Principles of Microeconomics Exam Practice Tests
Course Introduction
Principles of Microeconomics introduces students to the foundational concepts and analytical tools used to understand individual economic decision-making, market interactions, and the allocation of scarce resources. The course covers supply and demand analysis, consumer and producer behavior, elasticity, market structures, the role of government intervention, and the impact of public policy on market outcomes. Emphasis is placed on applying economic principles to real-world scenarios, fostering critical thinking and problem-solving skills essential for further studies in economics and related fields.
Recommended Textbook
Microeconomics Brief Edition 2nd Edition by Campbell R. McConnell
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13 Chapters
1963 Verified Questions
1963 Flashcards
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Page 2
Chapter 1: Limits, Alternatives, and Choices
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143 Verified Questions
143 Flashcards
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Sample Questions
Q1) Marginal analysis is the comparison of additional benefits with the additional costs.
A)True
B)False
Answer: True
Q2) One reason economists have difficulty applying the scientific method is because:
A) economic conditions are constant.
B) controlled laboratory experiments are often infeasible and sometimes impossible.
C) people are involved,and their behavior is entirely unpredictable.
D) the scientific method does not apply to economics.
Answer: B
Q3) Macroeconomics is the study of economics from the standpoint of:
A) individual economic units.
B) a typical firm.
C) a typical household.
D) the overall economy.
Answer: D
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Chapter 2: The Market System and the Circular Flow
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133 Verified Questions
133 Flashcards
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Sample Questions
Q1) Property rights have a positive effect in a market economy because they encourage owners to maintain their property.
A)True
B)False
Answer: True
Q2) Which of the following does not explain why the command systems of the Soviet Union and Eastern Europe failed?
A) Coordination problems.
B) Prices and profits did not fluctuate to reflect wants for a different allocation of resources.
C) Incentive problems.
D) The failure to use money for most exchanges.
Answer: D
Q3) A market system is best characterized by:
A) extensive government intervention in economic activity.
B) the private production of most capital goods.
C) government regulation of all private markets.
D) central planning and control.
Answer: B
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Page 4
Chapter 3: Demand, Supply, and Market Equilibrium
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179 Verified Questions
179 Flashcards
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Sample Questions
Q1) If the price of a product increases,we would expect:
A) demand to decrease.
B) quantity supplied to increase.
C) supply to decrease.
D) quantity demanded to increase.
Answer: B
Q2) If a legal price ceiling is set above the equilibrium price:
A) a shortage of the product will occur.
B) a surplus of the product will occur.
C) a black market will evolve.
D) neither the equilibrium price nor the equilibrium quantity will be affected.
Answer: D
Q3) In the past few years the demand for donuts has greatly increased.This increase in demand might best be explained by:
A) an increase in the cost of making donuts.
B) an increase in the price of coffee.
C) consumers expecting donut prices to fall.
D) a change in buyer tastes.
Answer: D
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Page 5
Chapter 4: Elasticity of Demand and Supply
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144 Verified Questions
144 Flashcards
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Sample Questions
Q1) Airlines charge business travelers more than leisure travelers because there is a more:
A) elastic supply of business travel.
B) inelastic supply of business travel.
C) elastic demand for business travel.
D) inelastic demand for business travel.
Q2) The income elasticity of demand for jewelry is 2.Other things equal,a 10 percent increase in consumer income will:
A) decrease the quantity of jewelry purchased by 20 percent.
B) increase the quantity of jewelry purchased by 10 percent.
C) decrease the quantity of jewelry purchased by 10 percent.
D) increase the quantity of jewelry purchased by 20 percent.
Q3) If a 2 percent increase in the price of product X causes the demand for product Y to increase by 6 percent,then:
A) X and Y are substitutes.
B) X and Y are complements.
C) X and Y are independent goods.
D) the demand for X is elastic.
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6
Chapter 5: Market Failures: Public Goods and Externalities
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125 Verified Questions
125 Flashcards
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Sample Questions
Q1) Private firms cannot profitably produce a public good because of:
A) liability rules and lawsuits.
B) inflation and unemployment.
C) nonrivalry and nonexcludability.
D) positive and negative externalities.
Q2) If an economy is being "productively efficient," then that means the economy is:
A) producing the products most wanted by society.
B) fully employing all economic resources.
C) maximizing the returns to factors of production.
D) using the least costly production techniques.
Q3) In a free-market economy,a product that entails a spillover benefit will be:
A) overproduced.
B) underproduced.
C) produced at the optimal level.
D) associated only with goods and services provided by the government.
Q4) If an economy is being "allocatively efficient," then that means the economy is:
A) using the least costly production techniques.
B) producing the goods and services most wanted by society.
C) fully employing all economic resources.
D) maximizing the returns to factors of production.
Page 7
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Chapter 6: Businesses and Their Costs
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156 Verified Questions
156 Flashcards
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Sample Questions
Q1) Other things equal,if the wage rates paid to a firm's labor inputs were to rise,we would expect the:
A) AFC,AVC,ATC,and MC to rise.
B) AVC,ATC,and MC to rise.
C) AFC and ATC to fall.
D) MP to fall.
Q2) Minimum efficient scale occurs at the smallest level of output at which a firm can minimize long-run average costs.
A)True
B)False
Q3) Implicit costs are:
A) regarded as costs by accountants but not by economists.
B) payments that a firm makes to other firms or individuals who supply resources to it.
C) nonexpenditure costs.
D) costs that vary proportionately with output.
Q4) Only the bondholders of a corporation have the right to vote for a corporation's directors.
