Microeconomic Theory Question
Bank
Course Introduction
Microeconomic Theory explores the fundamental principles governing the behavior of individuals and firms in allocating scarce resources. The course delves into consumer choice, production decisions, market structures, and the formation of prices under different competitive conditions. It introduces key concepts such as utility maximization, profit optimization, equilibrium analysis, and welfare outcomes. By employing mathematical tools and graphical models, students gain a rigorous understanding of how microeconomic agents interact within various market environments and the significance of these interactions for broader economic outcomes and policy design.
Recommended Textbook Microeconomics 2nd Edition by Daron Acemoglu
Available Study Resources on Quizplus
18 Chapters
3401 Verified Questions
3401 Flashcards
Source URL: https://quizplus.com/study-set/1286
Page 2
Chapter 1: The Principles and Practice of Economics
Available Study Resources on Quizplus for this Chatper
103 Verified Questions
103 Flashcards
Source URL: https://quizplus.com/quiz/25554
Sample Questions
Q1) Refer to the scenario above.Maria should choose to ________.
A) drive, as it will save her $120
B) travel by train, because it is quicker
C) drive, as it will give her a real saving of $150
D) travel by train, as it will save her $30 in travel time
Answer: A
Q2) Define the three key principles of economics.
Answer: i)Optimization: optimization refers to the process of choosing the best option from a set of alternatives,given the available information.
ii)Equilibrium: equilibrium is a special situation all agents are simultaneously optimizing,so that nobody would benefit personally by changing his or her behavior.
iii)Empiricism: empiricism is analysis that is evidence-based-it uses data to test theories and to determine what is causing things to happen in the world.
Q3) Define economics.Who are economic agents?
Answer: Economics is the study of how agents choose to allocate scarce resources and how these choices affect society.An economic agent is an individual or a group that makes choices.
To view all questions and flashcards with answers, click on the resource link above.
Page 3
Chapter 2: Economic Methods and Economic Questions
Available Study Resources on Quizplus for this Chatper
94 Verified Questions
94 Flashcards
Source URL: https://quizplus.com/quiz/25555
Sample Questions
Q1) When the objective of an experiment or a study is to understand the changes in the attributes of a variable on a month-to-month basis,a ________ is most useful.
A) pie chart
B) time series graph
C) histogram
D) bar chart
Answer: B
Q2) Which of the following statements is true?
A) A bar chart has many limitations in comparison to pie charts.
B) A bar chart does not allow for the comparison of a single variable across many segments.
C) A bar chart can only be used to represent independent variables.
D) A bar chart indicates the frequency of a variable by using rectangles of different heights or lengths.
Answer: D
To view all questions and flashcards with answers, click on the resource link above.
4
Chapter 3: Optimization: Doing the Best You Can
Available Study Resources on Quizplus for this Chatper
94 Verified Questions
94 Flashcards
Source URL: https://quizplus.com/quiz/25556
Sample Questions
Q1) In choosing between apartments in two different locations,the marginal commuting cost is given by ________.
A) the sum of the commuting cost from each apartment to the destination
B) the commuting cost from the apartment located closer to the destination
C) the commuting cost from the apartment located farther away from the destination
D) the difference between the commuting cost from two different apartments to the destination
Answer: D
Q2) Which of the following statements is true?
A) Marginal analysis is a key tool used while optimizing using total value.
B) Before and after comparisons can be used in both optimization using total value and optimization using marginal analysis.
C) Marginal analysis is the comparison of economic outcomes before and after some economic variable is changed.
D) Before and after comparisons involve calculating the incremental cost of moving from one alternative to the next best alternative.
Answer: B
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: Demand, supply, and Equilibrium
Available Study Resources on Quizplus for this Chatper
185 Verified Questions
185 Flashcards
Source URL: https://quizplus.com/quiz/25557
Sample Questions
Q1) In competitive markets,firms ________.
A) coordinate pricing decisions with other firms
B) take the market price as given
C) have the government set maximum and minimum prices
D) set the market price
Q2) A surplus occurs in a market when ________.
A) demand exceeds supply
B) the price is lower than the equilibrium price
C) the price is higher than the equilibrium price
D) the marginal cost of production is negligible
Q3) Refer to the table above.Which of the following statements is true?
A) There is a surplus of 4 notebooks in the market when the price of one notebook is $5.
B) There is a surplus of 10 notebooks in the market when the price of one notebook is $8.
C) There is a shortage of 4 notebooks in the market when the price of one notebook is $6.
D) There is a shortage of 12 notebooks in the market when the price of one notebook is $4.
