Intermediate Microeconomics
Test Questions
Course Introduction
Intermediate Microeconomics delves into the decision-making processes of individuals and firms, exploring how they interact in various market structures to allocate scarce resources. The course covers key topics including consumer and producer theory, the nature of competition and monopoly, market equilibrium, welfare analysis, and the effects of government intervention. Emphasis is placed on applying mathematical tools and graphical analysis to model economic behavior, interpret market outcomes, and understand real-world applications. Students will develop the analytical skills essential for advanced economic studies and policy evaluation.
Recommended Textbook
Microeconomics 1st Canadian Edition by B. Douglas Bernheim
Available Study Resources on Quizplus
20 Chapters
1191 Verified Questions
1191 Flashcards
Source URL: https://quizplus.com/study-set/3693 Page 2
Chapter 1: Introduction
Available Study Resources on Quizplus for this Chatper
67 Verified Questions
67 Flashcards
Source URL: https://quizplus.com/quiz/73531
Sample Questions
Q1) Scarcity forces society to confront three critical issues.List those issues and explain how they are related to the problem of scarcity.
Answer: What to Produce: When we produce more of one good,we use up scarce resources.This reduces our ability to produce other goods. How to produce goods: Society must determine a production method for each good that minimizes the use of the scarce resources used to produce the good. Who gets what: A society can produce only a limited amount of goods and services.Each society must therefore develop procedures for allocating those goods among consumers.
Q2) In a free market system
A) There is no government involvement in the economy
B) Resources are allocated on a first-come first-served basis
C) Buyers and sellers make all of the economic decisions
D) Government mostly allows markets to operate with little intervention or regulation
Answer: D
To view all questions and flashcards with answers, click on the resource link above.
3
Chapter 2: Supply and Demand3
Available Study Resources on Quizplus for this Chatper
68 Verified Questions
68 Flashcards
Source URL: https://quizplus.com/quiz/73520
Sample Questions
Q1) Which of the following is the formula for the elasticity of Y with respect to X?
A) E = (% Change in Y)/(% Change in X)
B) E = (% Change in X)/(% Change in Y)
C) E = (Change in Y)/(Change in X)
D) E = (Change in X)/(Change in Y)
Answer: A
Q2) Complements are characterized by
A) Negative cross-price elasticity of demand
B) Positive cross-price elasticity of demand
C) Cross-price elasticity of demand equal to zero
D) Cross price elasticity of demand equal to -1
Answer: A
Q3) A change in the quantity supplied of a good is represented as a
A) Movement along a supply curve
B) Shift of a supply curve
C) Movement along the supply function
D) Shift of the supply function
Answer: A
To view all questions and flashcards with answers, click on the resource link above.
Chapter 3: Balancing Benefits and Costs
Available Study Resources on Quizplus for this Chatper
67 Verified Questions
67 Flashcards
Source URL: https://quizplus.com/quiz/73518
Sample Questions
Q1) According to the No Marginal Improvement Principle,if X* is the best choice,then
A) MB must be greater than MC at X*
B) MB must be equal to MC at X*
C) MB must be less than MC at X*
D) MB must be greater than or equal to MC at X*
Answer: B
Q2) Use cost benefit analysis to explain the decision whether or not to attend college.Why do some people choose not to attend college?
Answer: The decision whether or not to attend college is based on a comparison of the costs and benefits associated with attending college.The benefit of attending college is the extra earnings that result from a college education.The costs of attending college include tuition,board and books.An important opportunity cost of attending college is the lost opportunity to earn income by working instead of attending college.For people who decide to attend college,the benefits exceed the costs,including the opportunity cost of lost wages.Some individuals will decide not to attend college if they perceive that the benefits will not exceed the costs.For some individuals,such as Bill Gates and LeBron James,the opportunity cost of attending college is so high that the costs exceed the benefits,so they rationally choose not to attend (or finish)college.
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: Principles and Preferences
Available Study Resources on Quizplus for this Chatper
67 Verified Questions
67 Flashcards
Source URL: https://quizplus.com/quiz/73517
Sample Questions
Q1) Felix always consumes exactly four cookies with a glass of milk.Felix's indifference curves for cookies and milk would be
A) Linear
B) L-shaped
C) Convex
D) Positively sloped
Q2) Information about preferences is ordinal if
A) The information tells us something about the intensity of the consumer's preferences
B) The information allows us to make comparisons between the preferences of different consumers
C) The information allows us to determine only whether one alternative is better or worse than another
D) The information allows us to make comparisons between the preferences of the same consumer at different points in time
Q3) Compare and contrast cardinal utility and ordinal utility.Which concept is sufficient for ranking consumers' preferences? Why?
