Principles of Microeconomics Test Bank
Course Introduction
Principles of Microeconomics introduces students to the fundamental concepts and tools used to understand how individuals, households, and firms make decisions regarding the allocation of limited resources. The course explores topics such as supply and demand, market equilibrium, consumer behavior, production and costs, market structures such as competition and monopoly, and the role of government in addressing market failures. Through real-world examples and analytical frameworks, students develop a foundational understanding of how microeconomic principles impact both personal decision-making and broader economic 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) An economic model:
A)omits critical elements.
B)must be presented in mathematical terms.
C)simplifies reality in order to focus on its essential elements.
D)can never be proven wrong if its assumptions are realistic.
E)produces poor predictions if it includes an unrealistic assumption.
Answer: C
Q2) Rational self-interest is equivalent to pure selfishness.
A)True
B)False
Answer: False
Q3) The association is causation fallacy is the error of assuming that what is true for one member of a group must be true for the group.
A)True
B)False
Answer: False
Q4) Economics is as much an art as it is a science.
A)True
B)False
Answer: True
Page 3
To view all questions and flashcards with answers, click on the resource link above.
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) Suppose you have an hour before your next class starts. You can either read a book, get something to eat, or take a nap. The opportunity cost of getting something to eat is:
A)the cost of what you eat.
B)the value of reading and sleeping.
C)the loss of value from not reading or sleeping.
D)the net benefit of sleeping for another hour.
E)impossible to determine because the most preferred alternative is not known.
Answer: E
Q2) If Robin has an absolute advantage in both gardening and baking when compared to Robert, then:
A)Robin cannot benefit by trading with Robert.
B)Robin can benefit by specializing in gardening if Robert specializes in baking.
C)Robin can benefit by specializing in baking if Robert specializes in gardening.
D)Robin and Robert may benefit from trading, but there is insufficient information to determine who should specialize in what.
E)neither Robin nor Robert can benefit from trading with the other.
Answer: D
To view all questions and flashcards with answers, click on the resource link above.
Page 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) An import quota taxes an import but does not set a limit on how much may be imported.
A)True
B)False
Answer: False
Q2) An external benefit is a benefit from an activity that falls on a third party which is not involved in the activity.
A)True
B)False
Answer: True
Q3) Household production is more likely to occur when:
A)it requires few specialized resources.
B)technology makes it more costly than market production.
C)tax avoidance is undesirable.
D)less control over the final product is desirable.
E)the opportunity cost of household production is high.
Answer: A
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 will indicate a shortage of a product in the market to suppliers?
A)The quantity supplied exceeds the quantity demanded at a particular price.
B)The quantity demanded decreases substantially.
C)The stock of inventories of most suppliers increases.
D)The quantity demanded exceeds the quantity supplied at a particular price.
E)The price of the product declines to an all-time low.
Q2) Identify the effect of a reduction in the price of steel on the equilibrium price and quantity of automobiles, for a given demand curve.
A)An increase in both equilibrium price and equilibrium quantity
B)A decrease in both equilibrium price and equilibrium quantity
C)An increase in equilibrium price and a decrease in equilibrium quantity
D)A decrease in equilibrium price and an increase in equilibrium quantity
E)An increase in equilibrium price but no change in equilibrium quantity
Q3) The introduction of a new cost effective production technique is likely to:
A)shift the demand curve leftward.
B)make the demand curve flatter.
C)shift the supply curve leftward.
D)make the supply curve steeper.
E)shift the supply curve rightward.
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
149 Verified Questions
149 Flashcards
Source URL: https://quizplus.com/quiz/74255
Sample Questions
Q1) If a price reduction leads to an increase in total revenue, demand is:
A)perfectly inelastic.
B)inelastic.
C)unit elastic.
D)elastic.
E)perfectly elastic.
Q2) Economists distinguish between normal and inferior goods using:
A)the price elasticity of demand.
B)the price elasticity of supply.
