Microeconomics Final Test Solutions
Course Introduction
Microeconomics is the branch of economics that studies the decision-making processes of individuals, households, and firms, and how they allocate limited resources among competing uses. This course explores fundamental concepts such as supply and demand, market equilibrium, elasticity, consumer behavior, production costs, and the structures of different market systems, including perfect competition, monopoly, monopolistic competition, and oligopoly. By analyzing how economic agents respond to price signals and incentives, students gain insight into how markets function and how public policy can influence market outcomes.
Recommended Textbook
Fundamentals of Economics 6th Edition by William Boyes
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18 Chapters
2262 Verified Questions
2262 Flashcards
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Page 2
Chapter 1: Economics and the World Around You
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110 Verified Questions
110 Flashcards
Source URL: https://quizplus.com/quiz/28532
Sample Questions
Q1) A good or service becomes scarcer over time if
A) the difference between quantities demanded and supplied at a zero price decreases.
B) the excess of the quantity demanded over the quantity supplied at a zero price increases.
C) the economy is capable of producing more goods and services.
D) people begin to reduce their requirements for the goods and services that are actually available.
E) the amount of a good available equals the amount desired.
Answer: B
Q2) According to Figure 1.1, if trade occurs, what is the least Korea would be willing to accept for 1 unit of food?
A) 1 car
B) 2 cars
C) 1/2 car
D) 20 cars
E) 10 cars
Answer: A
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Chapter 2: Markets and the Market Process
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174 Verified Questions
174 Flashcards
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Sample Questions
Q1) The following is an example of the market allocation mechanism
A) Long lines of people waiting to purchase the new Apple iPad
B) The raffle drawing for a trip to Hawaii
C) The American interstate freeway system
D) The $5 pizza special at the nearby-campus pizzeria
E) None of these is an example of the market allocation mechanism.
Answer: D
Q2) In Figure 2.5, which graph represents what might happen to the market for bikes if there were a decrease in the cost of public transportation (i.e., buses, subways, etc.)?
A) A
B) B
C) C
D) D
E) E
Answer: E
Q3) Economists assume people are selfish.
A)True
B)False
Answer: False
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Page 4
Chapter 3: Applications of Demand and Supply
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97 Verified Questions
97 Flashcards
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Sample Questions
Q1) People take jobs in unpleasant, low-wage facilities voluntarily.
A)True
B)False
Answer: True
Q2) We have the things we desire when we want them due to the market system.
A)True
B)False
Answer: True
Q3) A change in consumer tastes for low-carb food and a decrease in their preferences for low-fat meals does not lead to which of the following?
A) An inward shift of the demand curve for low-fat meals
B) An outward shift of the demand curve for low-carb food
C) An increase in the amount of resources used to produce low-carb food
D) A decrease in the amount of resources used to produce low-fat meals
E) A reduction in the value of resources used in low-carb food
Answer: E
Q4) A brand name is a form of monopoly.
A)True
B)False
Answer: True
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Chapter 4: The Firm and the Consumer
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122 Verified Questions
122 Flashcards
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Sample Questions
Q1) For a downward-sloping straight-line demand curve, the top portion of the curve is generally inelastic.
A)True
B)False
Q2) If a product has an elastic demand, then we can expect
A) total revenue to rise if price falls.
B) a price increase to increase total revenue.
C) a smaller percentage change in the quantity demanded given some percentage change in the price.
D) the absolute value of the elasticity of demand coefficient to be less than 1.
E) that there are few substitutes for this product.
Q3) As the price is raised along a straight-line demand curve, the demand curve becomes more elastic.
A)True
B)False
Q4) The reason flowers cost so much more around February 14 and on Mother's Day can be explained by their elastic demand during those times of the year.
A)True
B)False
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Chapter 5: Costs and Profit Maximization
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119 Verified Questions
119 Flashcards
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Sample Questions
Q1) Refer to Table 5.2. We can conclude that the marginal-cost curve intersects the average-variable-cost curve at ____ units of output and the average-total-cost curve at ____ units of output.
A) 1; 1
B) 2; 3
C) 4; 4
D) 4; 5
E) 6; 7
Q2) The additional cost a firm incurs from selling an extra unit of output is
A) total cost.
B) marginal cost.
C) average cost.
D) fixed cost.
E) variable cost.
Q3) In Figure 5.3, what is the curve marked I?
A) Demand
B) Marginal revenue
C) Average revenue
D) Marginal cost
E) Average total cost
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Chapter 6: Competition
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152 Verified Questions
152 Flashcards
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Sample Questions
Q1) When officers of firms in an industry get together to discuss how they can improve their mutual well-being, the result is
A) product differentiation.