To view all questions and flashcards with answers, click on the resource link above.
6
Chapter 5: Constraints, Choices, and Demand
Available Study Resources on Quizplus for this Chatper
68 Verified Questions
68 Flashcards
Source URL: https://quizplus.com/quiz/73516
Sample Questions
Q1) Mike's income is $450 per month.He spends all of it on books (B)and CDs (C).Books cost $10 and CD's cost $15.His preferences correspond to the utility function U(B,C)= BxC.For that utility function,the marginal benefit of books is C and the marginal benefit of CDs is B. How many books and how many CDs will he purchase in a month?
A) 10 CDs and 30 Books
B) 30 CDs and 10 Books
C) 20 CDs and 15 Books
D) 15 CDs and 30 Books
Q2) A curve that describes the relationship between income and the amount of a good consumed (holding the consumer's preferences and all other prices fixed)is called A) A price-consumption curve
B) The Engel curve
C) An income-consumption curve
D) A budget line
Q3) Suppose that an individual consumes just hamburgers and soft drinks.Using a carefully-labeled diagram,derive the price-consumption curve that would result from a decrease in the price of hamburgers.
To view all questions and flashcards with answers, click on the resource link above.
Page 7
Chapter 6: Rom Demand to Welfare
Available Study Resources on Quizplus for this Chatper
66 Verified Questions
66 Flashcards
Source URL: https://quizplus.com/quiz/73515
Sample Questions
Q1) ______ measures the percent change in the cost of a fixed consumption bundle.
A) A fixed-weight price index
B) Substitution bias
C) Compensating variation
D) Real income
Q2) The substitution bias refers to
A) The failure of the Laspeyres index to capture a consumer's tendency to purchase the same bundle of goods as prices change
B) The substitution effect is positive for a price increase
C) The substitution effect is negative for an inferior good
D) The failure of the Laspeyres index to capture a consumer's tendency to substitute away from goods that have become more expensive
Q3) If a good is _______,the income effect is negative for a price increase and positive for a price decrease.
A) Inferior
B) Superior
C) Normal
D) Giffen
To view all questions and flashcards with answers, click on the resource link above.
8
Chapter 7: Technology and Production
Available Study Resources on Quizplus for this Chatper
67 Verified Questions
67 Flashcards
Source URL: https://quizplus.com/quiz/73514
Sample Questions
Q1) A firm's _______ contains all combinations of inputs and outputs that the firm can achieve using efficient production methods.
A) Production possibilities set
B) Efficient production frontier
C) Production function
D) Production possibilities curve
Q2) Refer to Figure 7.4.This isoquant exhibits
A) Increasing MRTS<sub>LK</sub> as we move to the southeast along the isoquant
B) Declining MRTS<sub>LK</sub> as we move to the northwest along the isoquant
C) Constant MRTS<sub>LK</sub> as we move along the isoquant
D) Declining MRTS<sub>LK</sub> as we move to the southeast along the isoquant
Q3) Suppose a firm uses only capital and labour to produce output.When the firm doubles the amount of both inputs,output increases by less than double.This firm exhibits
A) Increasing returns to scale
B) Decreasing returns to scale
C) Constant returns to scale
D) Diminishing marginal returns
To view all questions and flashcards with answers, click on the resource link above.
9
Chapter 8: Cost
Available Study Resources on Quizplus for this Chatper
67 Verified Questions
67 Flashcards
Source URL: https://quizplus.com/quiz/73513
Sample Questions
Q1) As a firm with decreasing returns to scale technology increases its output, A) It will experience diseconomies of scale and its average cost of production will rise
B) It will experience diseconomies of scale and its average cost of production will fall
C) It will experience economies of scale and its average cost of production will rise
D) It will experience economies of scale and its average cost of production will fall
Q2) Refer to Figure 8.6,which shows a firm's short-run average cost curves for three different levels of capital.Which of the following statements about short-run and long-run marginal cost is true?