C)the income elasticity of demand.
D)the cross-price elasticity of demand.
E)tax incidence.
Q3) If supply is perfectly elastic, the supply curve is:
A)vertical.
B)horizontal.
C)downward sloping.
D)upward sloping.
E)u-shaped.
To view all questions and flashcards with answers, click on the resource link above.
7
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) If medical care is provided free of charge, _____.
A)beneficiaries consume it up to the point at which the marginal utility of the final unit is positive
B)beneficiaries will consume it up to the point at which the demand curve intersects the vertical axis
C)beneficiaries will derive no consumer surplus from medical care
D)beneficiaries will consume it up to the point at which the marginal utility of the final unit is negative
E)beneficiaries will consume it up to the point at which the marginal utility of the final unit is zero
Q2) The market demand curve is the sum of individual quantities demanded at each price.
A)True
B)False
Q3) Opportunity cost is measurable only when prices are known.
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) John moved his office from a building he was renting downtown to the carriage house he owns behind his house. How will his profit change?
A)Implicit costs will fall.
B)Explicit costs will remain unchanged, while implicit costs will rise.
C)Economic profit will fall.
D)Explicit costs will rise.
E)Accounting profit will rise.
Q2) The long-run average cost curve is tangent to the minimum point of every short-run average total cost curve.
A)True
B)False
Q3) If a pizza joint earns only a normal profit this year, its:
A)economic profit is equal to its accounting profit.
B)economic profit is zero.
C)economic profit is equal to the average accounting profit in other industries.
D)accounting profit is zero.
E)accounting profit is less than its economic profit.
To view all questions and flashcards with answers, click on the resource link above.
9
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) When market exchange occurs voluntarily in a competitive market, _____.
A)consumer choice does not involve any opportunity cost
B)the sum of consumer surplus and producer surplus is maximized
C)both consumer surplus and producer surplus are eliminated
D)buyers benefit at the expense of producers
E)the exchange confers no net benefit to the participants
Q2) Claude's Copper Clappers sells clappers for $65 each in a perfectly competitive market. At its present level of output, Claude's marginal cost is $65, average variable cost is $45, and average total cost is $67. To maximize his profit or minimize his loss, Claude should:
A)increase output.
B)reduce output but not to zero.
C)continue producing the present level of output.
D)shut down.
E)raise the price.
Q3) An industry consists of all firms that supply output to a particular market.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
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) For which of the following products would price discrimination be easiest?
A)Orange juice
B)Diamonds
C)Compact disks
D)Haircuts
E)Gasoline
Q2) A profit-maximizing monopolist that produces in the short run will:
A)choose the output level where marginal revenue exceeds marginal cost by the largest amount.
B)increase output as long as the marginal revenue exceeds the marginal cost of producing that unit.
C)choose the output level where average total cost is at its minimum.
D)increase price as long as average revenue exceeds average total cost.
E)choose the output level where average revenue exceeds average total cost by the largest amount.
Q3) A monopolist that earns a profit in the short run will always earn a profit in the long run.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 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) A firm experiences economies of scale if:
A)average cost declines as output increases.
B)marginal cost declines as output increases.
C)total cost increases as output increases.
D)average returns decline as output increases.
E)marginal revenue increases as output increases.
Q2) Identify a statement that is true of a cartel.
A)In a cartel, all firms produce the same amount of output and earn the same profit.
B)In a cartel, all firms produce the same amount of output but earn different amounts of profit because their costs differ.
C)In a cartel, firms produce different amounts of output but earn the same profit.
D)In a cartel, firms with higher average costs produce more so that all firms earn the same profit.
E)In a cartel, firms with lower average costs often earn higher profits.
Q3) The outcome in the prisoner's dilemma is referred to as the profit-maximizing equilibrium.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 12
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) The more elastic the supply of a resource, _____.
