Microeconomics for Engineers
Pre-Test Questions
Course Introduction
Microeconomics for Engineers introduces the fundamental principles of microeconomic theory with a focus on applications relevant to engineering practice. The course covers essential concepts such as supply and demand, market equilibrium, consumer and producer behavior, pricing strategies, and market structures, including monopolies and oligopolies. Emphasis is placed on decision-making under conditions of scarcity and uncertainty, cost analysis, and optimization techniques. Through case studies and real-world engineering scenarios, students learn how microeconomic tools can guide resource allocation, project evaluation, and technology adoption in engineering industries.
Recommended Textbook
Principles of Microeconomics 5th Edition by Robert Frank
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14 Chapters
1737 Verified Questions
1737 Flashcards
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Chapter 1: Thinking Like an Economist
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134 Verified Questions
134 Flashcards
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Sample Questions
Q1) The following table shows the relationship between the speed of a computer's CPU and the benefits and costs.Assume that all other features of the computer are the same,i.e. ,CPU speed is the only source of variation. \[\begin{array} { | l | l | l | l | l | }
\hline \text { CPU Mhz } & \text { Total Benefit } & \text { Marginal Benefit } & \text { Total Cost } & \text { Marginal Cost } \\
\hline 600 & \$ 1,000 & & \$ 900 & \\
\hline 700 & \$ 1,500 & & & \$ 100 \\
\hline 800 & & \$ 400 & \$ 1,400 & \\
\hline 900 & \$ 2,200 & & \$ 1,900 & \\
\hline 1,000 & \$ 2,400 & & & \$ 600 \\
\hline
\end{array}\]
The marginal cost of upgrading from a 700 to an 800 Mhz computer is:
A) $500.
B) $400.
C) $200.
D) $100.
Answer: B
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Page 3
Chapter 2: Comparative Advantage
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109 Verified Questions
109 Flashcards
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Sample Questions
Q1) Which of the following statements is NOT true about specialization?
A) Total economic output is larger due to specialization.
B) After specialization,worker skills are better matched with tasks.
C) Specialization focuses experience and increases comparative advantage.
D) The variety of tasks associated with a particular job grows over time due to specialization.
Answer: D
Q2) The political concern expressed about the North American Free Trade Agreement (NAFTA)was that:
A) prices to U.S.consumers would fall.
B) wages in Mexico would rise.
C) highly skilled workers in the United States would lose their jobs.
D) unskilled workers in the United States would lose their jobs.
Answer: D
Q3) When firms engage in outsourcing,________ benefit and ______ are harmed.
A) the firms;consumers
B) consumers;the firms
C) consumers;the firm's domestic employees
D) the firms;the firms' foreign employees
Answer: C
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Chapter 3: Supply and Demand
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120 Verified Questions
120 Flashcards
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Sample Questions
Q1) A seller's reservation price is generally equal to:
A) the buyer's reservation price.
B) the seller's average cost.
C) the seller's marginal cost.
D) the market price.
Answer: C
Q2) Which of the following is NOT a characteristic of a market in equilibrium?
A) Excess supply is zero.
B) All consumers are able to purchase an amount equal to their quantity demanded.
C) Excess demand is zero.
D) The equilibrium price is stable,i.e. ,there is no pressure for it to change.
Answer: B
Q3) A decrease in the price of pizza will cause a(n):
A) increase in demand.
B) increase in quantity demanded.
C) decrease in quantity demanded.
D) decrease in the number of consumers.
Answer: B
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Chapter 4: Elasticity
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130 Verified Questions
130 Flashcards
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Sample Questions
Q1) When the price of hot dogs is $1.50 each,500 hot dogs are sold every day.After the price falls to $1.35 each,510 hot dogs are sold every day.At the original price,what is the price elasticity of demand for hot dogs?
A) 66.67
B) 5
C) 2
D) 0.2
Q2) If a demand curve is the line defined by P = $5,the absolute value of the price elasticity of demand is:
A) 5.
B) 0.2.
C) 0.
D) infinity.
Q3) When the price of lettuce rises,the demand for salad dressing _______ because these two goods are complements.
A) increases
B) decreases
C) remains the same
D) becomes more inelastic
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Page 6
Chapter 5: Demand
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103 Verified Questions
103 Flashcards
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Sample Questions
Q1) In most markets scarce goods or services are rationed among competing users,and ______ perform that task.
