrease and quantity supplied will increase.
B)supplied will decrease and quantity demanded will increase.
C)demanded will decrease and quantity supplied will not change.
D)supplied will decrease and quantity demanded will not change.
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Chapter 5: Demand, Supply, and Equilibrium
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Sample Questions
Q1) If price increases and sellers supply a larger quantity, this represents
A)a change in quantity supplied.
B)a change in supply.
C)an increase in supply.
D)a decrease in supply.
Q2) A decrease in supply will tend to cause
A)an increase in demand.
B)a decrease in equilibrium price.
C)a decrease in equilibrium quantity.
D)an increase in equilibrium quantity.
Q3) A move from E to F represents
A)a change in quantity demanded.
B)a change in demand.
C)an increase in demand.
D)a decrease in demand.
Q4) The market demand curve is derived
A)so that it slopes downward and to the left as quantity rises.
B)by totaling the average demands for products in all markets.
C)by horizontally summing potential buyers' individual demand curves.
D)by vertically summing the demand curves of individuals in the market.
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Chapter 6: The Price Elasticities of Demand and Supply
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Sample Questions
Q1) If the federal excise tax on cigarettes were raised by one dollar, the price of cigarettes would probably
A)rise by more than one dollar.
B)rise by one dollar.
C)rise by less than one dollar.
D)not rise at all.
Q2) Statement I: A perfectly elastic demand curve has the same elasticity as a perfectly inelastic demand curve. Statement II: When elasticity is .2, a 1% decline in price will raise quantity demanded by .2%.
A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.
Q3) Which statement is true?
A)Over time demand tends to become less elastic.
B)The demand for cigarettes is very elastic.
C)Advertisers try to make the demand for their products less elastic.
D)None of these statements are true.
Q4) An elasticity of demand that is slightly elastic would be (write number) ____.
Q5) If demand is more elastic than supply, the buyer will pay ________ of a tax.
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Chapter 7: Theory of Consumer Behavior
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Sample Questions
Q1) Suppose you buy eight pairs of shoes every spring. This year, your shoe store has a huge sale and you end up buying 12 pairs. How does your consumer surplus now compare to how much it would have been had there been no sale?
A)It is higher.
B)It remains the same.
C)It is lower.
Q2) The law of diminishing marginal utility states that as we consume increasing amounts of a good or service, ________________________.
Q3) A product's utility
A)is measured by its usefulness.
B)determines the price charged by the seller.
C)has no effect on a person's consumption decision.
D)None of these choices are correct.
Q4) If the Santiago family, which pays a charge of one cent a gallon, uses about 1,200 gallons of water a month, what is the most accurate statement we can make about their consumer surplus?
A)They definitely enjoy a consumer surplus.
B)They may or may not enjoy a consumer surplus.
C)They definitely do not enjoy a consumer surplus.
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Chapter 8: Cost
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Sample Questions
Q1) Fixed costs are best defined as
A)costs that will not vary with the firm's output level over some period of time.
B)costs that are paid on a yearly basis rather than a weekly or monthly basis.
C)costs of inputs that cannot be moved, such as real estate.
D)costs that will last as long as the firm exists.
Q2) When marginal cost is less than average variable cost, average variable cost is falling. Statement II: As output rises, average fixed cost declines.
A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false
Q3) Fill in the table. Assume the fixed cost is $300.
Q4) In the long run,
A)a firm can shut down, but it cannot exit the industry.
B)there are no fixed factors of production.
C)a firm can vary all inputs, but it cannot change the mix of inputs it uses.
D)None of the choices are correct.
Q5) Fill in the Marginal Output column.
Q6) Draw a graph of AVC, ATC, and MC.
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Chapter 9: Profit, Loss, and Perfect Competition
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Sample Questions
Q1) A profit maximizing firm will always produce at that output at which
A)marginal cost = marginal revenue.
B)it minimizes its costs.
C)it operates at peak efficiency.
D)it maximizes its total revenue.
Q2) A profit-maximizing firm will always operate at that output at which _______ is equal to _______.
Q3) The lowest level of output on an average total cost curve is considered the __________ level of production.
Q4) The four main characteristics of perfect competition are (1) __________; (2) _________; (3) __________; and (4) ________.
Q5) Which of the following is an example of an identical product?
A)Wheat
B)Cars
C)Apartment buildings
D)Accounting services
E)Jeans
Q6) Under perfect competition all sellers sell a(n) ___________ product.
Q7) How much is the firm's output at the break-even point?
Page 11
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Chapter 10: Monopoly
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Sample Questions
Q1) The monopolist's demand curve is ______ that of the perfect competitor; the monopolist's marginal revenue curve is ______ that of the perfect competitor.