A)the greater the economic rent as a proportion of total earnings
B)the greater the opportunity cost as a proportion of total earnings
C)the fewer the alternative uses the resource has
D)the greater the derived demand for the resource
E)the lower the derived demand for the resource
Q2) Ten cases of spring water are sold for $6 each, and the marginal product of the last unit of labor is 5. If the price of a case increases from $6 to $8, then the marginal revenue product of the last unit of labor would:
A)decrease by $10.
B)increase by $40.
C)decrease by $30.
D)increase by $10.
E)increase by $20.
Q3) For a firm in a perfectly competitive product market, the marginal resource cost curve is likely to be horizontal if the resource market is also competitive.
A)True
B)False
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) If two accountants have had the same education, amount of experience, and they work at the same type of job for the same profit-maximizing firm, which charges its clients a uniform hourly fee, then:
A)they should earn the same amount of money, even though one accountant is more productive than the other.
B)the one whose job is less risky should be paid more.
C)the one whose job is riskier should be paid less.
D)the one who has a higher marginal product should be paid more.
E)the one who has a higher marginal product should be paid less.
Q2) Industrial unions in the United States formed a national organization known as the _____.
A)National Union
B)Knights of Labor
C)American Federation of Labor (AFL)
D)Congress of Industrial Organizations (CIO)
E)AFL-CIO
Q3) Most labor negotiations in the United States end without a strike.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 14
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) You buy a bond for $1,000 from the federal government at an interest rate of 7 percent. Suppose immediately after you buy the bond, the market rate of interest increases to 10 percent. The market value of your bond:
A)will be $1,100.
B)will be less than $1,000.
C)will be more than $1,700.
D)will remain unchanged at $1,000.
E)will first increase to $1,070 and then decrease to $1,007.
Q2) Interest rates on credit card balances are usually very low as credit cards are held by people with good credit ratings.
A)True
B)False
Q3) The Internet has created some special problems for intellectual property. One problem is that:
A)the price of intellectual property exceeds marginal cost.
B)the cyber market has not yet reached equilibrium.
C)intellectual property can be downloaded, modified, and then resold.
D)the marginal cost of enforcing property rights exceeds the marginal benefit.
E)the price of intellectual property usually exceeds the marginal benefit.
Page 15
To view all questions and flashcards with answers, click on the resource link above.
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) If the minimum efficient scale in woodstove production is 200,000 units per year,
A)the long-run average cost of producing 50,000 stoves is greater than the average cost of producing 100,000
B)the long-run average cost of producing 50,000 stoves is equal to the average cost of producing 100,000
C)the long-run total cost of producing 50,000 stoves is greater than the total cost of producing 100,000
D)the firm should not produce more than 200,000 woodstoves each year
E)the short-run marginal cost exceeds the short-run average cost at 200,000 stoves
Q2) Consumers generally consider the process of learning about the efficiency and durability of various brands of refrigerators:
A)irrational.
B)unproductive.
C)a vocation.
D)nonmarket work.
E)costless.
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) A private firm that sustains a financial loss because of an antitrust violation may be able to recover three times the actual damages.
A)True
B)False
Q2) Public utilities refer to government-owned or government-regulated monopolies.
A)True
B)False
Q3) Industry A has four firms, each with a 25% market share, while Industry B has four firms, one firm with a 70% market share and the other three firms with a 10% market share each. According to the Herfindahl-Hirschman Index, Industry A is highly concentrated.
A)True
B)False
Q4) In order to ensure allocative efficiency on the part of a natural monopoly, regulators would set price equal to marginal cost.
A)True
B)False
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) Public choices are government decisions about:
A)public goods only.
B)taxes only.
C)public goods and taxes.
D)private goods.
E)private services.
Q2) A firm wishing to acquire a monopoly position would be willing to spend up to its anticipated monopoly profit in rent-seeking activities.
A)True
B)False
Q3) An example of competing-interest legislation is:
A)a quota that limits imports of steel to the United States.
B)a subsidy to cigarette producers.
C)tax breaks for auto manufacturers.