A)True
B)False
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Chapter 7: Pure Competition
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155 Verified Questions
155 Flashcards
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Sample Questions
Q1) Economic profit is the difference between total revenue and marginal revenue.
A)True
B)False
Q2) The long-run supply curve for a competitive,decreasing-cost industry is upsloping.
A)True
B)False
Q3) When a purely competitive firm is in long-run equilibrium and is allocatively efficient:
A) total revenue is at a maximum.
B) marginal cost equals marginal revenue.
C) average variable cost equals marginal cost.
D) total cost is at a minimum.
Q4) Total revenue for producing eight units of output is $48.Total revenue for producing nine units of output is $63.Given this information,the:
A) average revenue for producing nine units is $1.
B) average revenue for producing nine units is $15.
C) marginal revenue for producing the ninth unit is $1.
D) marginal revenue for producing the ninth unit is $15.
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9
Chapter 8: Pure Monopoly
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150 Verified Questions
150 Flashcards
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Sample Questions
Q1) Which piece of federal legislation aims to prevent monopolization and restraint of trade?
A) Sherman Act
B) Clayton Act
C) Wheeler-Lea Act
D) Federal Trade Commission Act
Q2) Which is not true of price discrimination?
A) It exists when price differences depend critically on different buyers' evaluations of a product.
B) Successful price discrimination will provide the firm with more profit than if it does not discriminate.
C) Successful price discrimination implies that the producer can separate customers into easily identifiable groups.
D) Successful price discrimination will generally result in a lower level of output than would be the case under a single-price monopoly.
Q3) Patents and licenses are barriers to entry.
A)True
B)False
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Chapter 9: Monopolistic Competition and Oligopoly
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179 Verified Questions
179 Flashcards
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Sample Questions
Q1) In the short run,the monopolistically competitive firm will experience:
A) an economic profit,and also one in the long run.
B) a normal profit,but in the long run only an economic profit.
C) economic profits or losses,but in the long run only a normal profit.
D) economic profits or losses,but in the long run only an economic profit.
Q2) Which industry would be considered to be monopolistically competitive?
A) Electronic computers
B) Electric light bulbs
C) Local dry cleaners
D) Men's slacks and jeans
Q3) The demand curve faced by a monopolistically competitive firm is more elastic than the monopolist's demand curve.
A)True
B)False
Q4) The long-run equilibrium position of a monopolistically competitive firm is where average costs are:
A) constant.
B) increasing.
C) decreasing.
D) at their minimum point.
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Chapter 10: Wage Determination
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164 Verified Questions
164 Flashcards
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Sample Questions
Q1) The demand for labor would most likely become more elastic as a result of:
A) a decrease in the elasticity of the demand for the product that the labor produces.
B) an increase in the time for employers to make technological changes or purchase new equipment.
C) a decrease in the proportion of labor costs to total costs.
D) an increase in the proportion of labor cost to total costs.
Q2) The demand for labor will decrease in response to:
A) increased productivity.
B) better training of all laborers.
C) a decrease in the supply of labor.
D) decreased demand in markets for consumer goods and services.
Q3) Discrimination that results in minorities being paid less than whites for identical work would be an example of what explanation for wage differentials?
A) Noncompeting groups
B) Compensating differences
C) Market imperfections
D) Principal-agent problems
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Chapter 11: Income Inequality and Poverty
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158 Verified Questions
158 Flashcards
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Sample Questions
Q1) Which statement about the distribution of poverty is correct?
A) About 30 percent of households headed by females live in poverty.
B) About 33 percent of households headed by whites live in poverty.
C) About 50 percent of children under the age of 18 live in poverty.
D) About 50 percent of the elderly (65 or older)live in poverty.
Q2) Which of the following helps finance the medical expenses of individuals receiving TANF or SSI?
A) Medicare
B) Supplemental Security Income (SSI)
C) Medicaid
D) Social Security
Q3) The Bureau of Census data on income distribution in the United States take into account trends in lifetime income.
A)True
B)False
Q4) Of the following groups,which had the highest incidence of poverty in 2009?
A) Whites
B) Hispanics
C) Children under 18
D) Persons 65 or older
Page 13
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Chapter 12: Public Finance: Expenditures and Taxes
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140 Verified Questions
140 Flashcards
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Sample Questions
Q1) If the supply of a product is perfectly elastic and demand is downsloping,an excise tax of $2 per unit will increase price by:
A) more than $2.
B) less than $2.
C) $2 and increase equilibrium output.
D) $2 and reduce equilibrium output.
Q2) The largest source of tax revenue for the U.S.federal government is:
A) personal income taxes.
B) property taxes.
C) corporate income taxes.
D) sales and excise taxes.
Q3) Taxable income is:
A) total income less deductions and exemptions.
B) the same as gross income.
C) the only income to which marginal tax rates apply.
D) the sum of all wage and property income.
Q4) The basic source of state government's revenue is the property tax.
A)True
B)False
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Chapter 13: International Trade and Exchange Rates
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137 Verified Questions
137 Flashcards
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Sample Questions
Q1) Which organization meets regularly to establish rules related to international trade?
A) The United Nations
B) The Bank of America
C) The World Trade Organization
D) The Federal Reserve Board
Q2) The best example of a land-intensive commodity is:
A) tractors.
B) DVD players.
C) wheat.
D) chemicals.
Q3) Strategic trade policy is part of the protectionist argument for increasing domestic employment.
A)True
B)False
Q4) Net exports in the United States average about 1 to 2 percent of GDP.
A)True
B)False
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