Microeconomic Analysis Test Preparation
Course Introduction
Microeconomic Analysis explores the foundational principles of economic decision-making at the individual and firm level. The course examines how markets function, how consumers and producers make choices under constraints, and how prices and outputs are determined. Core topics include supply and demand, elasticity, consumer behavior, production and cost theory, market structures (perfect competition, monopoly, oligopoly), and the role of government intervention. Through theoretical models and real-world applications, students develop analytical tools to evaluate market outcomes and policy implications.
Recommended Textbook
Microeconomics 2nd Edition by Dean Karlan
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23 Chapters
3122 Verified Questions
3122 Flashcards
Source URL: https://quizplus.com/study-set/2649
Page 2
Chapter 1: Economics and Life
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143 Verified Questions
143 Flashcards
Source URL: https://quizplus.com/quiz/52856
Sample Questions
Q1) Which of the following is considered a macroeconomic topic?
A) iTunes raises the price of all its music.
B) iTunes raises the price of its pop artists' music only.
C) Jay-Z decides to sell his Brooklyn Nets minority ownership.
D) The labor force participation rate in the US fell by 1 percent in 2010.
Answer: D
Q2) When toilet paper sales increase,quarterly economic growth tends to rise.This is an example of:
A) two variables that are negatively correlated.
B) the presence of ceteris paribus.
C) correlation without causation.
D) causation with no correlation.
Answer: C
Q3) Which of the following is a question that an economist would use to break down a problem?
A) Will the average income per person for the society increase?
B) Does the decision maker have a track record of being rational?
C) Is there a scarce resource that will be allocated?
D) How might one person feel about the solution to the problem?
Answer: C
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Chapter 2: Specialization and Exchange
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139 Verified Questions
139 Flashcards
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Sample Questions
Q1) Tom and Jerry have two tasks to do all day: make dishes and build fences.If Tom spends all day making dishes,he will have make 16 dishes.If he instead devotes his day to building fences,Tom will build 4 fences.If Jerry spends his day making dishes,he will make 14 dishes; if he spends the day building fences,he will build 7 fences.If Tom divides his time evenly between activities and acts efficiently,he will produce:
A) 16 dishes and 4 fences.
B) 12 dishes and 3 fences.
C) 8 dishes and 2 fences.
D) 4 dishes and 3 fences.
Answer: C
Q2) The concepts of comparative advantage,specialization,and trade:
A) can be useful in explaining why countries import and export certain goods.
B) can be useful in explaining why individuals typically work at one job, and buy the other goods and services they need.
C) can be useful in explaining why we allow ourselves to be interdependent on others.
D) All of the statements are true.
Answer: D
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Page 4
Chapter 3: Markets
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158 Verified Questions
158 Flashcards
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Sample Questions
Q1) Which buyers and sellers are included in the market under consideration depends on:
A) their physical proximity.
B) the context.
C) their preferences.
D) the income levels.
Answer: B
Q2) The price of house paint,a normal good,has gone up.This change can be shown graphically as a:
A) shift in the demand curve to the right.
B) shift in the demand curve to the left.
C) movement along the demand curve to the right.
D) movement along the demand curve to the left.
Answer: D
Q3) Demand for Shell gasoline will increase if the price of:
A) Motor vehicles increases.
B) BP gasoline increases.
C) BP gasoline decreases.
D) Shell gasoline decreases.
Answer: B
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Chapter 4: Elasticity
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146 Verified Questions
146 Flashcards
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Sample Questions
Q1) The demand for markers is _______________________ than is the demand for Sharpies because ____________________.
A) less price elastic; markers require a smaller portion of one's income
B) more price elastic; markers require a smaller portion of one's income
C) less price elastic; the scope of the market for markers is more broadly defined
D) more price elastic; the scope of the market is for markers is more broadly defined
Q2) Considering the concept of cross-price elasticity,if two goods are complements:
A) an increase in the price of one will cause a decrease in the demand for the other.
