Microeconomics
Mock Exam
Course Introduction
Microeconomics is the branch of economics that explores the behavior and decision-making processes of individual agents such as households, firms, and industries in various market structures. This course examines how prices are determined, the allocation of scarce resources, consumer and producer choices, and the impact of government interventions in markets. Key topics include supply and demand analysis, elasticity, utility maximization, production and costs, market equilibrium, competition, monopoly, and welfare economics, helping students develop a foundational understanding of how economic forces shape everyday life.
Recommended Textbook
Economics for Today 4th Asia Pacific Edition by Allan Layton
Available Study Resources on Quizplus
19 Chapters
2245 Verified Questions
2245 Flashcards
Source URL: https://quizplus.com/study-set/1073
Page 2
Chapter 1: Thinking like an economist
Available Study Resources on Quizplus for this Chatper
89 Verified Questions
89 Flashcards
Source URL: https://quizplus.com/quiz/21216
Sample Questions
Q1) Which of the following questions would not be studied by a microeconomist but would be studied by a macroeconomist?
A)Why do national economies grow?
B)What percentage of consumer income is spent on entertainment?
C)Why do workers prefer a 4-day working week?
D)What happens to worker productivity when a job shifts to a 4-day working week?
E)How is the electricity industry harmed by the passage of new clean air legislation?
Answer: A
Q2) Microeconomists would be interested in which of the following topics?
A)How the GST affected the economy.
B)The unemployment in Europe and Australia.
C)What is the average income in Australia.
D)The effect of price on revenue.
E)The growth of the economy.
Answer: D
Q3) Policies to determine the price of troll dolls are a concern of macroeconomics.
A)True
B)False
Answer: False
To view all questions and flashcards with answers, click on the resource link above.
Page 3
Chapter 2: Production possibilities and opportunity cost
Available Study Resources on Quizplus for this Chatper
123 Verified Questions
123 Flashcards
Source URL: https://quizplus.com/quiz/21217
Sample Questions
Q1) The production possibilities frontier demonstrates the basic economic principle that:
A)market-based economies are more efficient.
B)supply will determine demand in the economy.
C)the production of more capital goods this year will cause the economy to produce fewer consumption goods next year.
D)to produce more of any one thing, assuming full employment, the economy must produce less of something else.
E)to produce more consumption goods this year requires the production of more capital goods this year.
Answer: D
Q2) Along a production possibilities curve showing capital and consumption goods production,which of the following pairs are being held fixed?
A)Unemployment and capital goods production.
B)Number of resources and consumption goods production.
C)Composition of the economy's output and number of resources.
D)Capital and consumption goods production.
E)Technology and number of resources.
Answer: E
To view all questions and flashcards with answers, click on the resource link above.
4
Chapter 3: Market demand and supply
Available Study Resources on Quizplus for this Chatper
123 Verified Questions
123 Flashcards
Source URL: https://quizplus.com/quiz/21218
Sample Questions
Q1) Which of the following will cause a downward movement along a supply curve?
A)Decreases in raw-material costs.
B)Decreases in labour costs.
C)Decreases in the cost of machinery.
D)Decreases in the market price of a good, other things being equal.
Answer: D
Q2) An increase in income increases the supply of all goods.
A)True
B)False
Answer: False
Q3) A demand curve for The Steel Porcupines' concert tickets would show the:
A)number of tickets the box office is willing to sell at various prices.
B)number of people who need tickets.
C)quality of people who want to buy these concert tickets.
D)number of tickets that will be purchased at various prices.
Answer: D
Q4) A shortage occurs when a good is in great demand.
A)True
B)False
Answer: False
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: Markets in action
Available Study Resources on Quizplus for this Chatper
123 Verified Questions
123 Flashcards
Source URL: https://quizplus.com/quiz/21219
Sample Questions
Q1) A public good may be defined as any good or service that:
A)must be provided only to certain groups.
B)must be distributed to all citizens in equal shares.
C)excludes free riders.
D)is not exclusive.
Q2) In 2002 a community in the United States passed a beautification ordinance (law)prohibiting the placement of indoor furniture outside of homes (e.g.,no couches on the porch).The law represents a conflict between _____ and _____.
A)the rich; the poor
B)third parties; market participants
C)victims; criminals
D)public goods; private goods
E)residents; visitors
Q3) More information on the benefits of honey will result in more honey bought.
A)True
B)False
Q4) Higher petrol prices would likely raise the price of large,gas-guzzling automobiles
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
124 Verified Questions
124 Flashcards
Source URL: https://quizplus.com/quiz/21220
Sample Questions
Q1) A horizontal demand curve indicates perfectly elastic demand.
