Principles of Microeconomics
Midterm Exam
Course Introduction
Principles of Microeconomics introduces students to the fundamental concepts and analytical tools of microeconomic theory. The course explores the decision-making processes of individuals, households, and firms as they allocate limited resources among competing uses. Key topics include supply and demand, market equilibrium, elasticity, consumer and producer behavior, the nature of costs, different types of market structures, and the impact of government intervention. Emphasis is placed on real-world applications, critical thinking, and using economic reasoning to understand how markets function and the implications for public policy.
Recommended Textbook
ECON MICRO 5th Edition by William A. McEachern
Available Study Resources on Quizplus
21 Chapters
3187 Verified Questions
3187 Flashcards
Source URL: https://quizplus.com/study-set/3724 Page 2
Chapter 1: The Art and Science of Economic Analysis
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/74251
Sample Questions
Q1) A good economic theory:
A)has realistic assumptions.
B)contains as much detail as possible.
C)cannot be proven false.
D)predicts well.
E)can only be presented in mathematical terms.
Answer: D
Q2) In economics, capital refers to:
A)money.
B)stocks, bonds, and other financial assets.
C)the seat of the government.
D)machines, buildings, tools, and knowledge.
E)net worth (assets minus liabilities).
Answer: D
Q3) Economists often focus on average behavior because it is easier to predict.
A)True
B)False
Answer: True
To view all questions and flashcards with answers, click on the resource link above.
3
Chapter 2: Economic Tools and Economic Systems
Available Study Resources on Quizplus for this Chatper
159 Verified Questions
159 Flashcards
Source URL: https://quizplus.com/quiz/74252
Sample Questions
Q1) The bowed-out shape of the production possibilities frontier indicates increasing opportunity costs.
A)True
B)False
Answer: True
Q2) Which of the following is an example of the division of labor?
A)An author writing a book one chapter at a time
B)A firm trying to get rid of a labor union
C)Separating resources into four categories: land, labor, capital, and entrepreneurial ability
D)Allocating revenue among a firm's resource suppliers
E)Dividing an assembly process into separate steps
Answer: E
Q3) A point inside the production possibilities curve illustrates a situation in which resources are not fully employed.
A)True
B)False
Answer: True
To view all questions and flashcards with answers, click on the resource link above.
4
Chapter 3: Economic Decision Makers
Available Study Resources on Quizplus for this Chatper
174 Verified Questions
174 Flashcards
Source URL: https://quizplus.com/quiz/74253
Sample Questions
Q1) Mr. Thomson had a before-tax income of $20,000 and paid taxes of $2,000. Ms. Lynch had a before-tax income of $10,000 and paid taxes of $1,500. Based on this information, which of the following is correct?
A)The tax system is progressive for incomes below $10,000.
B)The tax system is proportional.
C)The tax system is regressive.
D)The tax system is based on the benefits received.
E)The tax system is progressive for incomes above $20,000.
Answer: C
Q2) The partnership is the least common form of business organization in the United States.
A)True
B)False Answer: True
Q3) When externalities are present, market prices do not reflect all the social costs or benefits of the activity.
A)True
B)False
Answer: True
To view all questions and flashcards with answers, click on the resource link above.
Page 5
Chapter 4: Demand, Supply, and Markets
Available Study Resources on Quizplus for this Chatper
152 Verified Questions
152 Flashcards
Source URL: https://quizplus.com/quiz/74254
Sample Questions
Q1) Which of the following is likely to shift the market supply curve for corn in the short run?
A)A change in the price of corn
B)A change in the price of pesticides
C)A change in the number of corn consumers
D)A change in the expectations of consumers about the future price of corn
E)A change in the money income of corn consumers
Q2) The impact of a $200 increase in income on quantity of housing demanded would be called an income effect.
A)True
B)False
Q3) Which of these is likely to increase the supply of vanilla ice cream?
A)An increase in the price of vanilla beans, an ingredient in ice cream
B)A decrease in the sales tax on ice cream
C)An increase in the price of chocolate ice cream
D)A decrease in the price of milk, an ingredient in ice cream
E)An increase in the price of hot fudge
Q4) The slope of the demand curve for a normal good must be positive.
A)True
B)False
Page 6
To view all questions and flashcards with answers, click on the resource link above.
Chapter 5: Elasticity of Demand and Supply
Available Study Resources on Quizplus for this Chatper
149 Verified Questions
149 Flashcards
Source URL: https://quizplus.com/quiz/74255
Sample Questions
Q1) Identify a statement that is true about a linear demand curve.
A)Along a linear demand curve, both the slope and price elasticity are constant.
B)Along a linear demand curve, the price elasticity is constant, but the slope varies.
