Introduction to Microeconomics Test Questions
Course Introduction
Introduction to Microeconomics explores the fundamental principles of economic theory as they apply to individual consumers, firms, and markets. Students will examine the concepts of supply and demand, market equilibrium, consumer behavior, production costs, and various market structures such as perfect competition, monopoly, and oligopoly. The course also addresses the impact of government interventions, externalities, and public goods, providing a foundation for understanding how microeconomic forces shape decision-making and resource allocation in everyday life.
Recommended Textbook
ECON MICRO 5th Edition by William
A. McEachern
Available Study Resources on Quizplus
21 Chapters
3187 Verified Questions
3187 Flashcards
Source URL: https://quizplus.com/study-set/3724
Page 2
Chapter 1: The Art and Science of Economic Analysis
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/74251
Sample Questions
Q1) Goods and services are scarce because:
A)people are greedy.
B)they are produced using scarce resources.
C)firms keep production low in order to earn higher profits.
D)they are produced by firms that seek profits.
E)the government wants to maintain its power over the economy.
Answer: B
Q2) Environmentalists have continually argued for the use of alternatives to fossil fuels to generate energy. Harnessing wind power by setting up wind farms had been one alternative proposed and implemented. As it is now known that these wind farms lead to the slicing and dicing of migratory birds and the decimation of the local bat population, we could say that environmentalists have committed the:
A)fallacy of composition.
B)fallacy that association is causation.
C)fallacy of segmentation.
D)mistake of ignoring secondary effects.
E)mistake of ignoring the obvious.
Answer: D
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: Economic Tools and Economic Systems
Available Study Resources on Quizplus for this Chatper
159 Verified Questions
159 Flashcards
Source URL: https://quizplus.com/quiz/74252
Sample Questions
Q1) Adam Smith believed that people's pursuit of their own self-interests:
A)tended to promote general welfare.
B)required the government's "invisible hand" to keep the economy running smoothly.
C)might cause aggregate demand to be greater than aggregate supply.
D)would increase the wealth of a nation, which was the quantity of gold and silver it owned.
E)would decrease the wealth of a nation, which was its ability to produce goods and services.
Answer: A
Q2) One flaw of pure capitalism is that a person who owns no resources could starve.
A)True
B)False
Answer: True
Q3) It is possible for one person to have a comparative advantage in the production of all products.
A)True
B)False
Answer: False
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 3: Economic Decision Makers
Available Study Resources on Quizplus for this Chatper
174 Verified Questions
174 Flashcards
Source URL: https://quizplus.com/quiz/74253
Sample Questions
Q1) Which of the following is not based on the benefits-received principle of taxation?
A)Charging a fee for use of public golf courses
B)Differences between residential and out-of-state college tuition
C)The excise tax on gasoline
D)Toll booths on a highway
E)Charging a fee per bag to haul away garbage
Answer: B
Q2) Which of the following is true of public goods?
A)The market mechanism helps to signal the quantity that is demanded by the public.
B)Payment for consumption is efficiently provided by market prices.
C)Consumption by one person does not preclude consumption of the same good by another person.
D)The public sector is guided to produce the correct quantity by market prices.
E)Voluntary contributions will be sufficient to finance the production of public goods.
Answer: C
To view all questions and flashcards with answers, click on the resource link above.
Chapter 4: Demand, Supply, and Markets
Available Study Resources on Quizplus for this Chatper
152 Verified Questions
152 Flashcards
Source URL: https://quizplus.com/quiz/74254
Sample Questions
Q1) Other things constant, the demand for a product is the amount that:
A)sellers are willing and able to sell at alternative prices.
B)buyers purchase over different time periods.
C)sellers are willing to sell at a particular price.
D)buyers are willing and able to purchase at different prices.
E)buyers are willing to consume at a constant price.
Q2) If corn and soybean are alternative crops grown by most farmers, an increase in the price of corn is likely to:
A)increase the supply of corn.
B)increase the supply of soybeans.
C)decrease the supply of soybeans.
D)decrease the supply of corn.
E)decrease the demand for soybeans.
Q3) Classified ads and job web sites reduce the transaction costs of finding a new job.
A)True
B)False
Q4) The slope of the demand curve for a normal good must be positive.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: Elasticity of Demand and Supply
Available Study Resources on Quizplus for this Chatper
149 Verified Questions
149 Flashcards
Source URL: https://quizplus.com/quiz/74255
Sample Questions
Q1) The cross-price elasticity of demand measures the:
A)elasticity of demand at the intersection of the supply and demand curves.
B)elasticity of supply at the intersection of supply and demand curves.