A) Long-run marginal cost equals short-run marginal cost at 50 units of output
B) Long-run marginal cost equals short-run marginal cost at 130 units of output
C) Long-run marginal cost equals short-run marginal cost at 160 units of output
D) Long-run marginal cost and short-run marginal cost are never equal
Q3) Suppose a firm's technology is represented by the function Q = F(L,K)= 5L<sup>.25</sup>K<sup>.75</sup>.Does this firm experience economies of scale,diseconomies of scale or neither?
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: Rofit Maximization
Available Study Resources on Quizplus for this Chatper
67 Verified Questions
67 Flashcards
Source URL: https://quizplus.com/quiz/73512
Sample Questions
Q1) A price-taking firm's variable cost function is C = Q<sup>3</sup>,where Q is the output per week.It has a sunk fixed cost of $2,000 per week.Its marginal cost is MC = 3Q<sup>2</sup>.What is the profit maximizing output if the price is P = $192?
A) 0
B) 6
C) 8
D) 10
Q2) Since sunk costs are incurred no matter what,
A) They are relevant in deciding how much to produce
B) They are essential in the profit-maximizing sales quantity formula
C) They can generally be ignored in making economic decisions
D) They are considered fixed costs
Q3) Which of the following is NOT true about marginal revenue?
A) It is a firm's marginal benefit
B) It is defined as the extra revenue generated by the production of one more unit
C) It can be expressed mathematically as MR = [R(Q - Q) - R(Q)]/ Q
D) It can be expressed mathematically as R/ Q
Q4) Using a graph,explain why the law of supply holds for a competitive firm.
To view all questions and flashcards with answers, click on the resource link above.
Page 11
Chapter 10: Choices Involving Time
Available Study Resources on Quizplus for this Chatper
67 Verified Questions
67 Flashcards
Source URL: https://quizplus.com/quiz/73530
Sample Questions
Q1) Suppose the interest rate is 8%.If a project requires an initial investment of $5,000 and returns $5,500 in a year,what is its internal rate of return?
A) 2%
B) 8%
C) 10%
D) 18%
Q2) Refer to Figure 10.1.Suppose the individual is initially at point b.Based on the figure,the individual is relatively ______ and will ultimately be a _____.
A) Impatient; saver
B) Impatient; borrower
C) Patient; saver
D) Patient; borrower
Q3) The current worth of a claim on future resources is called
A) Net present value
B) Future value
C) Present discounted value
D) Internal rate of return
To view all questions and flashcards with answers, click on the resource link above.
12
Chapter 11: Choices Involving Risk
Available Study Resources on Quizplus for this Chatper
53 Verified Questions
53 Flashcards
Source URL: https://quizplus.com/quiz/73529
Sample Questions
Q1) Two variables are positively correlated if
A) They move in the same direction
B) They move in the opposite direction
C) Their movements tend to be unrelated
D) One is simply a multiple of the other
Q2) An insurance premium is
A) The contract that reduces the financial loss associated with some risky event
B) The amount of money a policy holder pays for the insurance policy
C) The amount of money a policy holder receives if a specific loss occurs
D) The probability of loss from a specific event
Q3) Brandon's risk premium given the information in problem 25 is
A) 250
B) 325
C) 17.5
D) 18.75
Q4) A person is risk neutral if
A) Her indifference curve is concave to the origin
B) Her indifference curve is convex to the origin
C) Her indifference curve coincides with the expected consumption line
D) Her indifference curve coincides with guaranteed consumption line
13
To view all questions and flashcards with answers, click on the resource link above.
Chapter 12: Choices Involving Strategy
Available Study Resources on Quizplus for this Chatper
52 Verified Questions
52 Flashcards
Source URL: https://quizplus.com/quiz/73528
Sample Questions
Q1) Refer to Figure e.What is the Nash equilibrium?
A) The only Nash equilibrium occurs when Allie watches the Red Sox, Brandon watches the Mets
B) The only Nash equilibrium occurs when Allie and Brandon both watch the Red Sox
C) The only Nash equilibrium occurs when Allie and Brandon both watch the Mets
D) There is more than one Nash equilibrium.
Q2) In a multiple-stage game
A) At least one participant observes a choice by another participant before making some decision
B) Each participant makes all of his choices before observing any choice by any other participant
C) At least one participant makes his choice before observing the choices made by other participants
D) One participant has full information of the other players choices before making his choice
Q3) Use the concepts of reputation and asymmetric information to explain why some faculty members become less productive after gaining tenure.