A)identical to; identical to B)different from; different from C)identical to; different from D)different from; identical to
Q2) When looking at a monopolist's level of output, you can expect to find
A)average revenue greater than price.
B)price greater than marginal cost.
C)marginal cost greater than marginal revenue.
D)marginal revenue greater than price.
Q3) Which statement is false?
A)A monopoly is both a firm and an industry.
B)A monopoly is an imperfect competitor.
C)There are monopolies in the United States at the regional and local levels.
D)None of these statements are false.
Q4) Wal-Mart's full-time employees' average hourly wages that are about _____% lower than those paid by competitors.
Q5) A monopolist is a single seller selling a(n) ___________ good or service.
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Chapter 11: Monopolistic Competition
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Sample Questions
Q1) If demand curve D2 represents a monopolistic competitor and demand curve D1 represents a perfect competitor, then
A)the perfect competitor has a more elastic demand curve than the monopolistic competitor.
B)the monopolistic competitor has a more elastic demand curve than the perfect competitor.
C)the perfect competitor and the monopolistic competitor have identical elasticity in their demand curves.
D)None of these choices are true.
Q2) Price discrimination means
A)charging different prices for identical goods that have identical production costs.
B)paying wages according to race or sex rather than productivity.
C)exploiting the working masses by charging the highest single price possible.
D)eliminating all costs so that only profits are realized.
Q3) If new firms enter a monopolistically competitive industry, an individual firm's demand curve will _____________ (increase / decrease).
Q4) An industry that has many firms producing differentiated products is classified as _____________.
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Chapter 12: Oligopoly
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Sample Questions
Q1) Fill in the table.
Q2) _____ is (are) legal in the United States.
A)Covert collusion
B)Cut throat competition
C)Cartels
D)None of these choices are true.
Q3) Which statement is true?
A)Industry Y has a Herfindahl-Hirschman Index of 95.
B)Industry Y has an H-H-I of 100.
C)Industry Y has an H-H-I of 1,000.
D)Industry Y has an H-H-I of 2,738.
Q4) A low concentration ratio would most likely indicate that the industry resembles the behavior of a (n)
A)cartel.
B)monopolistic competitor.
C)monopoly.
D)oligopoly.
Q5) If one cigarette company raises its prices and the next day all the other companies in the industry raise their prices by the same amount, this industry would be using _________ to set prices.
Page 14
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Chapter 13: Corporate Mergers and Antitrust
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Sample Questions
Q1) There has been an unmistakable steady trend toward bigness in business since A)the Civil War.
B)1911.
C)the mid-1930s.
D)the late-1990s.
Q2) Combinations in restraint of trade are prohibited by
A)the Sherman Act.
B)the Clayton Act.
C)the Federal Trade Commission Act.
Q3) Which statement is true about vertical mergers?
A)They are growing in popularity.
B)Recent vertical mergers have been very successful.
C)The great industrial age of the last quarter of the 19th century was a period when vertical mergers worked very well.
D)There have been no vertical mergers since the mid-1990s.
Q4) In the case against AT&T, it was forced to give up its _____________.
Q5) In 2004 the European Commission fined Microsoft over $______ million for using its "near monopoly" power to ____________________________.
Q6) Exxon, Mobil, and Amoco are all descendants of the ___________ trust.
Page 15
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Chapter 14: Demand in the Factor Market
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Sample Questions
Q1) In 1973 the Russian wheat crop failed and the Soviet Union made massive purchases of American wheat. Which statement is a result of this action?
A)The demand for farm labor and farmland was driven down in the United States.
B)There was no effect on the demand for farm labor and farmland in the United States.
C)The demand for farm labor and farmland was driven up in the United States.
D)None of these statements are true.
Q2) Marginal Revenue Product with one unit of labor would be
A)$100.
B)$140.
C)$160.
D)$260.
E)None of the choices are correct.
Q3) A decrease in interest rates would
A)increase the demand for capital.
B)decrease the demand for capital.
C)increase the supply of capital.
D)decrease the supply of capital.
E)None of the choices are true.
Q4) How many units of land would you hire?
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Chapter 15: Labor Unions
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Sample Questions
Q1) A jurisdictional dispute occurs when ___________.
Q2) If all professional baseball teams collude to reduce the wages paid to players, they are acting as
A)a pure monopsony.
B)a pure monopoly.
C)a labor union.
D)a pure oligopoly.
Q3) All of these countries are similar in their labor union membership as a percentage of their labor force, except
A)United States
B)Germany
C)Japan
D)Australia
E)Sweden
Q4) The job of _____ is to impose a settlement.
