Intermediate Microeconomics
Test Questions
Course Introduction
Intermediate Microeconomics delves deeper into the analysis of individual markets and the behavior of consumers and firms. Building on introductory concepts, the course explores topics such as consumer choice, production and cost functions, market structures (like perfect competition, monopoly, and oligopoly), and the role of government intervention in markets. Students develop analytical and mathematical tools to understand decision-making, equilibrium outcomes, and efficiency in various economic environments, preparing them for more advanced study in economics and related fields.
Recommended Textbook
Microeconomics 10th Edition by Stephen Slavin
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20 Chapters
4504 Verified Questions
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Page 2
Chapter 1: A Brief Economic History of the United States
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Sample Questions
Q1) Which of the following was considered a mild recession?
A)1937-1938
B)1973-1975
C)1981-1982
D)1990-1991
Answer: D
Q2) Which statement is true?
A)Our economy is larger than Japan's and our population is larger than Japan's.
B)Our economy is smaller than Japan's and our population is smaller than Japan's.
C)Our economy is larger than Japan's and our population is smaller than Japan's.
D)Our economy is smaller than Japan's and our population is larger than Japan's.
Answer: A
Q3) The world's number one economic power, in terms of total output, is
A)the United States.
B)Germany.
C)China.
D)Japan.
Answer: A
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3
Chapter 2: Resource Utilization
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Sample Questions
Q1) If we were at point ____ it would be possible to produce more heart transplants and more round-the-world trips.
A)P
B)Q
C)R
D)S
Answer: A
Q2) The production possibilities curve tells us that if full employment exists and a nation wishes to permanently increase its production of military goods, it must
A)also increase its production of nonmilitary goods.
B)reduce its output of nonmilitary goods.
C)suffer inflation.
D)suffer unemployment.
Answer: B
Q3) What is the opportunity cost of going from point A to point B?
Answer: 10 cars
Q4) The economy usually operates at point _______.
Answer: T
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Page 4
Chapter 3: The Mixed Economy
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Sample Questions
Q1) A $3 increase in the federal gasoline tax would
A)reduce air pollution.
B)very likely be voted for by most Representatives and Senators.
C)convince many Americans to buy SUV's.
D)have little effect on the number of miles driven.
Answer: A
Q2) Karl Marx and Friedrich Engels believed that after the capitalists were overthrown, eventually
A)the state would get stronger.
B)the state would wither away.
C)the capitalists would regain power.
D)a fascist state would emerge.
Answer: B
Q3) A ______ good is something whose consumption by one person does not prevent its consumption by other people.
Answer: public
Q4) The factory conditions of 19th century England that Karl Marx described may be found in his book, ______.
Answer: Das Kapital
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Chapter 4: Supply and Demand
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Sample Questions
Q1) The price of gasoline was much higher in 2007 than in 2003 because
A)The increase in demand from the emerging industrial nations China and India.
B)The decrease in supply due to the disruption in drilling and refining oil in the Southern United States due to Hurricane Katrina.
C)Both of the choices.
D)Neither of the choices.
Q2) When there is a price floor there will be
A)a shortage.
B)a surplus.
C)either a shortage or a surplus.
D)neither a shortage nor a surplus.
Q3) If price was set by the government at $4, there would be a price _____________, that would cause a ___________ of _______ units.
A)floor, surplus, 8
B)floor, surplus, 10
C)ceiling, shortage, 8
D)ceiling, shortage, 12
E)ceiling, shortage, 14
Q4) _____ is the charging of "an unconscionable or exorbitant rate of interest."
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Chapter 5: Demand, Supply, and Equilibrium
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Sample Questions
Q1) A shift in the demand curve for gasoline would occur if
A)the price of gasoline changed.
B)more oil was discovered.
C)there was a shift in the supply curve for gasoline.
D)people decided to travel more by car.
Q2) An inferior good is
A)generally of low quality.
B)purchased in the underground economy.
C)is damaged or referred to as a "second".
D)purchased in declining quantities as income rises.
Q3) If a federal gasoline tax of $1 per gallon goes into effect, in an attempt to promote conservation of energy, the result would be to
A)increase both equilibrium price and quantity for gasoline.