To view all questions and flashcards with answers, click on the resource link above.
14
Chapter 13: Behavioral Economics
Available Study Resources on Quizplus for this Chatper
51 Verified Questions
51 Flashcards
Source URL: https://quizplus.com/quiz/73527
Sample Questions
Q1) A dieter who prefers to eat small portions at his next meal,but chooses a large portion at mealtime when it arrives is
A) Dynamically consistent
B) Dynamically inconsistent
C) Exhibiting self-control
D) Exhibiting a past bias
Q2) Behavioral economists
A) Rely primarily on data drawn from the real world
B) Rely only on experimental data
C) Typically assume that each individual has well-defined objectives, that there is a connection between an individual's objectives and actions and that the actions chosen affect an individual's well being
D) Rely only on data drawn from the real world
Q3) Pre commitment is
A) A solution for dynamic inconsistency
B) A choice that removes future options
C) A way to avoid "bad" choices by restricting future options
D) All of these
To view all questions and flashcards with answers, click on the resource link above.
15
Chapter 14: Equilibrium and Efficiency
Available Study Resources on Quizplus for this Chatper
52 Verified Questions
52 Flashcards
Source URL: https://quizplus.com/quiz/73526
Sample Questions
Q1) Aggregate surplus
A) Is minimized under perfect competition
B) Is the difference between consumer and producer surpluses
C) Is the sum of consumer and producer surpluses
D) A and B
Q2) With free entry
A) There is a known and limited number of potential suppliers that can produce a good in the long run
B) There is an unlimited number of firms that can produce a good in the long run
C) The long run market demand curve is horizontal at the market price
D) Firms will always enter the market
Q3) In a perfectly competitive market
A) Firms take quantities as given
B) Firms produce the quantity for which marginal cost equals price
C) Firms can increase profits by charging a price higher than the market price
D) Firms produce the quantity for which marginal cost equals marginal revenue
Q4) Discuss some of the changes in the organization of the economic systems of countries transitioning from communism to capitalism.How does this type of market reform increase economic efficiency?
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: Market Intervention
Available Study Resources on Quizplus for this Chatper
52 Verified Questions
52 Flashcards
Source URL: https://quizplus.com/quiz/73525
Sample Questions
Q1) The incidence of a tax
A) Falls entirely on suppliers if supply is perfectly elastic
B) Falls entirely on suppliers if demand is perfectly inelastic
C) Falls entirely on consumers if supply is perfectly elastic
D) Falls entirely on consumers if demand is perfectly elastic
Q2) A quota
A) Is a tax on imports
B) Is a tax on exports
C) Directly limits the total quantity of a good that can be imported
D) Directly limits the total quantity of a good that can be exported
Q3) A specific tax
A) Is a fixed dollar amount that must be paid on each unit bought or sold
B) Is a tax that is stated as a percentage of the good's price
C) Is a tax that is stated as a percentage of the good's price, which increases as quantity bought increases
D) Is a tax that is only paid by producers
Q4) Discuss why the government would implement a program to lower the price of a good and the welfare effects of such a program.Give an example of good for which such a policy has been implemented and explain the purpose of the policy.
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 16: General Equilibrium, Efficiency, and Equity
Available Study Resources on Quizplus for this Chatper
52 Verified Questions
52 Flashcards
Source URL: https://quizplus.com/quiz/73524
Sample Questions
Q1) According to the principle of utilitarianism
A) Society should place equal weight on the well-being of every individual
B) Society should place all weight on the well-being of its worst-off member
C) Society should place all weight on the well-being of its best-off member
D) Equal division of society's resources among all members of the population is the most equitable outcome
Q2) Compare and contrast the principles of utilitarianism,Rawlsianism and egalitarianism.Discuss the assumptions of each and the difficulties societies might face while trying to conform to them.