A)an arbitrator
B)a mediator
C)a collective bargaining team leader
Q5) In an open shop no one is forced to ___________.
Q6) Union membership has been falling since the year ________.
Page 17
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Chapter 16: Labor Markets and Wage Rates
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Sample Questions
Q1) The primary job market consists of jobs which _____ and offers a good chance for _______.
Q2) Which statement is false?
A)Differences in wage rates are partially explained by differences in productivity.
B)In general, when output per labor-hour increases, real wages rise by a larger percentage.
C)The demand for labor in a particular market is the sum of all the firms' MRP curves.
D)If you are earning $20,000 a year today and you were to earn $40,000 a year 10 years from now, your money wages have increased.
Q3) Which statement is the most accurate?
A)Most Americans earn over $50,000 a year.
B)Those that made Forbes Magazine's 100 Top Celebrities List made no more than $25 million a year.
C)In the United States, there is a wide disparity of income.
D)Although some wage rates are set by supply and demand, these are the exception, not the rule.
Q4) Today the great divide between the haves and have-nots is a _______________.
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Page 18
Chapter 17: Rent, Interest, and Profit
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Sample Questions
Q1) Old Navy has a discount store in a rundown neighborhood and charges about half what they charge for the same merchandise in a more fashionable neighborhood. The best explanation for why they charge less in the rundown neighborhood is that A)they pay less rent.
B)their customers can't afford to pay any more.
C)they don't have to bother advertising.
D)they are maximizing their profits at the prices they are charging.
Q2) Given the market rate of interest, the present value of $10,000 to be received after a period of 5 years
A)will be more than the present value of $10,000 to be received after a period of 4 years.
B)will be less than the present value of $10,000 to be received after a period of 6 years.
C)will be more than the present value of $10,000 to be received after a period of 6 years.
D)will be the same as the present value of $10,000 to be received after a period of 6 years.
E)will be the same as the present value of $10,000 to be received after a period of 4 years.
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Page 19
Chapter 18: Income Distribution and Poverty
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Sample Questions
Q1) Statement I: In 2008, 19% of American children lived in poverty. Statement II: The welfare rolls expanded sharply from 1990 to 1994.
A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.
Q2) The typical welfare family would be
A)A single woman with 6 or 8 children.
B)A single woman with 1 or 2 children.
C)A couple about 70-80 years old.
D)A childless male in his 30s or 40s.
Q3) In 2009 if the poverty line had been set lower, the poverty rate would have been A)lower.
B)the same.
C)higher.
Q4) In the U.S. the lowest quintile receives about _______% of income.
Q5) The most important reason for why some people have higher income than others is __________________.
Q6) Almost half of the world lives on less than $______ a day.
Q7) The highest income quintile receives about ________% of all income.
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Chapter 19: International Trade
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Sample Questions
Q1) One way of reducing our trade deficit would be to get Americans to
A)save more and consume more.
B)save more and consume less.
C)save less and consume less.
D)save less and consume more.
Q2) What is Italy's opportunity cost of producing 3 art books?
Q3) We currently run a negative trade balance in ______ and a ______ trade balance in services.
Q4) A hollow corporation
A)makes goods abroad and ships them to the United States.
B)makes goods in the United States and ships them abroad.
C)imports foreign goods and puts its own name on them.
D)makes goods in the United States and has them sold abroad under another company's name.
Q5) What is Spain's domestic exchange equation?
Q6) Our trade deficit is big for three main reasons: (1) _____, (2) _____, and (3)
Q7) Today, the U.S. is borrowing almost $______ per day to finance its consumption habits.
Q8) What is the Portugal's opportunity cost of producing 3 bottles of wine?
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Chapter 20: International Finance
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Sample Questions
Q1) A decrease in the value of the dollar relative to foreign currencies would _____ the supply of foreign products in the U.S. and _____ the demand for U.S. products in other countries.
A)increase; increase
B)increase; decrease
C)decrease; increase
D)decrease; decrease
Q2) In considering pounds and dollars we can say that when the dollar rate of exchange for the pound rises
A)the pound rate of exchange for the dollar will fall.
B)the pound rate of exchange for the dollar will also rise.
C)the pound rate of exchange for the dollar may either fall or rise.
D)American net exports to Britain will tend to fall.
Q3) The U.S. and nearly all other industrial nations were on the gold standard until the year _________________.
Q4) Which statement is true?
A)International trade is part of international finance.
B)International finance is part of international trade.
C)International trade and international finance are identical.
Q5) The U.S. dollar is backed by ___________.
Page 22
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