C)Along a linear demand curve, total revenues are constant.
D)Along a linear demand curve, the slope is constant, but the price elasticity varies.
E) Along a linear demand curve, total revenues are negative.
Q2) Demand is unit elastic whenever
A)price elasticity has an absolute value of 1.
B)price elasticity has an absolute value greater than 1.
C)price elasticity has an absolute value less than 1.
D)price elasticity is negative.
E)consumers do not respond to a change in price.
Q3) Total revenue is the same for every price-quantity combination along a unit-elastic demand curve.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Chapter 6: Consumer Choice and Demand
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/74256
Sample Questions
Q1) Consumer surplus is:
A)the amount by which quantity supplied exceeds quantity demanded at the current market price.
B)the amount by which quantity demanded exceeds quantity supplied at the current market price.
C)the change in total utility derived from a one-unit change in the consumption of a good.
D)the horizontal sum of the individual demand curves for all consumers in the market.
E)valued by the difference between the maximum price consumers are willing to pay and the amount they actually pay.
Q2) The marginal utility of a second copy of today's New York Times is:
A)infinite.
B)practically zero.
C)positive and greater than the marginal utility of the first copy.
D)equal to the marginal utility of the first copy.
E)50 cents.
Q3) The consumption of goods and services has both a money price and a time price.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Production and Cost in the Firm
Available Study Resources on Quizplus for this Chatper
151 Verified Questions
151 Flashcards
Source URL: https://quizplus.com/quiz/74257
Sample Questions
Q1) The length of time that represents the long run:
A)is greater than one year.
B)is greater than six months.
C)is longer in service industries than in manufacturing.
D)is the same for all industries.
E)varies from industry to industry.
Q2) As output increases, diseconomies of scale:
A)lead to rising long-run average costs.
B)lead to declining long-run average costs.
C)lead to rising short-run average total costs.
D)lead to declining short-run total cost.
E)mean the law of diminishing marginal returns is affecting production.
Q3) As output rises, marginal product eventually diminishes and _____.
A)marginal cost increases
B)average cost falls
C)total cost falls
D)fixed cost is increasing
E)average product is negative
To view all questions and flashcards with answers, click on the resource link above.
Chapter 8: Perfect Competition
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/74258
Sample Questions
Q1) Mary Ann and Donna provide lawn mowing services in a perfectly competitive market. When they began their operations, the market rate for mowing lawns was $50 per lawn. After the price increased to $60, they were willing to work on Saturdays as well. Their response to the price change will be shown by:
A)a rightward shift of the market supply curve.
B)a leftward shift of the market supply curve.
C)an upward movement along their firm's marginal cost curve.
D)a downward movement along their firm's marginal cost curve.
E)a rightward shift in the market demand curve for mowing lawns.
Q2) The price that represents the shutdown point for a perfectly competitive firm corresponds to the _____.
A)highest point on the marginal cost curve
B)lowest point on the marginal cost curve
C)highest point on the average variable cost curve
D)lowest point on the average variable cost curve
E)lowest point on the average total cost curve
Q3) A firm that minimizes average cost will not survive in the long run.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 10
Chapter 9: Monopoly
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/74259
Sample Questions
Q1) A monopolist's marginal revenue curve is flatter than its demand curve.
A)True
B)False
Q2) Which of the following can be concluded about a monopolist whose marginal revenue is zero for a particular output level?
A)The economic profit earned by the monopolist by producing that output level is zero.
B)Total revenue earned by the monopolist is maximum at that output level.
C)Total revenue earned by the monopolist increases at an increasing rate as output increases beyond that output level.
D)Total revenue earned by the monopolist increases at a decreasing rate as output increases beyond that output level.
E)Average revenue earned by the firm for that output level is less than marginal revenue for that output level.
Q3) A monopolist that fails to recover a short-run loss in the long run generally leaves the market.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
11
Chapter 10: Monopolistic Competition and Oligopoly
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/74260
Sample Questions
Q1) An oligopolist that cheats on a collusive agreement by reducing price will quickly be forced out of the industry by its competitors.
A)True
B)False
Q2) Monopolistically competitive firms are unlikely to:
A)operate where price equals marginal cost.
B)charge a higher price than firms in perfect competition.
C)produce a smaller quantity than firms in perfect competition.
D)produce where price equals average total cost.
E)exit the industry when demand falls below long-run average costs.
Q3) Compared to a firm in perfect competition, a monopolistically competitive firm tends to:
A)produce less and charge a higher price.
B)produce less and charge a lower price.
C)produce more and charge a lower price.
D)produce more and charge a higher price.
E)produce the same quantity.
Q4) Oligopolists often sacrifice economies of scale as they expand product variety.