B)decrease both equilibrium price and quantity for gasoline.
C)increase the equilibrium price and decrease the equilibrium quantity for gasoline.
D)decrease the equilibrium price and decrease the equilibrium quantity for gasoline.
Q4) A change in consumer taste will prompt a change in ____________.
Q5) Supply is defined as ______________________________________________.
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Chapter 6: The Price Elasticities of Demand and Supply
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Sample Questions
Q1) Since the cross elasticity of demand between hamburger patties and cheese is negative, these are ________ goods.
A)complementary
B)substitutable
C)normal
D)both complementary and substitutable
Q2) If the price were increased from $94 to $96 and quantity demanded fell from 38 to 37, calculate elasticity; state whether demand is elastic, unit elastic, or inelastic, and find how much total revenue was when the price was $94 and $96.
Q3) The demand for goods such as telephone service and medical care tend to be
A)perfectly elastic.
B)relatively elastic.
C)unit elastic.
D)relatively inelastic.
Q4) In general, the more the substitutes available for a good
A)the more inelastic the demand for the good.
B)the more elastic the demand for the good.
C)the greater the demand for the good.
D)the less the demand for the good.
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Chapter 7: Theory of Consumer Behavior
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Sample Questions
Q1) Utility (is/is not) _______ inherent in a particular good or service.
Q2) If total utility is decreasing, then
A)marginal utility is zero.
B)marginal utility is decreasing but still greater than zero.
C)marginal utility is equal to one.
D)marginal utility is increasing.
E)marginal utility is less than zero.
Q3) Jason's cooking is so terrible that Melissa says she will have to be paid in order to even try it. Thus, her marginal utility for Jason's cooking is A)constant.
B)increasing.
C)positive.
D)negative.
Q4) Because some essential goods are sometimes cheap and some nonessential goods are sometimes very expensive, the _____________________ paradox developed.
Q5) If you pay a very high price for a good or service, you _____ (are/are not) getting ripped off.
Q6) If your marginal utility becomes negative, your total utility ____________.
Q7) Total utility is at a ___________ when marginal utility is zero.
Page 9
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Chapter 8: Cost
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Sample Questions
Q1) As long as there are __________ costs, we are in the short run.
A)variable
B)fixed
C)marginal
D)average
Q2) At an output of 4, AFC is
A)$50.
B)$100.
C)$200.
D)$400.
E)cannot be found.
Q3) The decision to go out of business
A)may be made only in the short run.
B)may be made only in the long run.
C)may be made in either the short run or the long run.
Q4) Which statement is false?
A)Total cost rises with output because variable cost rises.
B)A firm will operate when prospective sales are greater than variable cost.
C)When output falls, variable costs fall.
D)None of the statements are false.
Page 10
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Chapter 9: Profit, Loss, and Perfect Competition
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Sample Questions
Q1) The perfect competitor has a perfectly elastic demand curve
A)only in the short run.
B)only in the long run.
C)in both the short run and the long run.
D)in neither the short run nor the long run.
Q2) The business owner will try to maximize A)profit per unit of output.
B)total profit.
C)total revenue.
D)output.
Q3) The firm's short-run supply curve begins at an output of A)100.
B)175.
C)250.
D)300.
Q4) In the long run a perfect competitor's output is _________ equal to its most efficient output.
A)sometimes
B)always
C)never
11
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Chapter 10: Monopoly
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Sample Questions
Q1) An industry that realizes such large economies of scale in producing its product that single-firm production of that good or service is most efficient is called a(n)
A)fixed cost monopoly.
B)patent monopoly.
C)economies of scale monopoly.
D)natural monopoly.
Q2) Legal barriers to entry into an industry include (1) _______ (2) _______ and (3) ______.
Q3) Matt has a monopoly producing glass baseball bats. His company is called Matt's Glass Bats. As a result of his monopoly position
A)he is guaranteed a profit.
B)he will shatter his competition.
C)his average total costs will be lower than the price he charges.
D)he is not guaranteed of profit, because monopoly power alone will not lead to business success.
Q4) There are ___________ limits to monopoly power.
