Introduction to Microeconomics Exam Bank
Course Introduction
Introduction to Microeconomics provides students with a foundational understanding of economic principles as they relate to individual decision-making units such as households and firms. The course explores key concepts including supply and demand, market equilibrium, consumer and producer behavior, and the allocation of resources in different market structures. Through theory and real-world examples, students learn how prices are determined, how markets function efficiently or fail, and the role of government intervention. By the end of the course, students will be equipped to analyze everyday economic issues and understand the impact of microeconomic factors on society.
Recommended Textbook
Microeconomics 10th Edition by Stephen Slavin
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Chapter 1: A Brief Economic History of the United States
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Sample Questions
Q1) In the 1970s, the main economic problem was
A)stagflation.
B)huge budget surpluses.
C)a slow growing money supply.
D)an economy that was expanding too rapidly.
Answer: A
Q2) Ransom
A)was the first automobile manufacturer to use a division of labor and an assembly line.
B)was the first automobile manufacturer to manufacture a standardized engine with interchangeable parts.
C)sold millions of cars at a small unit of profit that allowed his company to dominate the industry.
D)All of the choices are true.
E)Olds
Answer: A
Q3) What was very unusual about the 2001 recession, was that consumer spending
Answer: continued to rise
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3
Chapter 2: Resource Utilization
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Sample Questions
Q1) Assuming the inner curve is our current production possibilities frontier, our economy usually operates at ____.
A)Point P
B)Point O
C)Point N
D)Point L
Answer: B
Q2) Referring to a production possibilities curve and the goods being compared, depict the economic event. The SARS epidemic spreads rapidly throughout Toronto, Canada claiming millions of lives (capital vs. consumer goods).
A)A movement from a point inside the curve to a point on or near the curve
B)A movement from a point on or near the curve to a point inside the curve
C)A shift in the entire curve to the right (outward)
D)A shift in the entire curve to the left (inward)
E)A movement along the curve
Answer: D
Q3) Place point C on the graph to indicate where our economy operated in 1997.
Answer: 11ea7e53_a681_7aa1_9a0a_33bc50e0952e_TB5854_00
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Chapter 3: The Mixed Economy
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Sample Questions
Q1) Which of the following statements is not true?
A)Our government ensures that competition flourishes, that information flows freely, and that property rights are protected.
B)The price mechanism will work best if there are a enough firms in each industry to ensure that no one firm can influence price.
C)Environmental pollution is considered a market failure.
D)Everything produced by the public sector is a public good.
Answer: D
Q2) The price system
A)sends signals to producers.
B)sends signals to consumers.
C)is based on supply and demand.
D)All of the choices are true about the price system.
Answer: D
Q3) One out of every ____ people on this planet lives in China.
Answer: 5
Q4) There has been a marked reduction in air pollution since ________________. Answer: 1972
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Chapter 4: Supply and Demand
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Sample Questions
Q1) Rent controls and usury laws are price _____.
Q2) The demand curve shows the relationship between
A)the demand and supply schedules.
B)demand and supply equilibrium.
C)price and quantity demanded.
D)None of these choices are correct.
Q3) When market price is below equilibrium price
A)a shortage is generated.
B)market price will rise.
C)quantity demanded is greater than quantity supplied.
D)all of the choices.
Q4) At equilibrium, each of these is true except
A)quantity demanded equals quantity supplied.
B)the price has no tendency to change.
C)market price equals equilibrium price.
D)there may be a shortage or a surplus.
Q5) As price falls, quantity supplied ___________.
Q6) If demand rises, what happens to equilibrium price and quantity?
Q7) When quantity demanded is greater than quantity supplied, market price is ________ the equilibrium price.
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Chapter 5: Demand, Supply, and Equilibrium
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Sample Questions
Q1) Which of the following can cause a change in supply?
A)Changes in demand
B)Changes in the number of buyers
C)Changes in tastes and preferences
D)Changes in the price of the good or service
E)Technological advance
Q2) A decrease in the demand for a service means that the
A)demand curve shifts to the right.
B)demand curve shifts to the left.
C)supply curve shifts to the right.
D)supply curve shifts to the left.
Q3) As the price of cameras increases
A)the demand for cameras will increase.