A)True
B)False
Q2) The major determinants of price elasticity of demand are:
A)availability of complements.
B)availability of substitutes.
C)availability of normal goods.
D)availability of supply.
Q3) Price elasticity of supply measures the responsiveness of the quality of supplied good to a change in price.
A)True
B)False
Q4) Price elasticity of demand measures:
A)the responsiveness of the quantity demanded of a good to a change in income.
B)the responsiveness of the quantity demanded of a good to a change in consumers' preferences.
C)the responsiveness of the quantity demanded of a good to a change in price.
D)the reduction in the quantity demanded of a good when the price is reduced.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 6: Production costs
Available Study Resources on Quizplus for this Chatper
123 Verified Questions
123 Flashcards
Source URL: https://quizplus.com/quiz/21221
Sample Questions
Q1) As shown in Exhibit 6-3,the marginal product of labour when 5 additional workers are employed per day is (points from B to C):
A)50.
B)100.
C)150.
D)175.
Q2) Exhibit 6-2 shows the change in the production of pizzas as more workers are hired.The marginal product of the labour input begins to fall with the employment of the _____ worker.
A)first
B)second
C)third
D)fourth
E)fifth
Q3) In Exhibit 6-1,total output increases from A to C because:
A)workers receive higher wages.
B)of technological progress in industries.
C)the law of diminishing marginal returns sets in.
D)of specialisation and therefore the increasing returns.
To view all questions and flashcards with answers, click on the resource link above.
Page 8
Chapter 7: Perfect competition
Available Study Resources on Quizplus for this Chatper
125 Verified Questions
125 Flashcards
Source URL: https://quizplus.com/quiz/21222
Sample Questions
Q1) A perfectly competitive firm shuts down in the short run when the market price is less than the average variable cost.
A)True
B)False
Q2) In the long run,firms can:
A)not vary any inputs.
B)vary all inputs and leave the industry if they earn negative profit.
C)vary only some inputs and enter the industry if they earn negative profit.
D)manipulate the market price.
Q3) In Exhibit 7-1,the firm will produce at which level of output:
A)zero.
B)150.
C)350.
D)250.
Q4) A perfectly competitive firm in the short run maximises its profit by producing the output where:
A)average cost equals price.
B)marginal product equals marginal revenue.
C)total profit is at maximum.
D)total profit is at minimum.
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Monopoly
Available Study Resources on Quizplus for this Chatper
123 Verified Questions
123 Flashcards
Source URL: https://quizplus.com/quiz/21223
Sample Questions
Q1) In order for a monopolist to earn a positive economic profit in short-run equilibrium,price must exceed average total cost.
A)True
B)False
Q2) The only dentist in a small isolated country town is an example of a/an:
A)oligopoly.
B)monopolistically competitive firm.
C)monopoly.
D)competitive firm.
Q3) The efficient allocation of resources is based on the fact that:
A)firms devote the amount of resources to their good that consumers demand.
B)P > MC.
C)P < MC.
D)economies of scale must exist.
E)monopolists can cater for the entire market.
Q4) A monopolist earns an economic profit only when:
A)average total cost equals price.
B)marginal cost equals price.
C)marginal revenue equals price.
D)average total cost is less than price.
10
To view all questions and flashcards with answers, click on the resource link above.
Chapter 9: Monopolistic competition and oligopoly
Available Study Resources on Quizplus for this Chatper
124 Verified Questions
124 Flashcards
Source URL: https://quizplus.com/quiz/21224
Sample Questions
Q1) Which of the following statements best describes the price,output and profit conditions of monopolistic competition?
A)Price will equal marginal cost at the profit-maximising level of output; and profits will be positive in the long run.
B)Price will always equal average variable cost in the short run and either profits or losses may result in the long run.
C)Marginal revenue will equal marginal cost in the short run, profit-maximising level of output; and in the long run, economic profit will be zero.
D)Marginal revenue will equal average total cost in the short run; and long-run economic profits will be zero.
Q2) Extremely difficult entry to the market with unique product is a feature of:
A)monopolies.
B)monopolistic competition.
C)perfect competition.
D)oligopolies.
Q3) The number of sellers is the largest in oligopoly.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Chapter 10: Policy issues: resource taxes and climate change
Available Study Resources on Quizplus for this Chatper
124 Verified Questions
124 Flashcards
Source URL: https://quizplus.com/quiz/21225
Sample Questions
Q1) Under the emissions trading scheme,if lots of firms introduce emissions curbing technologies,the demand for permits:
A)might increase and their price fall.