Q4) Explain the role of prices in a market.
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: Consumers and Incentives
Available Study Resources on Quizplus for this Chatper
187 Verified Questions
187 Flashcards
Source URL: https://quizplus.com/quiz/25558
Sample Questions
Q1) Which of the following goods is likely to have the highest price elasticity of demand?
A) Salt
B) Gasoline
C) Life-saving drugs
D) Ketchup
Q2) The demand for a good is elastic.This means that if there is a 10% change in price of this good,________.
A) the quantity demanded will change more than 10%
B) the quantity demanded will change less than 10%
C) the quantity demanded will change 10% as well
D) the quantity demanded will not change at all
Q3) Refer to the table above.If Evan eats 2 slices of pizza,how much consumer surplus does get?
A) $18
B) $22
C) $6
D) $10
Q4) Joey's budget constraint is given by $ ________ PR + $ ________ RS = $________.
Q5) What are the determinants of the price elasticity of demand?
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Sellers and Incentives
Available Study Resources on Quizplus for this Chatper
261 Verified Questions
261 Flashcards
Source URL: https://quizplus.com/quiz/25559
Sample Questions
Q1) When price is less than the firms' minimum average total cost in a perfectly competitive market in the long run,________.
A) new firms will enter the market
B) existing firms will leave the market
C) prices are likely to fall further
D) firms' profits are likely to be their maximum
Q2) A firm produces 200 units of a good when it employs seven workers.The marginal product of an eighth worker is 46 units.If the eighth worker is hired,the firm's total product will increase to ________.
A) 208 units
B) 228 units
C) 246 units
D) 322 units
Q3) Producer surplus for a perfectly competitive firm is ________.
A) always zero
B) the same as profit
C) the area under firm's total cost curve and above marginal cost
D) the area under the market price and above the firm's marginal cost curve
Q4) Is it possible for an input to have a negative marginal product?
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Perfect Competition and the Invisible Hand
Available Study Resources on Quizplus for this Chatper
251 Verified Questions
251 Flashcards
Source URL: https://quizplus.com/quiz/25560
Sample Questions
Q1) Refer to the table above.If the market for notebooks is perfectly competitive,the equilibrium quantity is ________.
A) 2 units
B) 3 units
C) 4 units
D) 5 units
Q2) Refer to the scenario above.In the completed graph,what is the equilibrium price for Walter Payton rookie cards in this market? Explain your choice.
A) $120
B) $130
C) Either $140 or $150
D) $160
Q3) If a firm faces an average total cost of $100 and sells its product for $115,how much profit does it make when it sells 20 units of the product?
A) $200
B) $115
C) $300
D) $800
To view all questions and flashcards with answers, click on the resource link above.
9
Chapter 8: Trade
Available Study Resources on Quizplus for this Chatper
264 Verified Questions
264 Flashcards
Source URL: https://quizplus.com/quiz/25561
Sample Questions
Q1) Refer to the scenario above.If Jack has to decide between the number of paintings and sculptures he wants to make in the given time,which of the following will best represent his options?
A) A budget constraint
B) An indifference curve
C) A production possibilities curve
D) A supply curve
Q2) A production possibilities curve shows the ________.
A) relationship between the price of a good and its quantity supplied
B) maximum production of one good for a given level of production of another good
C) different combinations of two inputs used to produce a given quantity of output
D) quantity of output produced and the amount of inputs required for the production of the output
Q3) An export is any good that is ________.
A) rationed and licensed by the government
B) produced and consumed domestically
C) produced by public sector firms
D) produced domestically, but sold abroad
To view all questions and flashcards with answers, click on the resource link above.
Chapter 9: Externalities and Public Goods
Available Study Resources on Quizplus for this Chatper
223 Verified Questions
223 Flashcards
Source URL: https://quizplus.com/quiz/25562
Sample Questions
Q1) A corrective subsidy induces the ________ toward the socially optimal level.
A) consumers affected by a negative externality to increase the quantity consumed
B) producers creating a negative externality to increase the quantity produced
C) consumers benefiting from a positive externality to increase the quantity consumed
D) producers generating a positive externality to reduce the quantity produced
Q2) Suppose the federal government implements a system of tradeable permits that lets power plants buy and sell the right to emit sulfur dioxide.This is an example of
A) the Coase Theorem
B) a market-based regulatory approach
C) a Pigovian corrective tax
D) a Pigovian corrective subsidy
Q3) A ________ externality occurs when a market transaction affects others through market prices.