A)no
B)some
C)many
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Chapter 11: Monopolistic Competition
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Sample Questions
Q1) This profit-maximizing (loss-minimizing) firm is making a profit or loss of about
A)$1,400
B)$225
C)$0
D)-$225
E)-$1,400
Q2) Under monopolistic competition
A)there is no distinction between the short run and the long run.
B)there are very few firms in the industry.
C)all the firms produce an identical product.
D)each firm breaks even in the long run.
Q3) Providing better service, ambience, or a convenient location are all forms of
A)price discrimination
B)product differentiation
C)consumer surplus
D)economies of scale
Q4) An industry that has many firms producing differentiated products is classified as
Q5) Product differentiation takes place in the _____________.
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Chapter 12: Oligopoly
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Sample Questions
Q1) Which statement is the most accurate?
A)When we talk about big business in the U.S., we're talking about oligopoly.
B)All oligopolists are very large firms.
C)Oligopolists produce at the minimum points of their average total cost curves.
D)It is impossible to lose money under oligopoly.
Q2) An oligopolist must be very sensitive to its rivals because
A)there are so many that their actions are unpredictable.
B)the government doesn't regulate oligopolists when it comes to colluding on prices and quantities.
C)there are so few that their behavior may well have consequences for the firm.
D)oligopolists try not to use non-price competition since it seems to be unfair to the consumer.
E)they have little else to do.
Q3) Calculate the Herfindahl-Hirschman Index in this industry.
Q4) Which of the following kinds of markets most closely resembles a monopoly market in its price and output level?
A)A market in which firms are engaged in a price conspiracy.
B)A monopolistically competitive market.
C)An oligopoly market.
D)None of the choices will be similar in outcome.
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Chapter 13: Corporate Mergers and Antitrust
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Sample Questions
Q1) In the 1920s General Motors gobbled up more than 100 independent carmakers. This would be an example of a ________ merger.
A)vertical
B)horizontal
C)conglomerate
Q2) The Justice Department brought suit against Microsoft contending ___________.
A)the company forced PC makers to take Internet Explorer as a condition of licensing Windows
B)the company's growing market power enabled them to crush competitors
C)the merger with Netscape's browser, Navigator, was in violation of Microsoft's consent decree
D)None of the choices are correct.
Q3) In 1997, the Justice Department brought a lawsuit against ________ because its growing market power had enabled the company to crush competitors, eliminate competition and innovation.
A)Microsoft
B)Walt Disney
C)Exxon
D)Standard Oil
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Page 15
Chapter 14: Demand in the Factor Market
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Sample Questions
Q1) A rise in the marginal revenue product schedule for labor
A)means that the marginal physical product of labor rose.
B)means that more labor is demanded by the firm.
C)means that the demand for the final product has fallen.
D)means that labor's productivity has risen.
Q2) If Peter produces 3 times as much per hour as Julia, we would say that he is ______ times as productive as she is.
Q3) If the productivity of capital rises, its MPP will _____ and its MRP will ____.
A)rise; rise
B)fall; fall
C)rise; fall
D)fall; rise
Q4) Workers in one country are more productive than workers in another country because
A)they have fewer complementary factors to work with.
B)they have more complementary factors to work with.
C)they are better motivated and paid.
Q5) If the price of a resource is raised, according to the substitution effect, _________; according to the output effect, ________, thereby lowering the employment of all resources.
Page 16
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Chapter 15: Labor Unions
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Sample Questions
Q1) Each of the following has at one time been a monopsony except A)Toyota.
B)Major League Baseball.
C)Wal-Mart
D)J.P Stevens.
E)R.J.Reynolds
Q2) When all the workers in a particular industry are unionized under a single union, there is a(n)
A)exclusive union.
B)inclusive union.
C)craft union.
D)revolutionary union.
E)union town.
Q3) Which statement is true about labor unions in the United States?
A)Overall unions have had no effect on wages, but have created better working conditions.
B)They did not gain widespread acceptance until the 1920s.
C)The U.S.has virtually the same percentage of its workforce unionized as other industrial nations.
D)None of the choices are true of labor unions in the U.S.