B)might decrease and their price rise.
C)might increase and their price rise.
D)might decrease and their price fall.
Q2) The _____________ is described by Treasury as a super profit:
A)total revenue.
B)marginal profit.
C)total profit.
D)economic profit.
Q3) In Exhibit 10-3,if the 'cap' is set at 80 permits,the resulting market price of permits is:
A)$60.
B)$30.
C)$40.
D)$10.
Q4) Regulation is the best solution to climate change issues.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Measuring the size of the economy
Available Study Resources on Quizplus for this Chatper
124 Verified Questions
124 Flashcards
Source URL: https://quizplus.com/quiz/21226
Sample Questions
Q1) GDP does not count:
A)the estimated value of homemaker production.
B)state and local government purchases.
C)spending for new homes.
D)changes in inventories.
Q2) Net domestic product is equal to GDP minus:
A)indirect business taxes.
B)depreciation.
C)personal taxes.
D)retained earnings.
E)consumption spending.
Q3) Nominal GDP is based on:
A)the existing prices during the period of production.
B)prices of final goods and services adjusted for inflation.
C)prices at which intermediate goods are sold.
D)the existing price during a given time period based on the price existing in a selected base year.
Q4) In an open economy,domestic savings must always equal investment.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Business cycles and economic growth
Available Study Resources on Quizplus for this Chatper
124 Verified Questions
124 Flashcards
Source URL: https://quizplus.com/quiz/21227
Sample Questions
Q1) The business cycle is the:
A)succession of long-run fluctuations around the long-term trend.
B)succession of short-run fluctuations around the long-term trend.
C)erratic movements around the long-term trend.
D)straight line.
Q2) Which of the following is not an example of government policy in line with the endogenous growth model?
A)Tax incentives for spending on research and development.
B)Increased public spending on research and development.
C)Patent protection for private firms.
D)Increased spending on roads.
Q3) One of the goals of macroeconomists is to:
A)reduce the severity of business-cycle fluctuations.
B)increase short-term output.
C)keep output at a constant level.
D)keep consumption at a constant level.
Q4) It is desirable to reduce the rise in unemployment during recession.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 13: Inflation and unemployment
Available Study Resources on Quizplus for this Chatper
121 Verified Questions
121 Flashcards
Source URL: https://quizplus.com/quiz/21228
Sample Questions
Q1) The consumer price index (CPI)compares the prices of:
A)all goods and services in the economy compared to the prices of those goods and services in a base year.
B)consumer goods and services that a household purchases to the prices of those goods and services purchased in a base year.
C)producer goods and services that are made for consumers to the prices of those goods and services in a base year.
D)goods and services that are purchased by producers to the prices of those goods and services in a base year.
E)goods and services that are purchased by consumer manufacturers to the prices of those goods and services in a base year.
Q2) People with fixed incomes fare best in an inflationary period.
A)True
B)False
Q3) Cost-push inflation is a result of an increase in overspending.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: A simple model of the macro economy
Available Study Resources on Quizplus for this Chatper
134 Verified Questions
134 Flashcards
Source URL: https://quizplus.com/quiz/21229
Sample Questions
Q1) Government spending is often used to:
A)change interest rates, which in turn alters consumption and investment.
B)increase demand in a recession.
C)decrease demand in a recession.
D)target inflation.
Q2) Why is investment demand more unstable than personal consumption?
A)Because business decisions are often made based on the expectations, and moods of optimism and pessimism concerning future economic conditions.
B)Because business decisions are often made based only on interest rates.
C)Because business decisions are made more often than personal purchasing decisions.
D)Because personal purchasing decisions are often made based on the forecasts of future sales.
Q3) The ratio of the change in GDP to an initial change in aggregate demand is the:
A)spending multiplier.
B)permanent income rate.
C)marginal expenditure rate.
D)marginal propensity to consume.
To view all questions and flashcards with answers, click on the resource link above.
16
Chapter 15: The monetary and financial system
Available Study Resources on Quizplus for this Chatper
124 Verified Questions
124 Flashcards
Source URL: https://quizplus.com/quiz/21230
Sample Questions
Q1) The Australian Prudential Regulation Authority's role is to:
A)control inflation.
B)monitor interest rates.
C)monitor Australia's deposit-taking institutions.
D)uphold consumer protection.
Q2) The opportunity cost of holding money is properly measured by the rate of interest on financial assets such as bonds.