A) non-monetary prices
B) monetary prices
C) government organizations
D) private organizations
Q2) JoJo is shopping for a new computer.A mail-order computer can be delivered to JoJo's home for $1,200.JoJo could pick up the same computer at the warehouse for $1,000.How should JoJo decide?
A) JoJo should definitely drive to the warehouse because the monetary cost is $200 lower.
B) JoJo should drive to the warehouse if the value of his travel time plus wear and tear on his car is less than $200.
C) JoJo should definitely have the computer delivered,because the $200 saving is less than 20% of the purchase price.
D) JoJo should definitely drive to the warehouse because the $200 saving is more than 10% of the purchase price.
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Chapter 6: Perfectly Competitive Supply
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108 Verified Questions
108 Flashcards
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Sample Questions
Q1) Suppose a firm is collecting $1,250 in total revenues and the total costs of its variable factors of production are $1,000 at its current level of output.The firm has $500 in fixed costs.In the short run,one can predict that the firm will ____ and in the long run the firm will _____.
A) shut down;reopen for business
B) earn a profit;earn a loss
C) earn a loss;earn a profit
D) continue to operate;exit the industry
Q2) A rational seller will sell another unit if:
A) the profit earned from the sale of the next unit is greater than the profit earned on the sale of the last unit.
B) the cost of making the next unit is less than the revenue gained by selling the next unit.
C) the quantity demanded of the seller's output is greater than zero.
D) the price that could be charged is greater than the equilibrium price.
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Chapter 7: Efficiency, Exchange, and the Invisible Hand in Action
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115 Verified Questions
115 Flashcards
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Sample Questions
Q1) If owners of a business are receiving total revenues just sufficient to cover all their explicit and implicit costs,they are:
A) doing better than their next best alternative.
B) earning a normal profit.
C) earning economic losses.
D) doing worse than their next best alternative.
Q2) Which of the following is NOT guaranteed by the efficiency of the market equilibrium?
A) Price represents the value of an extra unit of consumption.
B) Rich and poor will have adequate access to the good.
C) Price represents the cost of an extra unit of production.
D) All mutually beneficial trades will have been made.
Q3) The sum of the economic surpluses accruing to buyers and sellers is:
A) producer surplus.
B) equal to profit.
C) total economics surplus.
D) consumer surplus.
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Page 9
Chapter 8: Monopoly, Oligopoly, and Monopolistic Competition
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104 Verified Questions
104 Flashcards
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Sample Questions
Q1) According to the textbook,the most important and enduring source of market power is:
A) government franchise.
B) patents.
C) copyright.
D) economies of scale.
Q2) Perfect price discrimination occurs when:
A) each buyer pays his or her marginal cost.
B) most buyers pay their reservation price.
C) each buyer pays exactly his or her reservation price.
D) the buyer with the highest reservation price sets the market price.
Q3) The hurdle method of price discrimination is _____ efficient;it is ______ efficient than charging a single price to all buyers.
A) not perfectly;more
B) not perfectly;less
C) not;less
D) perfectly;less
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Page 10
Chapter 9: Games and Strategic Behavior
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113 Verified Questions
113 Flashcards
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Sample Questions
Q1) Cigarette manufacturers once relied heavily on TV advertising.According to the textbook,when the government banned TV ads,the cigarette manufacturers:
A) supported the ban due to their concern over health effects of smoking.
B) felt their First Amendment rights were being violated.
C) were made worse off because the ban significantly reduced cigarette sales.
D) benefited because their advertising prisoner's dilemma was solved.
Q2) Most cartels end or cease to be effective because:
A) of enforcement of antitrust legislation.
B) of the incentive to cheat on the cartel agreement.
C) the dominant member firm buys out the other firms.
D) consumers discover the cartel agreement and buy instead from other firms.
Q3) An agreement among firms to restrict production with the goal of earning economic profits is a:
A) pure monopoly.
B) oligopoly.
C) cartel.
D) duopoly.
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Chapter 10: Externalities and Property Rights
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127 Verified Questions
127 Flashcards
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Sample Questions
Q1) Taylor lives in a residential neighborhood that prides itself on well-groomed lawns.Taylor's neighbors find that the collective marginal benefit of someone else's well-groomed lawn is $10.Taylor,however,dislikes yard work and receives zero net benefit from an unkempt lawn and a net benefit of -$1 for a well-groomed lawn;the cost of maintaining the lawn is a dollar more than the benefit of having a well-groomed lawn. \[\begin{array} { l c c } & \text { Unkempt } & \text { Well-groomed } \\
\text { Net Value to Taylor } & 0 & - 1 \\ \text { Net Value to Taylor's neighbors } & 0 & + 10 \end{array}\]
Refer to the information given above.Taylor's neighbors would be willing to pay Taylor ______ to keep a well groomed lawn.