B)the demand for film will increase.
C)the demand for film will decrease.
D)the supply of cameras will increase.
Q4) If the price of manicures declines by 50 percent, the quantity demanded will _____ and the quantity supplied will _____.
Q5) Ebay has created a _______ market for goods that previously had purely _______ markets.
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Chapter 6: The Price Elasticities of Demand and Supply
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Sample Questions
Q1) The elasticity of demand for fish is estimated to be 3. If this estimate is accurate, then a 3% rise in price will
A)increase quantity demanded by 1%.
B)increase quantity demanded by 9%.
C)decrease quantity demanded by 1%.
D)decrease quantity demanded by 3%.
E)decrease quantity demanded by 9%.
Q2) Over time, the supply of a particular good or service tends to A)become more elastic.
B)become less elastic.
C)stay about the same.
Q3) If price were increased from $25 to $26 and quantity demanded fell from 10 to 9, calculate elasticity; state whether demand is elastic, unit elastic, or inelastic; and find out how much total revenue was when price was $25 and $26.
Q4) When elasticity is 0.1, demand is A)elastic.
B)inelastic.
C)unit elastic. D)undefined.
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Chapter 7: Theory of Consumer Behavior
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Sample Questions
Q1) The marginal utility of his third action figure would be
A)$10.
B)$12.
C)$14.
D)$36.
Q2) The economist most closely associated with consumer surplus is
A)Karl Marx.
B)Adam Smith.
C)Milton Friedman.
D)John Maynard Keynes.
E)Alfred Marshall.
Q3) Statement I: If you knew a person's demand schedule, you could figure out her marginal utility schedule. Statement II: As a person consumes more and more of a service, her total utility rises and her marginal utility 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.
Q4) A person's utility schedule ____________ (can/cannot) change over time.
Q5) 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) The MC curve intersects the AVC and ATC curves at their minimum points
A)none of the time.
B)some of the time.
C)most of the time.
D)all of the time.
Q2) Fill in the table. Assume the fixed cost is $600.
Q3) In the long run, all costs are _____________.
A)fixed
B)variable
C)equal to zero
D)None of the choices are correct.
Q4) If a firm with variable costs of $14 million lost money and continues to operate, we may conclude that its total revenue is _________.
Q5) Which is most clearly a variable cost?
A)Rent
B)Insurance premiums
C)Salaries of employees under long-term contract
D)Interest payments
E)Wages of production workers
Q6) At an output of one, variable cost = _______________.
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Chapter 9: Profit, Loss, and Perfect Competition
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Sample Questions
Q1) Which curve tells us the output at which a firm is producing at peak efficiency?
A)AFC
B)AVC
C)ATC
D)Demand
Q2) A firm with explicit costs of $3,000,000, no implicit costs, and total revenue of $3,000,000 would have
A)zero economic profit.
B)zero accounting profit.
C)accounting profits equal to economic profits, in this case both zero.
D)All of the choices are true of this firm.
Q3) A perfect competitor's demand curve and marginal revenue curve are __________.
Q4) Profit-maximizing price level
A)is OE.
B)is OF.
C)is OG.
D)cannot be found on this graph.
Q5) At an output of 6, MC = $17, ATC = $20, and MR = $20. At an output of 7, MC = $22, ATC = $20, and MR $20. Estimate the firm's total profits.
Page 11
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Chapter 10: Monopoly
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Sample Questions
Q1) Which statement is true?
A)All monopolies are good.
B)All monopolies are bad.
C)Most natural monopolies are government regulated or government owned.
D)None of these statements are true.
Q2) This monopolist
A)Is making a profit.
B)Is taking a loss.
C)May be making a profit or taking a loss.
D)Is breaking even.
Q3) Which statement is false?
A)The monopolist's demand and marginal revenue curves are two separate curves.
B)The monopolist can sell more output only by lowering price.
C)The monopolist produces at the minimum point of its ATC curve.
D)None of these statements are false.
Q4) The monopolist and the perfect competitor are similar in that
A)both operate at peak efficiency.
B)both can make a profit in the long run.
C)both types of markets have no barriers to entry.
D)both try to maximize profits.