C)relative elasticity of supply and demand at the intersection of the two curves.
D)relationship between the demand for one good and the price of another.
E)relationship between the demand for one good and the supply of another.
Q2) When the cross-price elasticity of demand between two products is positive, the two goods are said to be substitutes.
A)True
B)False
Q3) If an increase in the price of a product from $100 to $200 per unit leads to a decrease in the quantity demanded from 10 to 8 units, then demand is:
A)elastic.
B)inelastic.
C)unit elastic.
D)zero.
E)perfectly elastic.
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Consumer Choice and Demand
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/74256
Sample Questions
Q1) Elvis values the first gravy sandwich at $5, the second at $4.50, the third at $4. If he buys three for $4 each, his consumer surplus has a value of:
A)$5.
B)$4.
C)$1.50.
D)$9.50.
E)$12.
Q2) Along a consumer's demand curve the:
A)price of a good reflects the producer's costs.
B)price reflects the dollar value of the total utility derived from the good.
C)price reflects the dollar value of the marginal utility of each additional unit of the good.
D)quantity demanded reflects the dollar value of the income earned.
E)quantity demanded reflects the dollar value of a substitute.
Q3) The law of diminishing marginal utility states that the marginal utility of my tenth pistachio is less than the marginal utility of my third pistachio, other things constant.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Production and Cost in the Firm
Available Study Resources on Quizplus for this Chatper
151 Verified Questions
151 Flashcards
Source URL: https://quizplus.com/quiz/74257
Sample Questions
Q1) Which of the following are implicit costs for a typical firm?
A)Insurance costs
B)Electricity costs
C)The opportunity costs of the capital owned and used by the firm
D)The cost of the labor hired by the firm
E)The cost of raw materials
Q2) Suppose Ripco owns the building from which it operates. If:
A)the firm pays no rent, there is no opportunity cost.
B)the firm does not rent the building to anyone else, there is no opportunity cost.
C)the firm pays rent, there is an opportunity cost.
D)its usage of the building precludes it from renting to anyone else, there is an opportunity cost.
E)the firm can use the building for other things, there is no opportunity cost.
Q3) Which of the following would most likely reach the long run most rapidly?
A)A nuclear power plant
B)A college
C)A lumber mill
D)A shopping mall
E)A hot dog stand
To view all questions and flashcards with answers, click on the resource link above.
Page 9
Chapter 8: Perfect Competition
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/74258
Sample Questions
Q1) Suppose a perfectly competitive constant-cost industry is in long-run equilibrium when market demand increases. What will probably happen to a firm in this industry in the long run?
A)There will be no change in the equilibrium price and quantity supplied by the firm.
B)The equilibrium price will be higher in the long run.
C)The equilibrium price will be lower in the long run.
D)It will charge the same equilibrium price but will reduce its output.
E)It will experience higher average total costs and will reduce its output.
Q2) Economists assume that firms seek to:
A)maximize accounting profit.
B)maximize economic profit.
C)maximize total revenue.
D)earn normal profit.
E)maximize cost.
Q3) Perfectly competitive firms are sometimes called price makers because they have significant control over product price.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
10
Chapter 9: Monopoly
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/74259
Sample Questions
Q1) Anything that prevents new firms from competing on an equal basis with existing firms in an industry is called a barrier to entry.
A)True
B)False
Q2) A monopolist can either sell 100 units for $3 each or sell 160 units for $2 each. This implies that, for the given range of output, elasticity of demand for the monopolist's product is:
A)greater than one but not infinite.
B)one.
C)zero.
D)less than zero.
E)infinite.
Q3) A natural monopoly forms when a firm has:
A)a license.
B)a patent.
C)a U-shaped long-run average cost curve.
D)a downward-sloping long-run average cost curve.
E)a right to exclusively use a natural resource.
To view all questions and flashcards with answers, click on the resource link above.
11
Chapter 10: Monopolistic Competition and Oligopoly
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/74260
Sample Questions
Q1) In a coordination game, a Nash equilibrium occurs when:
A)each player ignores the strategy of the other player.
B)each player chooses no strategy, but maintains the status quo.
C)each player chooses the same strategy.
D)one player can improve the outcome by changing his strategy.
E)each player chooses different strategies.
Q2) In the short run, a monopolistically competitive firm is:
A)likely to shut down.
B)likely to charge a price that is less than the average cost of production.
C)guaranteed to earn an economic loss.
D)guaranteed to earn either zero or positive economic profit.
E)not guaranteed any level of economic profit.