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Chapter 16: Labor Markets and Wage Rates
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Sample Questions
Q1) The substitution effect takes place as we move
A)upward from I to J.
B)down from J to I.
C)up from J to K.
D)down from K to J.
Q2) Harder, more unpleasant, less convenient work is usually ______ paid than the more conventional occupations.
Q3) The main reason for the decline in real wages in the 1970s and 1980s was
A)our high rate of productivity growth.
B)our low rate of productivity growth.
C)that so many housewives joined the labor force.
D)people couldn't find jobs.
Q4) At relatively low wage rates the ____________ outweighs the ____________.
A)income effect; substitution effect
B)substitution effect; income effect
C)marginal revenue product; resource demand
D)None of these choices are correct.
Q5) Mr. Retchnik was paid $500 a week in 1988, the base year. By 1994 he was earning $700. If the CPI was at 140 in 1994, how much were Mr. Retchnik's real wages in that year and by what percentage had they changed?
Page 18
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Chapter 17: Rent, Interest, and Profit
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Sample Questions
Q1) If there were no usury law, the interest rate would be ______%.
A)12
B)14
C)16
D)18
E)22
Q2) The marginal revenue product schedule for land refers to
A)a firm's demand for land.
B)the final demand for land.
C)the firm's supply of land.
D)the marginal physical product schedule for land.
Q3) Which statement is the most accurate?
A)Usury laws may hurt the very people they are intended to help by creating a shortage of loanable funds.
B)Usury laws, which were enacted in biblical times, were abolished by the Middle Ages.
C)Usury laws are opposed by most borrowers.
D)Usury laws help enforce the law of supply and demand.
Q4) The statement, "Corn is not high because a rent is paid, but a rent is paid because corn is high," was made by ________.
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Chapter 18: Income Distribution and Poverty
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Sample Questions
Q1) About one out of every ________ white children under the age of 18 is poor.
Q2) Statement I: Because of the Great Recession of 2008, our poverty rate is now at an eleven year high. Statement II: One child in every six lives below the poverty line.
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) If we counted the value of non-cash, or in-kind, benefits given to the poor by the government, the poverty rate would be
A)higher.
B)lower.
C)not affected.
Q4) Among non-Hispanic whites, blacks, and Hispanics, the group with the highest poverty rate is ____.
Q5) The richest American is __________________.
Q6) What is the percentage of income received by the upper quintile on line Z?
Q7) About one out of every ________ black children under the age of 18 is poor.
Q8) About one out of every _______ whites is poor.
Q9) If income were distributed equally our economic _________ would suffer.
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Chapter 19: International Trade
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Sample Questions
Q1) It is _______ that protection makes a nation worse off because it induces the firms in that nation to produce more of the goods that are costly to make and; it is _____ that one nation can gain from international trade only at the expense of other nations.
A)true; true
B)false; false
C)false; true
D)true; false
Q2) Italy has a comparative advantage in the production of which product?
Q3) In 2009 our merchandise trade deficit with China ______ and our merchandise trade deficit with Japan _______.
A)rose; rose
B)fell; fell
C)fell; rose
D)rose; fell
Q4) If Germany can make compact cars more efficiently than Russia, it enjoys
A)a comparative advantage.
B)an absolute advantage.
C)no advantage.
Q5) What is Spain's domestic exchange equation?
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Chapter 20: International Finance
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Sample Questions
Q1) The most effective way to reduce our current account deficit would be to A)lower our service trade deficit.
B)lower our merchandise trade deficit.
C)raise our capital account surplus.
D)lower our capital account surplus.
Q2) Our balance of trade is part of our _______________.
Q3) In 2009, the return on American investments abroad was _____ the return earned by foreigners on their investments in the U.S.
A)larger than B)about equal to C)smaller than
Q4) If the rate of exchange for a pound of $4, the rate of exchange for the dollar is _____ pound.
Q5) Appreciation of the euro relative to the dollar means that the A)dollar price of the euro has fallen.
B)euro price of gold has risen.
C)euro prices of U.S.goods exported to the nations that adopted the euro as its currency have fallen.
D)euro is cheaper for Americans.
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