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Chapter 11: Monopolistic Competition
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Sample Questions
Q1) If new firms enter a monopolistically competitive industry, an individual firm's demand curve will _____________ (increase / decrease).
Q2) If this firm produced at its most efficient output level it would produce _______ units.
A)50
B)80
C)115
D)140
Q3) This profit-maximizing firm produces a quantity of about ________ units.
A)40
B)45
C)50
D)55
Q4) If monopolistic competitors are making a profit in the short run, in the long run _____________ and squeeze out profits.
Q5) If monopolistic competitors are taking losses, in the long run firms ________ and market price will _______.
Q6) Peak efficiency _________ achieved under monopolistic competition.
Q7) Product differences are ___________ physical.
Page 13
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Chapter 12: Oligopoly
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Sample Questions
Q1) This oligopolist is a ___.
A)cut-throat competitor making a profit
B)cut-throat competitor taking a loss
C)colluder making a profit
D)colluder taking a loss
Q2) An industry with a Herfindahl-Hirschman index of 1,000 would have ____ firm(s).
A)1
B)10
C)100
D)1,000
Q3) Calculate the Herfindahl-Hirschman Index in this industry.
Q4) Which statement is false?
A)A few decades ago there were only 3 college textbook publishers, but now there are 20.
B)The college textbook market is an example of a cutthroat competition type of oligopoly.
C)A few decades ago there were 20 college textbook publishers, but now just 5 publish 80 percent of all college textbooks.
D)All of these statements are false.
Q5) How much is the concentration ratio in this industry?
Page 14
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Chapter 13: Corporate Mergers and Antitrust
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Sample Questions
Q1) The "rule of reason" originated in the
A)Standard Oil case of 1911.
B)U.S.Steel case of 1920.
C)ALCOA case of 1945.
D)XEROX case of 1973.
Q2) At least in the short run, each of these factors has increased competition except
A)the entry of foreign firms.
B)the growth in size of many American firms.
C)the rise of the service industries.
D)the rise of new industries.
Q3) A conglomerate merger involves combining firms
A)involved in the same industry.
B)that are based in different countries.
C)from unrelated industries.
D)that control various stages of the production of a particular good from raw materials to finished manufacture.
Q4) The ___________ case marked the high-water mark of antitrust enforcement.
Q5) The rule of reason originated in the __________________ case of 1920.
Q6) In the case against AT&T, it was forced to give up its _____________.
Page 15
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Chapter 14: Demand in the Factor Market
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Sample Questions
Q1) If the productivity of labor falls, its MPP will _____ and its MRP will ____.
A)rise; rise
B)fall; fall
C)rise; fall
D)fall; rise
Q2) If a large decrease in rent leads to a firm cutting back on the labor it uses,
A)the output effect outweighs the substitution effect.
B)the substitution effect outweighs the output effect.
C)the substitution and output effects are equal.
D)there is no way of determining the relative strengths of the output and substitution effects.
Q3) When the wage rate falls, if the substitution effect outweighs the output effect, the use of machinery will A)rise.
B)fall.
C)remain the same.
Q4) Is the firm a perfect competitor or an imperfect competitor? Explain your answer in one sentence.
Q5) How many units of capital would you hire?
Q6) How many workers would the firm hire if the wage rate were $700?
Page 16
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Chapter 15: Labor Unions
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Sample Questions
Q1) The number of labor union members reached its peak in the decade of the A)1950s.
B)1960s.
C)1970s.
D)1980s.
E)1990s.
Q2) The National Labor Relations Act
A)forbade the closed shop.
B)was an anti-labor piece of legislation.
C)guaranteed labor the right to organize unions.
D)allows firms to refuse to negotiate with an elected union.
Q3) The National Labor Relations (Wagner) Act prohibited employers from
A)coercion or interference with employees who are organizing or bargaining.
B)refusing to bargain in good faith with a union legally representing employees.
C)penalizing employees for union activity.
D)All of these choices are correct.
Q4) The AFL and the CIO merged in ___________.
Q5) The airline pilots' union and the National Education Association are examples of ______ unions.
Q6) If large employers could repeal one law, it would be the _____.
Page 17
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Chapter 16: Labor Markets and Wage Rates
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Sample Questions
Q1) Which statement is false?
A)Germany pays higher manufacturing wage rates than the U.S.does.