Q3) If a monopolistically competitive firm is in long-run equilibrium and average cost equals $150, then the market price must be $150.
A)True
B)False
Q4) Price wars occur more often in monopolistic competition than in other market structures.
A)True
B)False
Page 12
To view all questions and flashcards with answers, click on the resource link above.
Chapter 11: Resource Markets
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/74261
Sample Questions
Q1) Both sugar and fructose can be used in the production of candy. If the price of sugar increases, _____.
A)the demand for sugar increases as the relative price of sugar decreases
B)sugar becomes relatively more expensive than fructose only if the price of fructose falls
C)sugar becomes relatively more expensive than fructose, other things constant
D)the price of fructose immediately increases
E)the price of fructose immediately decreases
Q2) The market supply curve of a resource is:
A)downward sloping.
B)upward sloping.
C)horizontal at the market price.
D)vertical.
E)determined by firms.
Q3) The marginal revenue product curve slopes downward only if the firm is a price taker in the product market.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
13
Chapter 12: Labor Markets and Labor Unions
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/74262
Sample Questions
Q1) If a teachers' union negotiates a wage for all college professors above the equilibrium wage rate, the market supply curve of college professors becomes _____.
A)perfectly elastic everywhere
B)perfectly inelastic everywhere
C)horizontal, and then it slopes upward
D)vertical, and it slopes upward
E)upward sloping and then becomes horizontal
Q2) Leisure time is not subject to diminishing marginal utility.
A)True
B)False
Q3) People generally view leisure as _____.
A)an inferior good
B)a normal good
C)a source of disutility
D)being more valuable per unit, the more they have of it
E)being unrelated to utility maximization
Q4) An increase in the wage rate will decrease the demand for labor.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 13: Capital, Interest, Entrepreneurship, and Corporate Finance
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/74263
Sample Questions
Q1) The payment stream from shares is more predictable than the payment stream from bonds.
A)True
B)False
Q2) Financial intermediaries bring suppliers and demanders together in the market for: A)labor.
B)loanable funds.
C)saving.
D)physical capital.
E)human capital.
Q3) The present value of receiving M dollars in year t when the prevailing interest rate is i is given by the formula _____.
A)M i<sup>t</sup>
B)M × (1 i)<sup>t</sup>
C)M/(1 + i)<sup>t</sup>
D)M ×i<sup>t</sup>
E)M/i<sup>t</sup>
To view all questions and flashcards with answers, click on the resource link above.
Page 15
Chapter 14: Transaction Costs, Asymmetric Information, and Behavioral Economics
Available Study Resources on Quizplus for this Chatper
152 Verified Questions
152 Flashcards
Source URL: https://quizplus.com/quiz/74264
Sample Questions
Q1) In order to focus on its area of core competency, a firm relies on:
A)government intervention and the bounded rationality of its managers.
B)the market price and the minimum efficient scale of production.
C)economies of scope.
D)the division of labor and the law of comparative advantage.
E)the vertical integration of its production process.
Q2) Which of the following is true of traditional economics?
A)It questions the assumptions of utility and demand.
B)It questions the assumptions of unbounded rationality and will power.
C)It borrows insights from philosophy to explain certain economic decisions.
D)It assumes that people make irrational choices and end up with bad outcomes.
E)It assumes that people act rationally to maximize their overall well-being.
Q3) Which of these factors is likely to reduce search cost and price dispersion?
A)Growth in the number of educated workers
B)Growth of information technology
C)Growth in unemployment
D)Immigration of skilled workers
E)Decline in the average earnings of workers
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: Economic Regulation and Antitrust Policy
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/74265
Sample Questions
Q1) The average cost curve for a natural monopoly is downward sloping where it intersects the market demand curve.
A)True
B)False
Q2) If an electric company is allowed by regulators to earn only a normal profit, it will produce at the point where _____.
A)MR = MC
B)P = MC
C)MC = Qd
D)P = AC
E)MR = AC
Q3) Most local phone companies:
A)face a vertical demand curve.
B)operate in a perfectly competitive industry.
C)operate in an oligopoly industry.
D)face an upward-sloping demand curve.
E)are natural monopolies.
Q4) Horizontal mergers involve firms in different industries.
A)True
B)False
Page 17
To view all questions and flashcards with answers, click on the resource link above.
Chapter 16: Public Goods and Public Choice
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/74266
Sample Questions
Q1) In a democratic society, the preferences of _____ will often dominate decisions made by direct majority voting
A)elected government representatives
B)special interest groups
C)rent seekers
D)senior citizens
E)the median voter
Q2) Which of the following is an example of a good that is nonrival and nonexclusive in consumption?