B) collusion.
C) price leadership.
D) rule-of-thumb pricing.
E) game theory.
Q2) The problem for participating firms in a cartel is that each member has an incentive to cheat.
A)True
B)False
Q3) Monopolistically and perfectly competitive firms are similar in that, in both markets, firms have long-run economic profits equal to zero.
A)True
B)False
Q4) A cartel attempts to increase profits in the industry by limiting the production of each member.
A)True
B)False
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Chapter 7: Business, Society, and the Government
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157 Verified Questions
157 Flashcards
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Sample Questions
Q1) The government's policies regarding anticompetitive actions take the form of antitrust policy.
A)True
B)False
Q2) According to the survey reported in the text, the least number of people believe that health-related goods and services should be allocated by the ____ allocation mechanism.
A) price
B) first-come, first-served
C) government
D) random
E) private
Q3) Government intervenes in the market process to enhance competition.
A)True
B)False
Q4) A market system sends signals to consumers regarding what to produce and what to consume.
A)True
B)False
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Chapter 8: Government Intervention Versus Free Markets
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103 Verified Questions
103 Flashcards
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Sample Questions
Q1) Most drug dealers would prefer to have their markets legalized.
A)True
B)False
Q2) If the market demand for illegal drugs consists of addicts and those who might experiment with the drug at the right price (casual users), we can say that the seller would
A) price discriminate by charging the addict more than the casual user.
B) price discriminate by charging the addict the same as the casual user.
C) price discriminate by charging the casual user more than the addict.
D) not be able to sell any drugs.
E) lose money.
Q3) When economic profit is ____, the firm will ____.
A) positive; face new competition
B) positive; enjoy large economic profits for a long time
C) negative; cease to exist
D) negative; face new competition
E) zero; go out of business
Q4) The market for medical care is a free, unregulated market.
A)True
B)False
Page 10
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Chapter 9: An Overview of the National and International Economies
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137 Verified Questions
137 Flashcards
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Sample Questions
Q1) The main trading partners of the United States are
A) developing countries.
B) industrial countries.
C) Saudi Arabia and Venezuela.
D) Communist countries.
E) Latin American countries.
Q2) Big business is only a U.S. phenomenon, as evidenced by the largest corporations in the world.
A)True
B)False
Q3) A federal budget deficit exists when government spending exceeds tax revenue.
A)True
B)False
Q4) A household can consist of a family, but a family does not always constitute a household.
A)True
B)False
Q5) Fiscal policy is best defined as the manipulation of the balance of payments. A)True
B)False
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Chapter 10: Macroeconomic Measures
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111 Flashcards
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Sample Questions
Q1) Real GDP measures
A) personal income adjusted for taxes paid to the government.
B) national output adjusted for changes in the quality of products.
C) national output adjusted for price-level changes.
D) nominal output adjusted for changes in national income because of economic booms.
E) national output adjusted for unemployment.
Q2) The demand for foreign currency in the United States is based on the demand for A) domestic goods and services.
B) domestic exports.
C) gold.
D) foreign goods and services.
E) U.S. dollars.
Q3) The national income accounting system is used by
A) only the United States
B) only industrialized nations
C) only developing countries
D) all countries
E) members of the World Trade Organization
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Page 12
Chapter 11: Unemployment, Inflation, and Business Cycles
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134 Verified Questions
134 Flashcards
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Sample Questions
Q1) The inflation rate is greater than the nominal interest rate, so the real interest rate is less than zero.
A)True
B)False
Q2) To avoid confusing ____ fluctuations in unemployment with other sources of unemployment, unemployment data are adjusted ____.
A) seasonal; seasonally
B) frictional; frictionally
C) structural; structurally
D) cyclical; cyclically
E) static; statically
Q3) The part of a business cycle that follows a trough is the
A) contractionary phase of the cycle.
B) breakeven point of the cycle.
C) peak period of the cycle.
D) recessionary phase of the cycle.
E) expansionary phase of the cycle.
Q4) Expected inflation causes a redistribution of income.
A)True
B)False
Page 13
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Chapter 12: Macroeconomic Equilibrium: Aggregate
Demand and Supply
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117 Flashcards
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Sample Questions
Q1) Which of the following does not account for a movement along a given aggregate demand curve?
A) The wealth effect
B) The interest-rate effect
C) The real-balance effect
D) The international trade effect
E) The effect of an increase in government spending
Q2) We would expect higher interest rates on business loans to result in a(n)
A) increase in aggregate demand.
B) increase in aggregate supply.
C) increase in investment spending.
D) decrease in government spending.
E) decrease in aggregate expenditures.
Q3) Refer to Figure 12.4. A movement from B to C would not be the result of an increase in A) foreign income levels.