A)True
B)False
Page 12
To view all questions and flashcards with answers, click on the resource link above.
Chapter 11: Resource Markets
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/74261
Sample Questions
Q1) Both sugar and fructose can be used in the production of candy. If the price of sugar increases, _____.
A)the demand for sugar increases as the relative price of sugar decreases
B)sugar becomes relatively more expensive than fructose only if the price of fructose falls
C)sugar becomes relatively more expensive than fructose, other things constant
D)the price of fructose immediately increases
E)the price of fructose immediately decreases
Q2) If the price of a resource falls, other things constant, the _____.
A)demand for the final product produced by the resource will increase
B)demand for a substitute product will increase
C)demand for a substitute resource will fall
D)supply of that resource will rise
E)supply of a substitute resource will also rise
Q3) The greater the economic rent as a proportion of total earnings, _____.
A)the less elastic the resource supply
B)the more elastic the resource demand
C)the more elastic the resource supply
D)the less elastic the resource demand
E)the more elastic the firm's supply of its final product
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Labor Markets and Labor Unions
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/74262
Sample Questions
Q1) Market work includes activities such as:
A)practicing your golf game.
B)studying for an economics exam.
C)teaching a college economics course.
D)picking up empty cans for the bottle deposit.
E)picking strawberries for your own use.
Q2) The amount of time an individual is willing to sell on the labor market varies positively with the value of leisure time.
A)True
B)False
Q3) Craft unions attempt to increase wages in their profession by:
A)increasing labor demand.
B)decreasing labor demand.
C)decreasing labor supply.
D)increasing labor supply.
E)negotiating exclusive dealing contracts.
Q4) The demand for labor curve bends backward whenever the income and substitution effects work in opposite directions.
A)True
B)False
Page 14
To view all questions and flashcards with answers, click on the resource link above.
Chapter 13: Capital, Interest, Entrepreneurship, and Corporate Finance
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/74263
Sample Questions
Q1) An IOU reflecting a corporation's promise to pay the holder a fixed sum of money at a designated maturity date plus annual interest payments until maturity is:
A)a bond.
B)a stock certificate.
C)an annuity.
D)a golden parachute.
E)a credit note.
Q2) If the interest rate increases from 3 to 4 percent, other things constant, individuals will want to _____.
A)both save and borrow more
B)both save and borrow less
C)save more and borrow less
D)save less and borrow more
E)borrow more but save the same amount
Q3) The present value of an annuity that pays $100 each year indefinitely is $2,000 if the interest rate is 5 percent.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: Transaction Costs, Asymmetric Information, and
Behavioral Economics
Available Study Resources on Quizplus for this Chatper
152 Verified Questions
152 Flashcards
Source URL: https://quizplus.com/quiz/74264
Sample Questions
Q1) In his article "The Nature of the Firm," Ronald Coase:
A)suggested that monopolies may be more innovative than competitive firms.
B)argued that the economy should be organized into one large firm.
C)provided an answer to the question, "Why do firms exist?"
D)focused on the concept of adverse selection.
E)analyzed market concentration in U.S. industry.
Q2) Neuroeconomics looks at how people react to a change in their income.
A)True
B)False
Q3) In which of these occupations is it easy for the customers to observe and quantify the ability of workers?
A)Air pilots
B)Garment factory workers
C)Lawyers
D)Bartenders
E)Doctors
Q4) The subfield of behavioral economics that examines how economic decision making affects areas of the brain is called neuroeconomics.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: Economic Regulation and Antitrust Policy
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/74265
Sample Questions
Q1) The research of William Shepherd suggests that since World War II, the three main reasons for increased competition in U.S. industries are competition from imports, deregulation, and antitrust policy.
A)True
B)False
Q2) Which of the following did not lead to an increase in competition in the United States between 1958 and 1988?
A)Antitrust activity
B)Deregulation of transportation industries
C)Deregulation of the banking sector
D)Increased imports
E)Conglomerate mergers
Q3) Due to economies of scale, throughout the range of market demand, natural monopolies have:
A)downward-sloping long-run average cost curves.
B)upward-sloping long-run average total cost curves.
C)upward-sloping short-run average cost curves.
D)upward-sloping short-run average total cost curves.
E)horizontal long-run average cost curves.
To view all questions and flashcards with answers, click on the resource link above.
Page 17
Chapter 16: Public Goods and Public Choice
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/74266
Sample
Questions
Q1) Rent-seeking activities by special interest groups result in:
A)greater economic activity by promoting efficiency in government.
B)lower economic activity by diverting resources to less-productive or nonproductive uses.
C)a more equal distribution of income and wealth in the nation.
D)an increase in government revenue through an increase in taxes.