Q3) The most commonly used notion of economic efficiency originated in the writings of
A) John Nash
B) Kenneth Arrow
C) Gerard Debreu
D) Vilfredo Pareto
Q4) In an exchange economy
A) People produce goods, but do not own or trade them
B) People own and trade goods, but no production takes place
C) People produce, own and trade goods
D) People trade goods, but do not own them or produce them
To view all questions and flashcards with answers, click on the resource link above. Page 18
Chapter 17: Monopoly
Available Study Resources on Quizplus for this Chatper
52 Verified Questions
52 Flashcards
Source URL: https://quizplus.com/quiz/73523
Sample Questions
Q1) An oligopoly market is
A) A market with many sellers
B) A market with a single seller
C) A market with a few sellers
D) A market with a few buyers
Q2) When a monopolist maximizes its profit by selling a positive amount
A) Its marginal revenue must equal its marginal cost at that quantity
B) Its marginal revenue must exceed its marginal cost at that quantity
C) Its marginal revenue must be less than its marginal cost at that quantity
D) Its marginal revenue must be equal to zero
Q3) A loss leader
A) Is a product that is sold at a price above its direct marginal cost to encourage sales of a complementary product
B) Is a product that is sold at a price below its direct marginal cost to encourage sales of a substitutable good
C) Is a product that is sold at a price below its direct marginal cost to encourage sales of a complementary good
D) Is a product that is sold at a price below its variable cost to encourage sales of a complementary good
To view all questions and flashcards with answers, click on the resource link above.
Page 19
Chapter 18: Pricing Policies
Available Study Resources on Quizplus for this Chatper
52 Verified Questions
52 Flashcards
Source URL: https://quizplus.com/quiz/73522
Sample Questions
Q1) With a two-part tariff
A) Consumers simply pay a fixed fee if they buy anything at all
B) Consumers pay a fixed fee if they buy anything at all, plus a separate per-unit price for each unit they buy
C) Consumers pay a fixed fee if they buy anything at all, plus an annual fee for the right to purchase anything
D) Consumers simply pay a fee for the right to buy anything
Q2) Explain bundling and mixed bundling and the benefits to a multi product monopolist of such packaging schemes.
Q3) Price discrimination is based on observable customer characteristics
A) When a firm can distinguish consumers with a high versus low willingness to pay
B) When a firm offers a menu of alternatives, designed so that different customers will make different choices based on their willingness to pay
C) A monopolist knows perfectly the customer's willingness to pay for each unit its sells and can charge a different price for each unit
D) When a firm cannot distinguish consumers with a high versus low willingness to pay
To view all questions and flashcards with answers, click on the resource link above. Page 20
Chapter 19: Oligopoly
Available Study Resources on Quizplus for this Chatper
52 Verified Questions
52 Flashcards
Source URL: https://quizplus.com/quiz/73521
Sample Questions
Q1) As products become less differentiated
A) Consumers are less willing to switch in response to price changes
B) Consumers are more willing to switch in response to price changes
C) Competition becomes less intense
D) Consumers are not willing to switch in response to price changes
Q2) At the Nash equilibrium of an oligopoly market
A) Only one firm is able to earn profits
B) Each firm is making a profit-maximizing choice, regardless of the choices of its rivals
C) Each firm is making a profit-maximizing choice given the choices of its rivals
D) Each firm produces the same quantity
Q3) Define the Bertrand model and its assumptions.Explain why the model predicts the perfectly competitive outcome despite the number of sellers.Discuss the limitations of the model.
Q4) A firm's best response
A) Is a firm's most instant choice given the actions of its rivals
B) Is selected by one firm in a Nash equilibrium
C) Is always the option with the highest price for each firm
D) Is a firm's most profitable choice given the actions of its rivals
To view all questions and flashcards with answers, click on the resource link above. Page 21
Chapter 20: Externalities and Public Goods
Available Study Resources on Quizplus for this Chatper
52 Verified Questions
52 Flashcards
Source URL: https://quizplus.com/quiz/73519
Sample Questions
Q1) A public good
A) Is a good that is nonrival
B) Is a good that is nonexcludable
C) Is often provided by the government
D) All of these
Q2) A private good
A) Is a good for which consumption involves perfect rivalry
B) Is nonexcludable
C) Is often provided by the government
D) Is often not provided by the government
Q3) The economic gain that a positive externality provides to others is called
A) An internal benefit
B) An external benefit
C) An external cost
D) An internal cost
Q4) The field of political economy
A) Examines the economic consequences of free markets
B) Examines the economic consequences of public sector decision making
C) Examines the economic consequences of private sector decision making
D) Examines the labor market
To view all questions and flashcards with answers, click on the resource link above. Page 22