A) positive
B) negative production
C) negative consumption
D) pecuniary
To view all questions and flashcards with answers, click on the resource link above.
11
Chapter 10: The Government in the Economy: Taxation and Regulation
Available Study Resources on Quizplus for this Chatper
244 Verified Questions
244 Flashcards
Source URL: https://quizplus.com/quiz/25563
Sample Questions
Q1) Refer to the scenario above.If each family pays 12 percent of its income in tax every year,the local government follows a(n)________ tax system.
A) cardinal
B) ordinal
C) progressive
D) proportional
Q2) A minimum wage policy is an example of a ________.
A) price ceiling
B) price floor
C) positive externality
D) negative externality
Q3) A black market is also known as a(n)________ economy.
A) open
B) closed
C) underground
D) emerging
Q4) The sale of all alcoholic beverages is taxed in Budopia.If the demand for alcohol in Budopia is perfectly inelastic,how much of the tax burden will be borne by the consumers and why?
Page 12
To view all questions and flashcards with answers, click on the resource link above.
Chapter 11: Markets for Factors of Production
Available Study Resources on Quizplus for this Chatper
237 Verified Questions
237 Flashcards
Source URL: https://quizplus.com/quiz/25564
Sample Questions
Q1) If there is a decrease in the price of the final good that an industry produces,the labor demand curve for the industry is likely to ________.
A) shift to the left
B) shift to the right
C) become vertical
D) become horizontal
Q2) If an industry introduces labor-saving technology in production,the demand curve for labor in that industry is likely to ________.
A) shift to the left
B) shift to the right
C) become vertical
D) become horizontal
Q3) Which of the following is an example of a factor of production?
A) Land
B) Cell phones
C) Canned soup
D) Television sets
Q4) What are the factors that affect the supply curve of labor?
Q5) Differentiate between taste-based discrimination and statistical discrimination.
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Monopoly
Available Study Resources on Quizplus for this Chatper
295 Verified Questions
295 Flashcards
Source URL: https://quizplus.com/quiz/25565
Sample Questions
Q1) Refer to the scenario above.If the quantity sold is 50 million packs,then the firm's total revenue is ________ and the total cost is ________.
A) $400 million; $200 million
B) $300 million; $150 million
C) $250 million; $100 million
D) $200 million; $50 million
Q2) If a monopolist decides to charge a higher price for its product,it will yield a ________ revenue per unit sold and ________ number of units sold.
A) lower; higher
B) lower; lower
C) higher; lower
D) higher; higher
Q3) Refer to the scenario above.If Tobac Co.is forced by the government to charge the fair-return price,the firm's profit would be ________.
A) -$50 million
B) negative but more than -$50 million
C) $0
D) positive but less than $300 million
To view all questions and flashcards with answers, click on the resource link above.
Chapter 13: Game Theory and Strategic Play
Available Study Resources on Quizplus for this Chatper
199 Verified Questions
199 Flashcards
Source URL: https://quizplus.com/quiz/25566
Sample Questions
Q1) Refer to the scenario above.In equilibrium,________.
A) both firms will offer a discount
B) neither firm will offer a discount
C) Firm 1 will offer a discount, while Firm 2 will not offer a discount
D) Firm 1 will continue charging the original price, while Firm 2 will offer a discount
Q2) Why do some people tip generously at restaurants to which they never plan to return?
Q3) Refer to the scenario above.If a < 3,then ________ form a Nash equilibrium.
A) low efforts by both workers
B) high efforts by both workers
C) low effort by Jim and high effort by Janis
D) high effort by Jim and low effort by Janis
Q4) Refer to the scenario above.What is the equilibrium outcome in this case?
A) Both firms will dump their waste into the river.
B) Neither of the firms will dump its waste into the river.
C) Firm 1 will dump its waste into the river, and Firm 2 will not dump its waste.
D) Firm 2 will dump its waste into the river, and Firm 1 will not dump its waste.
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: Oligopoly and Monopolistic Competition
Available Study Resources on Quizplus for this Chatper
264 Verified Questions
264 Flashcards
Source URL: https://quizplus.com/quiz/25567
Sample Questions
Q1) Which of the following is true?
A) The price charged by a monopolistically competitive firm is equal to the price charged by a perfectly competitive firm in the long run.
B) The price charged by each firm in a monopolistically competitive market is identical in the long run.
C) The profit earned by a firm in a monopolistically competitive market is equal to the profit earned by a firm in a perfectly competitive market in the long run.
D) The profit earned by a firm in a monopolistically competitive market is equal to the profit earned by a monopolist in the long run.