E)greater efficiency in the private economy and increased wealth for society.
Q2) Suppose a citizen concludes that he has had enough of big government and decides to launch a personal campaign to expose the big spenders in Congress. In such a case, _____.
A)he is likely to have his taxes reduced dramatically
B)his action is not likely to affect public choices
C)he is likely to benefit from public goods without paying for them
D)he is likely to be elected to public office by other voters
E)his action will get the support of many special-interest groups
Q3) Traditional public-goods legislation usually has a negative impact on the economy.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 18
Chapter 17: Externalities and the Environment
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/74267
Sample Questions
Q1) A metal-stamping factory moves next to a day care center. Noise from the factory makes it impossible for the kids to nap. It would cost the factory $5 million to move and $1 million for the day care center to move. Sound insulation for the factory costs $1 million; insulation for the day care center costs $200,000. The court initially determines that the day care center has the property right. But, on appeal, the factory is awarded the property right. Which of the following is likely to be true given the scenario?
A)Insulation for the day care center would be bought, a result consistent with the Coase theorem.
B)Insulation for the factory would be bought, a result consistent with the Coase theorem.
C)Insulation for the day care center would be bought by the factory, a result consistent with the Coase theorem.
D)Insulation for the factory would be bought by the day care center, a result inconsistent with the Coase theorem.
E)The day care center would move instead of buying insulation, a result consistent with the Coase theorem.
To view all questions and flashcards with answers, click on the resource link above.
Page 19
Chapter 18: Poverty and Redistribution
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/74268
Sample Questions
Q1) Social Security and Medicare:
A)have not succeeded in reducing the incidence of poverty among the elderly.
B)have succeeded in reducing the incidence of poverty among those below 18 years of age.
C)have succeeded in reducing the incidence of poverty among the elderly.
D)have not succeeded in reducing the incidence of poverty among those between 18 and 64 years of age.
E)have succeeded in redistributing income from the old to the young.
Q2) The Lorenz curve for the United States economy has:
A)shifted further away from the line of equal distribution over the years.
B)shifted toward the line of perfect equality over the years.
C)coincided with the line of perfect equality in recent years.
D)become a vertical line in recent years.
E)become horizontal line in recent years.
Q3) The social insurance system generally redistributes income from:
A)the rich to the poor and from old to young.
B)the rich to the poor and from young to old.
C)the poor to the rich and from old to young.
D)the producers to the consumers of a good.
E)the consumers to the producers of a good.
To view all questions and flashcards with answers, click on the resource link above. Page 20
Chapter 19: International Trade
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/74269
Sample Questions
Q1) Domestic producers of goods who compete with cheaper imports benefit from protectionism in the short run.
A)True
B)False
Q2) Which of the following is a type of trade restriction?
A)Diseconomies of scale
B)Autarky
C)Diminishing marginal returns
D)Health, safety, or technical standards
E)Import concession
Q3) If resources are equally adaptable to the production of different goods, the production possibilities frontier of a country will be an upward-sloping, concave curve.
A)True
B)False
Q4) When a country imposes trade restrictions, the domestic producers who compete with imports may lose in the long run if protection stifles innovation and leaves the industry vulnerable.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 21
Chapter 20: International Finance
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/74270
Sample Questions
Q1) Which of the following statements is true?
A)The demand for foreign currency in the United States increases as the volume of imports increases.
B)The demand for foreign currency in the United States increases as the volume of exports increases.
C)The demand for foreign currency in the United States decreases with a decrease in the inflation rate abroad.
D)The demand for foreign currency in the United States decreases as foreign interest rates rise.
E)The demand for foreign currency in the United States is unaffected by U.S. demand for foreign goods and services.
Q2) If Europe and the United States were the only two regions in the world, then U.S. government would buy euros to improve the U.S. balance of payments.
A)True
B)False
Q3) The current international financial system is a managed float system.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
22
Chapter 21: Economic Development
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/74271
Sample Questions
Q1) Private international borrowing and lending is freely allowed by governments of developing countries.
A)True
B)False
Q2) Because of disappointment with the results of government aid, the trend is to _____.
A)stop accepting outside aid altogether
B)channel funds through profit-making organizations
C)channel funds through private investors
D)become the donor country from being the recipient country
E)channel funds through private non-profit agencies
Q3) It is clear that foreign aid is a source of discretionary funds that _____.
A)benefit only the poor people
B)benefit government leaders
C)benefit only rich people
D)benefit institutions like the World Bank and the IMF
E)benefit all common people irrespective of their economic status
Q4) Wages are high in poor countries because businesses are run efficiently.
A)True
B)False
Page 23
To view all questions and flashcards with answers, click on the resource link above.