D)a new bridge in Arizona funded by general tax revenues.
E)public education subsidies.
Q4) Dairy price supports result in a redistribution of welfare from consumers to dairy farmers.
A)True
B)False
Page 18
To view all questions and flashcards with answers, click on the resource link above.
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) If production is characterized by variable technology and generates pollution, the optimal level of air quality occurs where:
A)the marginal private cost of air quality equals the marginal social benefit.
B)the marginal social cost of air quality equals the marginal social benefit.
C)the marginal social cost of air quality equals the marginal private cost of air quality.
D)government regulators set it.
E)the average private cost equals the average social cost.
Q2) Suppose a city builds a new park that is advertised as being "open to the public" and the grass in the park is ruined by overuse within two months. This would be an example of _____.
A)adverse selection
B)moral hazard
C)the common-pool problem
D)a positive externality
E)arbitrage
Q3) A society is better off if the level of education exceeds the private equilibrium.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
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) The U.S. infant mortality rate:
A)is lower than the mortality rates in other industrialized countries.
B)is higher than the mortality rates in other industrialized countries.
C)is the same as the mortality rates in other industrialized countries.
D)is not related to the poverty rate.
E)is inversely related to the poverty rate.
Q2) Identify the correct statement about the supply of labor in the U.S. economy.
A)The supply of less-educated workers has increased more than the supply of more-educated workers, thus increasing the rewards of education.
B)Immigration has decreased the supply of relatively less-educated workers, thus increasing the wages.
C)Immigration has increased the supply of relatively less-educated workers, thus increasing the wage rates.
D)Computer-controlled machinery has substituted low-skilled workers in the manufacturing process, thus increasing their wages.
E)Technological change has benefitted only the low-skilled, less-educated workers at the cost of the highly-skilled, highly-educated workers.
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) Which of the following is a difference between the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO)?
A)GATT was involved only in merchandise trade, while the WTO covers services and trade-related aspects of intellectual property.
B)GATT was involved in settling disputes in a fast way, while the WTO relies on voluntary cooperation.
C)GATT was developed to support Mexico's efforts to become more market oriented, while the WTO aims to launch new provisions against dumping.
D)GATT resolved more trade disputes in its first decade, while the WTO is susceptible to blockage.
E)GATT was the institutional foundation for world trade, while WTO is a multilateral agreement with no institutional foundation.
Q2) Countries export products they can produce cheaply in return for products that are unavailable domestically or are cheaper elsewhere.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
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) The exchange rate is the:
A)ratio of exports to imports.
B)interest rate the U.S. government charges on international loans.
C)percentage of domestic goods that are exported.
D)cost of one nation's currency in terms of another nation's currency.
E)rate that central banks charge each other for currency exchanges.
Q2) A rightward shift of a country's demand curve for foreign exchange will:
A)decrease the price of foreign exchange in the country.
B)decrease the value of its currency.
C)increase the value of its currency.
D)make foreign goods less expensive in the domestic market.
E)make its goods more expensive in foreign markets.
Q3) A leftward shift of a country's demand curve for foreign exchange will:
A)decrease the price of foreign exchange in the country.
B)increase the price of foreign exchange in the country.
C)decrease the value of its currency.
D)make foreign goods more expensive in the country.
E)make its goods cheaper in the foreign market.
To view all questions and flashcards with answers, click on the resource link above.
Page 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) Which of the following group of countries is most likely to have a high number of telephone lines per 1,000 people?
A)High-income industrial countries
B)Countries with high birth rates
C)Countries that import capital from abroad
D)Low-income countries
E)Middle-income countries
Q2) Differences in stages of development among countries are reflected in a number of ways besides per capita income.
A)True
B)False
Q3) If the country of Zorg has a birth rate of greater than 2.2 births per woman, it is likely that Zorg is an industrial market country.
A)True
B)False
Q4) Wages are high in poor countries because businesses are run efficiently.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 23