B) an increase in the price of one will cause an increase in the demand for the other.
C) a decrease in the price of one will cause a decrease in the demand for the other.
D) the cross-price elasticity is positive.
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Chapter 5: Efficiency
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134 Verified Questions
134 Flashcards
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Sample Questions
Q1) Assume there are three hardware stores,each willing to sell one standard model hammer in a given time period.House Depot can offer their hammer for a minimum of $7.Lace Hardware can offer the hammer for a minimum of $10.Bob's Hardware store can offer the hammer at a minimum price of $13. Given the scenario described,if the market price of hammers increased from $8 to $11:
A) total producer surplus would increase by $3.
B) total producer surplus would increase by $6.
C) total producer surplus would increase by $9.
D) total producer surplus would increase by $4.
Q2) Total surplus:
A) can never be zero.
B) can never fall below zero.
C) is always above zero.
D) is less than the consumer surplus.
Q3) The creation of markets that were previously "missing":
A) can create winners and losers.
B) increases total surplus.
C) benefits those who interact in the new markets.
D) All of these are true.
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Page 7
Chapter 6: Government Intervention Microeconomics
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156 Verified Questions
156 Flashcards
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Sample Questions
Q1) A type of public policy set in response to rising prices of a basic necessity,such as food,might be:
A) to make it illegal to charge higher prices for those goods.
B) to hire more producers of those goods.
C) to subsidize the price of those goods.
D) All of these are ways government can try to address rising prices of a basic necessity.
Q2) The relative tax burden borne by buyers and sellers is called the:
A) tax wedge.
B) tax incidence.
C) tax revenue.
D) real tax.
Q3) Governments tend to set price ceilings:
A) to ensure everyone can afford certain goods.
B) to ensure producers make enough for everyone.
C) to ensure producers make enough profit to stay in the industry.
D) to prevent consumers from choosing the wrong goods.
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8
Chapter 7: Consumer Behavior
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130 Verified Questions
130 Flashcards
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Sample Questions
Q1) When a person's income decreases,the slope of the individual's budget constraint stays the same because:
A) everything is relatively more expensive now.
B) everything is relatively less expensive now.
C) the relative prices of the goods haven't changed.
D) the prices of the goods change in the same proportion.
Q2) Max is shopping for a new winter jacket.The salesperson explains that two coats have identical features-the Columbia jacket that costs $120,and the Burton jacket that costs $300.Max buys the Burton jacket.Burton jackets may be a good example of:
A) a normal good.
B) an inferior good.
C) a Veblen good.
D) a Giffen good.
Q3) The marginal utility gained from the consumption of successive units of a typical good:
A) tends to decrease.
B) tends to increase.
C) may increase or decrease depending on the cost of the good.
D) tends to stay the same.
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Page 9
Chapter 8: Behavioral Economics: A Closer Look at Decision Making
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100 Verified Questions
100 Flashcards
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Sample Questions
Q1) Kyle receives two free passes to the symphony as a bonus at work.He has never been to the symphony before and would probably not buy such tickets for their face value of $120.Kyle decides to use the tickets rather than sell them at face value.This type of behavior is:
A) irrational, since Kyle would not pay $120 for the tickets, yet gives up $120 by not selling them.
B) rational, since Kyle can check out the symphony and not have to pay for it himself.
C) irrational, since Kyle ignores his sunk cost of $120.
D) rational, since Kyle does not ignore his sunk cost of $120.
Q2) When we say that money is fungible,we mean that a dollar spent out of your savings account:
A) is exactly the same as a dollar spent from your checking account.
B) is earmarked for a purpose and can't be spent on everyday expenses like groceries.
C) is not substitutable with any other dollar you have.
D) is worth more than the dollar you have in your pocket.
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Page 10
Chapter 9: Game Theory and Strategic Thinking
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147 Verified Questions
147 Flashcards
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Sample Questions
Q1) The tit-for-tat strategy:
A) is not effective in repeated games.
B) is not possible in single-round games.