A)Televisions
B)Haircuts
C)Pizza
D)National defense
E)Tickets to a rock concert
Q3) A limit on special-interest contributions to national political campaigns:
A)would give challengers an edge over incumbents.
B)is usually supported by special-interest groups as a way of saving money.
C)would involve widespread costs and concentrated benefits.
D)would reduce the extent of rent seeking.
E)is an example of competing-interest legislation.
To view all questions and flashcards with answers, click on the resource link above. Page 18
Chapter 17: Externalities and the Environment
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/74267
Sample Questions
Q1) To maximize social welfare in the presence of a negative externality, marginal __________ must equal marginal __________.
A)social cost; private cost
B)private cost; external cost
C)social cost; social benefit
D)private cost; social benefit
E)social cost; external cost
Q2) Open-access resources are owned by:
A)every individual in society.
B)large firms.
C)no one.
D)the government.
E)nonprofit agencies.
Q3) Economists view pollution as an economic problem that arises because:
A)private enterprises always minimize the amount of pollution produced.
B)profitable firms rarely pollute.
C)the level of pollution declines as the economy grows.
D)firms that pollute do not pay the full social cost of producing their output.
E)pollution costs are borne by the consumer.
To view all questions and flashcards with answers, click on the resource link above.
Page 19
Chapter 18: Poverty and Redistribution
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/74268
Sample Questions
Q1) If 15 percent of households receive 15 percent of the total income in an economy,
A)the Lorenz curve will lie above the line of equality
B)the Lorenz curve will lie below the line of equality
C)the slope of the Lorenz curve will be equal to zero
D)the slope of the Lorenz curve will be equal to one
E)the slope of the Lorenz curve will be equal to infinity
Q2) Evidence suggests that spending by quintiles is more evenly distributed than income by quintiles.
A)True
B)False
Q3) The U.S. infant mortality rate:
A)is lower than the mortality rates in other industrialized countries.
B)is higher than the mortality rates in other industrialized countries.
C)is the same as the mortality rates in other industrialized countries.
D)is not related to the poverty rate.
E)is inversely related to the poverty rate.
Q4) Poor welfare recipients often face very high marginal tax rates.
A)True
B)False
Page 20
To view all questions and flashcards with answers, click on the resource link above.
Chapter 19: International Trade
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/74269
Sample Questions
Q1) If a tariff increases, everybody loses except the government imposing the tariff.
A)True
B)False
Q2) Quotas are favoured over free international trade by:
A)consumers in the importing country and consumers in the exporting country.
B)domestic producers in the importing country and foreign producers with quota rights.
C)domestic producers and domestic consumers in the exporting country.
D)foreign producers without quota rights and consumers in the importing country.
E)foreign consumers and domestic producers in the exporting country.
Q3) When a country imposes a per-unit tariff on an imported good or service, _____.
A)the price that domestic consumers pay for the import falls
B)the quantity of the good or service imported into the country declines
C)the quantity of the good or service imported into the country increases
D)the price at which any supplier can sell output in the world market decreases
E)the quantity of the good or service demanded by the consumers increases
Q4) A tariff is a tax on either imports or exports.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 21
Chapter 20: International Finance
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/74270
Sample Questions
Q1) An arbitrageur in foreign exchange is a person who:
A)buys foreign currency, hoping to profit by selling it at a higher exchange rate at some later date.
B)earns illegal profit by manipulating foreign exchange.
C)causes differences in exchange rates in different geographic markets.
D)simultaneously buys large amounts of a currency in one market and sells it in another market.
E)mediates disputes when there is no agreement on exchange rates in international currency markets.
Q2) Those who simultaneously buy and sell currency to take advantage of exchange rate differences are called _____.
A)speculators
B)hedgers
C)entrepreneurs
D)arbitrageurs
E)underwriters
Q3) Flexible exchange rates do not allow for discretionary monetary policy.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 22
Chapter 21: Economic Development
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/74271
Sample Questions
Q1) The newly industrialized Asian economies have developed by adopting the latest technology and investing in _____.
A)human capital
B)the agricultural sector
C)defense equipment
D)public infrastructure like roads, communication, and transport
E)developing consumer-oriented products.
Q2) There is a possibility of increased capital imports, investment, and consumption in countries that receive foreign aid because, in general, foreign aid provides _____.
A)a surplus in all product markets
B)additional agricultural output
C)additional purchasing power
D)a regular inflow of skilled labor
E)additional foreign exchange
Q3) Japan has one of the most developed economies in the world because Japan is rich in natural resources.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 23