B) government spending.
C) worker productivity.
D) production costs.
E) income tax rates.
Page 14
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Chapter 13: Fiscal Policy
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141 Verified Questions
141 Flashcards
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Sample Questions
Q1) If the government sells U.S. Treasury bonds to finance its budget deficit, one would expect
A) interest rates to rise.
B) domestic investment to rise.
C) tax rates to fall.
D) inflation to rise.
E) interest rates to fall.
Q2) Total unemployment compensation increases during recessions with no change in benefit rates, which is an example of
A) balanced-budget policy.
B) the crowding-out effect.
C) automatic stabilizers.
D) discretionary fiscal policy.
E) regressive taxation.
Q3) When the government intentionally uses taxes and government spending as a means to influence the level of output, employment, and general prices in the economy, it is engaging in fiscal policy.
A)True
B)False
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Page 15
Chapter 14: Money and Banking
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116 Verified Questions
116 Flashcards
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Sample Questions
Q1) M2 is a more liquid measure of a country's money stock than is M1.
A)True
B)False
Q2) If Mexico experienced a period of rapid inflation, causing Mexicans to lose confidence in the peso as a store of value, which of the following would be most likely to occur?
A) The value of the peso would appreciate on the foreign exchange market.
B) Foreign currency would be used as a substitute for the peso.
C) The peso would be used as a store of value in other countries.
D) Mexicans would save more.
E) The purchasing power of the peso would increase.
Q3) As people travel more, travelers' checks account for an increasingly larger portion of the M1 money supply.
A)True
B)False
Q4) The FDIC discourages bank failure by insuring commercial bank deposits.
A)True
B)False
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Chapter 15: Monetary Policy
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125 Verified Questions
125 Flashcards
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Sample Questions
Q1) A "central bank" performs all of the following functions except:
A) accepting deposits from commercial banks
B) making loans to commercial banks
C) acting as a banker for the federal government
D) controlling the money supply
E) None - all of these are performed by a nation's central bank.
Q2) If people want to hold money that is convenient for the day-to-day buying and selling of products, then there is a(n)
A) rise in the money supply.
B) speculative demand for money.
C) transactions demand for money.
D) asset demand for money.
E) precautionary demand for money.
Q3) The instructions issued by the Federal Open Market Committee to implement monetary policy are called the
A) Federal Reserve code.
B) FOMC directive.
C) federal funds code.
D) GDP initiative.
E) Board of Governors memorandum.
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Chapter 16: Macroeconomic Policy, Business Cycles, and Growth
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135 Verified Questions
135 Flashcards
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Sample Questions
Q1) The Phillips curve suggests a tradeoff between
A) unemployment rates and tax rates.
B) inflation and the money supply.
C) monetary policy and fiscal policy.
D) unemployment rates and inflation.
E) inflation and GDP.
Q2) Government spending can be financed by all of the following except A) personal income taxes.
B) investment spending.
C) government borrowing.
D) money creation.
E) excise taxes.
Q3) The long-run Phillips curve assumes that every unemployed worker who is looking for a job has a constant reservation wage.
A)True
B)False
Q4) Other things being equal, advances in technology allow resources to be more productive.
A)True B)False
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Chapter 17: Issues in International Trade and Finance
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126 Flashcards
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Sample Questions
Q1) Comparative advantage is an advantage derived from
A) a country's potential military superiority over another.
B) diplomatic initiatives, not economic theory.
C) a lower absolute input cost of producing a particular good than that of another country.
D) comparing the opportunity costs of production in two countries.
E) a country that exports more than it imports.
Q2) Which of the following concepts is irrelevant in making international trade decisions?
A) Absolute advantage
B) Comparative advantage
C) Relative opportunity cost
D) Domestic surpluses and shortages
E) Opportunity costs
Q3) If manufacturers in China can acquire the same production technology used in the United States but use much cheaper labor, they have an absolute advantage over U.S. manufacturers.
A)True
B)False
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Chapter 18: Globalization
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86 Flashcards
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Sample Questions
Q1) Measuring globalization involves measurement of the international movements of goods, services, financial assets, people, ideas, and technology.
A)True
B)False
Q2) Supporters of globalization believe it has raised living standards.
A)True
B)False
Q3) Japan followed the lead of the other Asian tiger countries.
A)True
B)False
Q4) Free trade helps developing countries when
A) multinational corporations take over government infrastructure projects.
B) the government subsidizes local production.
C) the government blocks foreign investment.
D) workers lose their jobs.
E) restrictions on goods that developing countries produce efficiently are removed.
Q5) Countries not engaged in globalization tend to be mired in low-growth poverty.
A)True
B)False
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