C) makes cooperation unlikely.
D) All of these statements are true.
Q2) In the real world,wage negotiations typically do not drag on for years:
A) because the company can simply offer the split that would eventually occur if the two sides played all the rounds.
B) because neither a company nor employees can afford to not work for that long.
C) unless the employees play an ultimatum game using a union to negotiate.
D) None of these statements is true.
Q3) Two players who are both playing tit-for-tat can quickly find their way toward:
A) lasting cooperation.
B) noncooperative outcomes for the remaining rounds.
C) a cycle of cooperation and noncooperation, similar to a business cycle.
D) None of these statements is true.
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Chapter 10: Information
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141 Verified Questions
141 Flashcards
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Sample Questions
Q1) Building a good reputation in the marketplace:
A) is easy to fake.
B) can take a long time to establish.
C) is not a significant value to a seller.
D) All of these statements are true.
Q2) Job candidates during a job search will seek to provide employers with ______ but avoid providing _____:
A) positive signals; negative signals.
B) as much information as possible; private information.
C) negative signals; positive signals.
D) truthful information; false information.
Q3) The principal-agent problem occurs:
A) when the principal has less information than the agent.
B) when the principal has more information than the agent.
C) when the agent has less information than the principal.
D) not observed in reality.
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Chapter 11: Time and Uncertainty
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117 Verified Questions
117 Flashcards
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Sample Questions
Q1) The interest rate you typically earn on a deposit at a bank:
A) represents the price of your loan.
B) represents the risk of investing.
C) is the opportunity cost to you of lending money.
D) is the opportunity cost to a bank of lending money.
Q2) A risk-seeker is likely to:
A) buy a government bond instead of a stock.
B) put money in a savings account instead of investing in a start-up company.
C) invest in a start-up company instead of putting his money under his mattress.
D) put his money under his mattress instead of buying company stock.
Q3) Risk aversion:
A) is the same for everyone.
B) is an unusual type of preference.
C) is an aspect of an individual's preferences.
D) All of these statements are true.
Q4) Insurance:
A) reduces the risks inherent in life.
B) helps individuals avoid certain types of risk.
C) increases a personĂ¢ s expected wealth.
D) None of these statements is true.
Page 13
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Chapter 12: The Costs of Production
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142 Verified Questions
142 Flashcards
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Sample Questions
Q1) The short run:
A) is typically defined by the process cycle of the particular firm.
B) is defined by the presence of a fixed cost for a firm.
C) is generally less than a year.
D) All of these are true.
Q2) Profit is the:
A) total revenue minus total cost.
B) sum of total revenue and total cost.
C) total cost minus total revenue.
D) None of these is true.
Q3) Suppose Chip's Chips produces bags of potato chips that sell for $3 a bag.What was the total revenue for Chip's Chips?
A) Cannot answer this question without knowing the cost per bag.
B) Cannot answer this question without knowing the quantity of bags sold.
C) Cannot answer this question without knowing the cost per bag and the quantity of bags sold.
D) Cannot answer this question without knowing what market share they hold.
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14
Chapter 13: Perfect Competition
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156 Verified Questions
156 Flashcards
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Sample Questions
Q1) If the demand decreases in a perfectly competitive market,firms will likely:
A) experience negative profits in the short run.
B) experience zero profits in the long run.
C) exit the market in hopes of capturing profits elsewhere.
D) All of these are true.
Q2) In the short run,we assume that the number of firms in a perfectly competitive market:
A) varies if perfect information is present.
B) varies more than the long-run equilibrium.
C) is fixed.
D) is equal to the number of firms in the long-run.
Q3) A characteristic that is important,but not essential to defining a perfectly competitive market is:
A) goods are standardized.
B) buyers and sellers are price takers.
C) firms can freely enter and exit the market.
D) All of these are necessary to define a perfectly competitive market.
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Chapter 14: Monopoly
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146 Verified Questions
146 Flashcards
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Sample Questions
Q1) Antitrust activities can cause inefficiencies by:
A) breaking up a natural monopoly.
