Intro to Microeconomics – Practice Exam 1

Economics is best defined as:

Which of the following is not an example of the factor of production called capital?
a. Computers used in a local bank
b. Cash registers at a restaurant
c. An office building
d. Deposits in a corporate bank account

"Small businesses should not have to follow the same rules as big corporations" is an example of

Economic models are:

Which of the following would best be associated with microeconomics?
a. The national unemployment rate in Canada relative to Canada's total production of goods
and services in 2014
b. The strategy used by the owners of Pop's Corner Store to maximize profits
c. The annual rate of growth of nation income in the U.S. since 1970
d. The inflation rate in pre-World War II Germany

The economic, or opportunity, cost of a resource used to produce an output is:

Concluding that because government-provided health care will benefit some sectors of the economy it must also be beneficial for the economy as a whole is an example of:

In the circular flow model, firms:

In the design of public policy, the fallacy of composition occurs when:

(Use the graph) This economy must experience an increase in technology and/or an increase in resources available to produce consumer and capital goods in order to produce at point _________.

(Use the graph) Production is inefficient at point ______.

A rightward shift of a production possibilities frontier (curve) indicates that:

(Use the production possibilities schedule) If the opportunity cost of moving from combination C to combination D is 14 school buses, how many school buses are produced at combination D?

(Use the production possibilities schedule) This economy can produce 46 school buses and 20 army tanks if:

(Use the production possibilities schedule) This production possibilities schedule:

(Use the data in the table) According to the data provided in this table, what is the slope of the line between points A and B, if these data were graphed with X on the horizontal axis and Y on the vertical axis?

(Use the data in the table) Based on the data provided in this table, if these data were plotted in a two-variable diagram the result would be a ______________ sloping ____________________.

Based on the data provided in this table, what type of relationship exists between variables X and
Y?

(Use the graph) If the student whose study habits are illustrated here is currently studying for the 8th hour, she should

(Use the graph) If the student whose study habits are illustrated here is currently studying for the 2nd hour she should

Variables X and Y are independent of each other. If we plot X on the horizontal axis and Y on the vertical axis, the line that connects combinations of X and Y in a two-variable diagram is:
a. parallel to the horizontal axis.
b. downward-sloping (left to right). c. parallel to the vertical axis.
d. upward-sloping (left to right).
e. a or c

According to the law of demand, an increase in the price of personal computers will ceteris paribus, lead to:

All of the following will lead to an increase in the demand for jeans except:
a. an increase in income, assuming jeans are normal goods.
b. a decrease in the price of khakis, assuming khakis are substitutes for jeans
c. an increase in the popularity of jeans.
d. an increase in the number of schools that allow students to wear jeans.

Which of the following would best explain a decrease in the demand for shrimp?
a. An increase in consumer income, assuming shrimp is a normal good
b. A decrease in the price of crab legs (a substitute for shrimp)
c. An increase in the price of shrimp
d. A decrease in the price of shrimp

An increase in the quantity supplied of haircuts is most likely to occur as a result of:

Which of the following would best explain a decrease in the supply of bicycles?
a. An increase in the price of bicycles
b. A decrease in the price of bicycles
c. An increase in the popularity of bicycling
d. A decrease in the number of bicycle manufacturers

Technological improvements that reduce the cost of manufacturing personal computers combined with a decrease in the demand for personal computers results in:
a. an increase in equilibrium quantity and a decrease in equilibrium price. b. a decrease in both equilibrium quantity and equilibrium price.
c. either a. or b. could be correct
d. none of the above

(Use the graph) The equilibrium price is ________ and equilibrium quantity is _________.

(Use the graph) If the price in this market is set at $20, a ________ of _________ units will occur.

(Use the graph) If the price in this market is set at $40, a _________ of __________ units will occur.

Price elasticity of demand is calculated as:

If a 10 percent reduction in the price of a commodity results in a 10 percent increase in quantity demanded, the absolute value of the price elasticity of demand coefficient is ________ and demand is said to be ________.

If the absolute value of the price elasticity of demand coefficient for liquid hand soap is 1.67, the demand for liquid hand soap is:

Ceteris paribus, the demand for a product will be more elastic when:

When the price of a hotdog at the ballpark is $2.00, quantity demanded is 1,000. When the price of a hotdog at the ballpark is $2.50, quantity demanded is 850. The demand for hotdogs at the ballpark is:

Price elasticity of demand ____________ when moving down along a linear downward sloping demand curve.

If the absolute value of the price elasticity of demand coefficient for milk is 0.75, then the demand for milk is _________ and a(n) _________ in price will lead to an increase in total revenue.

Which of the following pairs of goods is most likely to have a cross elasticity coefficient of -1.2?
a. Coffee and cream
b. Coffee and tea
c. Scooters and skateboards d. Food and clothing

If the income elasticity coefficient for restaurant meals is 1.4, then restaurant meals are:

Which of the following resources will have the most elastic supply?
a. Land
b. Highly specialized labor
c. Unskilled labor that can be replaced by capital
d. Capital that cannot be replaced by labor