A) $1
B) more than $1 but less than $5
C) more than $10
D) no more than $10
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Page 12
Chapter 11: The Economics of Information
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145 Verified Questions
145 Flashcards
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Sample Questions
Q1) Vinnie is looking for an apartment in Dayton,Ohio.In Dayton,75% of the two bedroom,one bath apartments are $800 a month and 25% are $600.The marginal cost of his search increases by $15 per search,i.e. ,the marginal cost of looking at the first apartment is $15,the marginal cost of looking at the second apartment is $30,the marginal cost of looking at the third apartment is $45 and so on. The expected benefit to Vinnie of searching for an apartment is A) $400.
B) $200.
C) $100.
D) $50.
Q2) Carson and Fran are both thrill seekers.Carson has health insurance and Fran does not.One can predict that
A) Fran will engage in fewer dangerous activities.
B) Carson will engage in fewer dangerous activities.
C) Carson and Fran will have the same frequency of participation in dangerous activities.
D) Carson's health insurance has no bearing on Carson's behavior.
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Page 13
Chapter 12: Labor Markets, Poverty, and Income Distribution
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145 Verified Questions
145 Flashcards
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Sample Questions
Q1) Firms and individuals do not technically buy and sell the labor input;renting is a more accurate description.Therefore,
A) the supply and demand model does not apply.
B) the basic model of supply and demand can be applied to competitive labor markets.
C) equilibrium will never occur.
D) firms will always underpay workers.
Q2) Kyle works for a perfectly competitive firm where he receives a wage rate of $15.One can infer that
A) Kyle's marginal product is at least $15.
B) the price of the firm's output is at least $15.
C) Kyle's reservation wage is exactly $15.
D) Kyle's value of marginal product is at least $15.
Q3) Ben and Ashley are identical in every way except for one: Ashley has an IQ score 10 points higher than Ben.All else equal,human capital theory would predict Ashley
A) and Ben will earn the same.
B) will earn exactly 10% more than Ben.
C) will earn less than Ben.
D) will earn more than Ben.
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Chapter 13: The Environment, Health, and Safety
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140 Verified Questions
140 Flashcards
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Sample Questions
Q1) Suppose that there are three power-generating plants,all of which generate emissions.The table summarizes the cost of emission reduction for each firm given five different levels of pollution: \(\begin{array}{lllllr}
\text { Tons of smoke emitted per day } & 4 & 3 & 2 & 1 & 0 \\
\text { Total abatement cost, firm A } & 0 & \$ 14 & \$ 30 & \$ 50 & \$ 75 \\
\text { Total abatement cost, firm B } & 0 & \$ 20 & \$ 45 & \$ 80 & \$ 120 \\
\text { Total abatement cost, firm C } & 0 & \$ 25 & \$ 60 & \$ 100 & \$ 150 \end{array}\)
Suppose that the government imposes a tax of $21 per ton of pollution generated.Firm A will emit ____ tons;Firm B will emit ___ tons and Firm C will emit ___ tons.
A) 0;2;3
B) 1;3;4
C) 3;4;4
D) 1;2;4
Q2) First-dollar insurance coverage means that
A) most of the insured's expenses are covered.
B) some of the insured's expenses are covered.
C) all of the insured's expenses are covered.
D) the first 10% of the insured's expenses are covered.
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Chapter 14: Public Goods and Tax Policy
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144 Verified Questions
144 Flashcards
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Sample Questions
Q1) According to the textbook,the private provision of radio and television may not achieve a socially efficient outcome because
A) consumers don't pay for the entertainment.
B) the government strictly regulates the market.
C) increasingly,radio and television stations are monopolies.
D) programs are chosen on the basis of audience size rather than the value to the audience.
Q2) According to the textbook,a solution to the externality of greenhouse emissions will be difficult to achieve because
A) the scientific evidence is weak.
B) the technology to reduce emissions is extremely expensive.
C) an international political organization is necessary to enforce the solution.
D) the technology to reduce emissions is undeveloped.
Q3) A good or service which is both rival and excludable is a
A) public good.
B) private good.
C) collective good.
D) commons good.
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