B) creating many small firms that cannot capture available economies of scale.
C) Both of these statements are true.
D) Neither of these statements is true.
Q2) For a monopoly,marginal revenue for all units greater than 1 is always:
A) less than price because of the price effect.
B) more than price because of the price effect.
C) more than price because of the quantity effect.
D) less than price because of the quantity effect.
Q3) A market in which a single firm can produce,at a lower cost than multiple firms,the entire quantity of output demanded is called:
A) diseconomies of scale.
B) government intervention.
C) a natural monopoly.
D) price gouging.
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Page 16
Chapter 15: Monopolistic Competition and Oligopoly
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149 Verified Questions
149 Flashcards
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Sample Questions
Q1) Oligopoly describes a market with:
A) many sellers.
B) one seller.
C) only a few sellers.
D) few or many sellers, but only one buyer.
Q2) The goods or services that firms in an oligopoly sell:
A) are not close substitutes.
B) are close substitutes.
C) are standardized.
D) are either standardized or close substitutes.
Q3) Economists usually believe that:
A) competition encourages innovation.
B) innovation encourages competition.
C) innovation leads to market power and should be regulated.
D) market power leads to innovation.
Q4) In the long-run,monopolistically competitive firms:
A) charge prices equal to marginal cost.
B) have excess capacity.
C) produce at the minimum of average total cost.
D) both B and C are true.
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Chapter 16: The Factors of Production
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179 Verified Questions
179 Flashcards
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Sample Questions
Q1) The factor distribution of income:
A) shows how much income people get from labor compared to land and capital.
B) refers to the pattern of income that people derive from different factors of production.
C) hasn't changed substantially in the last century in the United States.
D) All of these statements are true.
Q2) A "company town" is one in which:
A) all employees of a company live within its confines.
B) a single company employs the great majority of people in a town and owns most structures in the town.
C) the company directs most town business by assisting local government.
D) a single company directly regulates and monitors all town activity.
Q3) If wages drop below the market equilibrium level in a competitive labor market:
A) firms will demand more labor than workers are willing to supply.
B) firms will be able to offer lower wages and still fill all the jobs they have.
C) unemployment will persist until the wage increases.
D) All of these statements are true.
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Chapter 17: International Trade
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141 Flashcards
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Sample Questions
Q1) If there are big gains to be had from specialization and trade,countries generally don't produce one good because:
A) national economies often are perfectly free markets.
B) there is perfectly free trade between national economies.
C) specialization is generally limited by trade agreements.
D) All of these are true.
Q2) In general,one of the results of free trade is that the owners of domestically:
A) scarce factors of production lose due to increased competition.
B) abundant factors of production lose from increased demand.
C) scarce factors of production win due to increased consumers.
D) abundant factors of production win from decreased demand.
Q3) Suppose a country,whose production and consumption of cell phones is large relative to the world market,has just entered the global market.If the country is a net-importer of cell phones,we would expect:
A) an increase in both world price and quantity of cell phones.
B) an increase in world price and decrease in world quantity of cell phones.
C) a decrease in both world price and quantity of cell phones.
D) a decrease in world price, and increase in world quantity of cell phones.
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Chapter 18: Externalities
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124 Flashcards
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Sample Questions
Q1) Pigovian taxes are used to counterbalance:
A) negative externalities.
B) positive externalities.
C) network externalities.
D) They could be used to counteract any of these.
Q2) If a Pigovian tax is too large,the resulting:
A) quantity will be too high.
B) outcome will not maximize surplus.
C) outcome will still be efficient.
D) All of these statements are true.
Q3) The effect of a government subsidy in a market where a positive externality is present is:
A) to increase surplus.
B) to increase efficiency.
C) to make consumers internalize the external benefit.
D) All of these statements are true.
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Page 20
Chapter 19: Public Goods and Common Resources
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111 Flashcards
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Sample Questions
Q1) A common resource is:
A) rival in consumption and excludable.