B)The United States pays the highest manufacturing wage rates in the world.
C)Both Britain and Norway pay higher manufacturing wage rates than the United States.
D)None of the statements are false.
Q2) Which statement is false?
A)The primary labor market includes jobs in the skilled crafts, management, and the professions.
B)The dual labor market consists of the primary market and the secondary market.
C)The dual labor market theory doesn't account for the huge middle level of occupations-nursing, teaching, social work, and non-college-graduate positions in insurance, banking, and retailing.
D)None of the statements are false.
Q3) The income effect and the substitution effect offset each other at point
Q4) Economic rent is the difference between _____________ and
Page 18
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Chapter 17: Rent, Interest, and Profit
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Sample Questions
Q1) Which statement is true?
A)Rent and wages, but not interest, are determined by supply and demand.
B)Wages and interest, but not rent, are determined by supply and demand.
C)Rent and interest, but not wages, are determined by supply and demand.
D)Rent, interest, and wages are determined by supply and demand.
Q2) The horizontal dotted line is
A)a price ceiling.
B)a price floor.
C)either a price ceiling or a price floor.
D)neither a price ceiling nor a price floor.
Q3) Who said that the economic profit in a purely competitive economy "will vanish in the subsequent process of competition and adaptation"?
A)Joseph Schumpeter
B)David Ricardo
C)Frank Knight
D)Karl Marx
Q4) ________________ said, "Property is theft!"
Q5) Which would you rather have? a) $100, 8 years from now at a 2% interest or b) $100, 2 years if the interest rate is 8%.
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Chapter 18: Income Distribution and Poverty
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Sample Questions
Q1) Each of these arguments may be used against Charles Murray's assertion that antipoverty spending caused poverty except
A)other countries that have higher antipoverty spending have much lower rates of teenage births.
B)welfare benefits vary widely from state-to-state, but the low-spending states also have high teenage pregnancy rates.
C)the poverty rate in 1980 was exactly the same as it was in 1968, when antipoverty spending began to rise sharply.
D)during the period from 1968 to 1980, the unemployment rate doubled, yet the poverty rate remained constant.
Q2) All the people employed at or just above the minimum wage could be considered the ____________________.
Q3) Of every 10 female-headed households with children under 6, over _____ have an income nearly below the poverty line.
A)2.4
B)4.1
C)5.3 D)8.7
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Chapter 19: International Trade
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Sample Questions
Q1) When the dollar value of a country's imports of final products is less than the dollar value of its exports, the country has a
A)balance of trade deficit.
B)budget surplus.
C)budget deficit.
D)balance of trade surplus.
E)None of the choices is true.
Q2) If productivity growth in Japan exceeds productivity growth in the U.S., to the point that the resource cost in ALL Japanese industries is lower than in the U.S., then
A)there is no feasible way for the U.S.and Japan to continue to trade.
B)mutually beneficial trade is possible.
C)trade between the U.S.and Japan is possible, but only Japan will benefit from it.
D)trade between the U.S.and Japan is possible, but only the U.S.will benefit from it.
Q3) Italy has an absolute advantage in the production of which product?
Q4) Both ______ and _______ targeted the huge American consumer market as a way to build up their own manufacturing base.
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Page 21
Chapter 20: International Finance
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Sample Questions
Q1) Between the summer of 2005 and April 2008, the Chinese yuan ___ against the U.S. dollar
A)appreciated by 5%.
B)appreciated by 21%.
C)depreciated by 5%.
D)depreciated by 20%.
Q2) Which statement is false?
A)Foreigners have reinvested most of the dollars they have earned trading with us in U.S.government and corporate securities, real estate, and direct investment in plant and equipment.
B)Until the early 1980s Americans were investing much more in foreign countries than foreigners were in the United States.
C)Our capital and current accounts add up to zero.
D)None of these statements is false.
Q3) As the dollar is devaluated
A)inflationary pressures are reduced and our standard of living is reduced.
B)inflationary pressures are increased and our standard of living is increased.
C)inflationary pressures are reduced and our standard of living is increased.
D)inflationary pressures are increased and our standard of living is reduced.
Q4) In 2009, our current account deficit was $___________ billion.
Page 22
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