A)True
B)False
Q3) The speculative demand for money shows the relationship between money demand and:
A)income levels.
B)interest rates.
C)price levels.
D)investment rates.
E)consumption patterns.
Q4) T-note is sold by the Treasury on behalf of the federal government and is considered riskless.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 16: Macroeconomic policy I: monetary policy
Available Study Resources on Quizplus for this Chatper
124 Verified Questions
124 Flashcards
Source URL: https://quizplus.com/quiz/21231
Sample Questions
Q1) Keynesians argue that the velocity of money is:
A)constant over time.
B)stable over time.
C)constant in the short run, but volatile in the long run.
D)zero.
E)volatile.
Q2) The reduction in aggregate demand would:
A)slow the economy down and increase the rate of inflation.
B)speed the economy up keeping the rate of inflation unchanged.
C)slow the economy down and reduce the rate of inflation.
D)speed the economy up and reduce the rate of inflation.
Q3) According to the quantity theory of money,any change in the money supply:
A)must lead to an inverse change in the price level.
B)must lead to an exponential change in the price level.
C)does not lead to any change in the price level.
D)must lead to a proportional change in the price level.
Q4) Modern monetary policy in Australia is implemented by the RBA seeking to maintain the overnight cash rate at a pre-announced level.
A)True
B)False
Page 18
To view all questions and flashcards with answers, click on the resource link above.
Chapter 17: Macroeconomic policy II: fiscal policy
Available Study Resources on Quizplus for this Chatper
123 Verified Questions
123 Flashcards
Source URL: https://quizplus.com/quiz/21232
Sample Questions
Q1) In Exhibit 17-4,supply-siders claimed that the shift from AS to AS would occur if the government:
A)increased tax rates and increased the amount of government regulation.
B)increased tax rates and decreased the amount of government regulation.
C)increased tax rates only.
D)decreased tax rates and decreased the amount of government regulation.
E)decreased tax rates and increased the amount of government regulation.
Q2) The objectives of the GST in Australia were to:
A)reduce the range of goods and services attracting tax.
B)encourage increased rates of community saving by taxing income when it was spent rather than when it was earned.
C)increase the reliance on income taxation in government revenue raising.
D)increase the ability of individuals to avoid paying their taxes.
Q3) An example of a long-term fiscal policy in Australia is:
A)the GST.
B)an encouragement of competition in the markets.
C)employment of high-ranking academics.
D)introduction of new markets.
To view all questions and flashcards with answers, click on the resource link above. Page 19
Chapter 18: International trade and finance
Available Study Resources on Quizplus for this Chatper
133 Verified Questions
133 Flashcards
Source URL: https://quizplus.com/quiz/21233
Sample Questions
Q1) Using tariffs to trade only with some developing countries is often called:
A)the national safety argument.
B)the cheap foreign labour argument.
C)the baby industry argument.
D)the unemployment argument.
Q2) In the mid- to late 1980s,Australia had large foreign debt.The concerns were about:
A)the ability of the country to make payments in case of an economic downturn. The equity investments were suggested.
B)the coming economic boom and the ability of the country to pay economic dividends.
C)the accessibility of local capital for foreign companies to partially cover the debt.
D)the liabilities were only 2% of the GDP and needed to be brought up to at least 25%.
Q3) Which of the following would be included in Australia's capital account?
A)The sale of wheat to Britain.
B)The purchase of cars from Japan.
C)Interest repayments on a loan from a US bank.
D)Investors from Papua New Guinea buy a cattle station in Queensland, Australia.
To view all questions and flashcards with answers, click on the resource link above.
Page 20
Chapter 19: Applying graphs to economics
Available Study Resources on Quizplus for this Chatper
37 Verified Questions
37 Flashcards
Source URL: https://quizplus.com/quiz/21215
Sample Questions
Q1) Which of the following would cause a shift in the relationship shown in Exhibit 1A-6?
A)A change in people's annual income.
B)A rise in people's expenditure on air travel.
C)Both a rise in income and a rise in expenditure on air travel.
D)A change in people's preferences in favour of air travel.
Q2) What is the slope of the line shown in Exhibit 1A-6?
A)1/20.
B)1/10.
C)1/5.
D)1/2.
Q3) Adding a third variable to a two dimensional graph:
A)makes it impossible to interpret the graph.
B)helps to show the effect of factors that are not on the graph.
C)creates unnecessary complexity and should be avoided.
D)provides a point of intersection.
Q4) An inverse relationship is a negative causation between two variables.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 21