B) not rival in consumption, but excludable.
C) rival in consumption, but not excludable.
D) not rival in consumption and not excludable.
Q2) When a good is excludable:
A) one person's consumption prevents or decreases others' ability to consume it.
B) it is possible for sellers to prevent its use by those who have not paid for it.
C) consumers have a perception of scarcity of that good.
D) the government has specific import policies limiting its supply.
Q3) When a good is rival in consumption:
A) one person's consumption prevents or decreases others' ability to consume it.
B) it is possible for sellers to prevent its use by those who have not paid for it.
C) consumers have a perception of scarcity of that good.
D) the government has specific import policies limiting its supply.
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21
Chapter 20: Taxation and the Public Budget
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156 Verified Questions
156 Flashcards
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Sample Questions
Q1) A progressive tax:
A) takes the same percentage of taxes from income from all taxpayers.
B) requires those with low incomes to pay a smaller percentage of their income than high-income people.
C) is levied so that low-income taxpayers pay a greater proportion of their income toward taxes than high-income taxpayers.
D) taxes everyone the same amount, regardless of their income.
Q2) An income tax is a tax:
A) charged on the earnings of individuals and corporations.
B) on income earned by buying investments and selling them at a higher price.
C) on the wages paid to an employee.
D) charged on the value of a good or service being purchased.
Q3) A lump-sum tax:
A) takes the same percentage of taxes from income from all taxpayers.
B) requires those with low incomes to pay a smaller percentage of their income than high-income people.
C) is levied so that low-income taxpayers pay a greater proportion of their income toward taxes than high-income taxpayers.
D) taxes everyone the same amount, regardless of their income.
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Page 22
Chapter 21: Poverty, Inequality, and Discrimination
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129 Flashcards
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Sample Questions
Q1) The term "welfare state" describes the idea that:
A) government has a responsibility to promote the economic well-being of its citizens.
B) some areas suffer a disproportionate amount of chronic poverty.
C) some areas suffer from stagnant economic growth.
D) None of these is true.
Q2) Long-term solutions to communitywide poverty must involve:
A) ways to expand the range opportunities available to the population.
B) increasing the value of the currency.
C) ways to reduce taxes collected by local governments.
D) All of these are true.
Q3) Those who believe that overall economic growth is more important than the distribution of income would say that:
A) if everyone is getting richer, the relative speed of these gains isn't as important.
B) it is fundamentally unjust for some people to have so much when others have so little.
C) if the society is not getting richer, then things can never become more equal.
D) All of these are true.
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Chapter 22: Political Choices
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Sample Questions
Q1) When organizing a collective action,it is generally true that the larger the group the:
A) lower the costs and benefits per person.
B) higher the costs and lower the benefits per person.
C) lower the costs and higher the benefits per person.
D) higher the costs and benefits per person.
Q2) In considering the criteria for an ideal voting system,the idea of an irrelevant alternative refers to:
A) when an option is added to a vote and is unrelated to the issue being voted on.
B) different voting methods that could alternatively be used, but would not change the outcome.
C) when an option is added to a vote and has no realistic chance of winning.
D) different voting methods that could alternatively be used, and could change the outcome.
Q3) Which theorem tells us that no voting system is perfect?
A) Arrow's impossibility theorem
B) Median-voter theorem
C) Condorcet paradox
D) Bowman's problematic theorem
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Chapter 23: Public Policy and Choice Architecture
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Sample Questions
Q1) We're more likely to make mistakes with situations we face:
A) often, because we pay less attention.
B) often, because they involve low payoffs.
C) infrequently.
D) with little warning.
Q2) When considering choice architecture,a nudge:
A) is a gentle push in a particular direction.
B) does not take away any options.
C) allows anyone who wants to go in a different direction to do so.
D) All of these statements are true.
Q3) A person committing to carpool with a friend to the gym for daily workouts is an example of:
A) status quo bias.
B) the endowment effect.
C) a commitment device.
D) positive framing.
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