Q2) The market for tea in Petrovia is perfectly competitive,while the market for candy bars is monopolistically competitive.Which market is likely to have excess capacity and why? Explain your answer with the help of suitable diagrams.
Q3) Refer to the scenario above.What is the profit of Firm A without collusion?
A) $4
B) $6
C) $9
D) $21
To view all questions and flashcards with answers, click on the resource link above.
Page 16
Chapter 15: Trade-Offs Involving Time and Risk
Available Study Resources on Quizplus for this Chatper
147 Verified Questions
147 Flashcards
Source URL: https://quizplus.com/quiz/25568
Sample Questions
Q1) Kevin deposits a certain sum in a bank at an annual compound rate of interest for 2 years.Interest in the second year will be calculated on ________.
A) the principal amount only
B) the amount in the account after 1 year
C) the sum of the principal amount and the amount in the account after 1 year
D) the difference between the principal amount and the amount in the account after 1 year
Q2) A bag has ten green balls,six blue balls,and forty-four purple balls.A ball is picked randomly from the bag.What is the probability that it is a
a)green ball.
b)blue ball.
c)purple ball.
Q3) Refer to the scenario above.What is the present value of Option C?
A) $2,763.64
B) $3,662.44
C) $4,516.80
D) $5,800.79
Q4) Define the discounted value of a future payment.
Q5) Why do preference reversals occur?
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 16: The Economics of Information
Available Study Resources on Quizplus for this Chatper
119 Verified Questions
119 Flashcards
Source URL: https://quizplus.com/quiz/25569
Sample Questions
Q1) Efficiency wages paid to workers ________.
A) equal the lowest pay that workers would accept
B) are wages above the lowest pay that workers would accept
C) equal the marginal revenue product of the workers
D) are wages adjusted for changes in the price level
Q2) Refer to the scenario above.Suppose you decide to buy a Toyota Corolla.You value the car at $10,000,but the car dealer values it at $8,500,which is not known to you.Which of the following is likely to be true?
A) You will end up buying a high-quality car.
B) You will end up buying a poor-quality car.
C) You will end up earning a positive consumer surplus.
D) You will choose not to buy the car.
Q3) Which of the following is likely to be observed among unemployed individuals if government offers generous unemployment benefits?
A) Increased motivation to look for a job
B) An increase in the acceptance of low-paying jobs
C) A decrease in current consumption
D) Decreased motivation to look for a job
Q4) Why do people often tend to take risks if they are insured?
To view all questions and flashcards with answers, click on the resource link above. Page 18
Chapter 17: Auctions and Bargaining
Available Study Resources on Quizplus for this Chatper
123 Verified Questions
123 Flashcards
Source URL: https://quizplus.com/quiz/25570
Sample Questions
Q1) What does the revenue equivalence theorem state?
Q2) The higher the bid in a first-price auction,the ________ will be the chances of winning and the ________ the surplus earned.
A) higher; higher
B) higher; lower
C) lower; higher
D) lower; lower
Q3) Refer to the scenario above.Suppose there are several other bidders in the auction.Roger will win the auction only if ________.
A) all the other bidders bid above $625
B) all the other bidders bid below $625
C) all the other bidders are risk lovers
D) all the bidders are risk averse
Q4) ________ is the process of determining the terms of exchange by individual negotiations between a buyer and a seller.
A) Backward induction
B) Bilateral bargaining
C) Arbitration
D) Collective bargaining
To view all questions and flashcards with answers, click on the resource link above. Page 19
Chapter 18: Social Economics
Available Study Resources on Quizplus for this Chatper
111 Verified Questions
111 Flashcards
Source URL: https://quizplus.com/quiz/25571
Sample Questions
Q1) An environmental protection agency in Natura has launched a campaign against the use of plastic bags.This is an example of ________.
A) backward induction
B) indoctrination
C) anchoring
D) sniping
Q2) Refer to the scenario above.If Jill values fairness,________.
A) she will not accept any offer made by Jack
B) Jack should make the lowest possible offer to Jill
C) she will accept the offer when Jack offers $25
D) Jack should not play the game
Q3) Refer to the scenario above.This is an example of ________.
A) a symmetric game
B) an ultimatum game
C) the prisoners' dilemma
D) a zero-sum game
Q4) What are the two ways by which people can help charitable causes?
Q5) What role does information cascade play in job interviews?
Q6) Why do people donate less when it is costlier to give?
Q7) Why is the equilibrium in a trust game socially inefficient?
To view all questions and flashcards with answers, click on the resource link above. Page 20