Microeconomics 202 Test 1 review

question

A key theme fundamental to all of economics is:

answer

People have unlimited wants facing limited means to satisfy them.

question

The basic concern of economics is

answer

To study the choices people make

question

The opportunity cost of something is:

answer

What is given up to acquire it.

question

Corner offices in high-rise office buildings usually cost more to rent than other offices. This best illustrates the economic principle of

answer

Scarce resources

question

Which of the following is an example of marginal analysis?

answer

What additional output does a family business produce when it hires one more worker?

question

The concept of the margin deals with

answer

D. All of the above -which are A. Making incremental choices B. One more or one less of something C. doing a little more or a little less.

question

The best example of making a choice at the margin is

answer

Drinking another cup of coffee

question

The phrase 'gains from trade' refers to the

answer

Increase in total output that is realized when individuals specialize in particular tasks and trade with each other.

question

An economy is said to have a comparative advantage in the production of one good if it:

answer

Has the lowest opportunity cost for producing a particular good.

question

The factors of production are

answer

Labor, Capital, land and entrepreneurship.

question

Reecy's Hamburger joint is a fast-food restaurant that specializes in hamburgers. It uses inputs and factors of production in the production process. Which of the following is a factor of production?

answer

The Cook (not meat, buns etc.)

question

When moving along a production possibilities curve, the opportunity cost to society of getting more of one good:

answer

is measured by the amount of the other good that must be given up.

question

A recession, during which unemployment increases, will place an ecomomy

answer

inside its production possibilities frontier.

question

Technological improvements will:

answer

shift the production possibilities curve outward

question

A nation produces a point inside its PPF

answer

When it produces inefficiently

question

By specialization and trade, two individuals can

answer

Consume at a point beyond their individual production possibilities frontiers.

question

If countries do not engage in international trade:

answer

D. All the above are true -They give up the ability to specialize in production, worldwide levels of production are lower & the world will be operating inside its production possibilities curve.

question

The relationship between two variables that move in the same direction is said to be:

answer

Positive

question

The relationship between two variables that move in opposite directions is said to be:

answer

negative

question

The ratio of the change in the variable on the vertical axis to the change in the variable on the horizontal axis, measured between two points on the curve, is the:

answer

Slope

question

A negative relationship between the quantity demanded and price is called the law of:

answer

Demand

question

A demand curve

answer

D-both b & c are correct -a demand curve has a downward slope & is a graph of the relationship between quantity demanded of a good and its price.

question

The primary difference between a change in demand and a change in the quantity demanded is:

answer

a change in quantity demanded is a movement along the demand curve and a change in demand is a shift in the demand curve.

question

A change in the quantity demanded is shown as a

answer

movement along the demand curve

question

A decrease in the price of a good will result in:

answer

an increase in the quantity demanded -NOT an increase in demand

question

The demand curve for videos has shifted to the right. What could have caused it?

answer

an increase in the income of buyers

question

If steak and potatoes are complements, when the price of steak goes up, the demand curve for potatoes:

answer

Shifts to the left (or decreases)

question

Given that chicken and beef are substitute goods, if the price of chicken decreases substantially, there would be:

answer

a decrease in the demand for beef.

question

If people demand more of product A when the price of B falls, then A and B are:

answer

complements

question

A supply curve

answer

Both B & C; slopes upward & is a graph of the relationship between quantity supplied of a good and its price.

question

With other things remaining the same, suppose the price of bread increases from $2 per loaf to $2.20 per loaf, and a bakery increases the quantity it supplies. This event describes

answer

the law of supply

question

A decrease in supply means

answer

a shift to the left of the entire supply curve

question

Which one of the following would not cause the supply curve to shift?

answer

A change in the price of the good; All of the following, would, cause a shift: technology, factor costs, or a change in suppliers expectations of prices.

question

If the quantity supplied in a market exceeds the quantity demanded in a market, we would expect price to:

answer

decrease

question

A competitive market with flexible prices and many buyers and sellers will:

answer

D. Accomplish all of the above; eliminate surpluses & shortages, and reach an equilibrium where the market has no surpluses or shortages.

question

If the market for corn is in equilibrium

answer

the price is at a level where the quantity of corn produced is equal to the quantity of corn consumed.

question

Suppose the equilibrium price of oranges is $2.00 per pound. If the price is above the equilibrium price a:

answer

surplus exists and the price falls to restore equilibrium.

question

Economists know that a particular good can be classified as an inferior good if a(n) _______ in buyers income causes a(n) _______

answer

Increase; decrease in demand

question

If income increases and the demand for bus rides decreases

answer

bus rides are an inferior good.

question

If macaroni and cheese is an inferior good, then a decrease in income results in

answer

an increase in the demand for macaroni and cheese.

question

Which of the following always results in an increase in price and quantity?

answer

an increase in demand with no change in supply.

question

In many parts of the US when Wal-Mart opens a new store, some smaller retailers go out of business. One of the reasons for this development could be that:

answer

Consumers in those areas receive a larger consumer surplus from shopping at WalMart than from the smaller stores.

question

Along a given supply curve, an increase in the price of a good will

answer

increase producer surplus

question

Along a given demand curve, an increase in the price of a good will:

answer

decrease consumer surplus

question

If the price of a good rises, then producer surplus:

answer

will increase

question

Producer surplus definitely exists when the

answer

Price exceeds marginal cost. Remember, it's not benefit as that's related to Demand.

question

If there is an increase in demand, total surplus:

answer

Will increase

question

If more agricultural land is devoted to producing peanuts, total surplus in the peanut butter market

answer

will increase

question

Markets function best when

answer

D. Both A & B exist; prices function as economic signals & property rights are well defined

question

Which of the following is true when a market is in equilibrium and there is no government intervention?

answer

D. All of the above; total surplus is maximized, the dead-weight loss is eliminated & no mutually beneficial trades are missed.

question

To achieve efficiency, an economy must meet which of the following criteria?

answer

D. All of the above; it must be efficient in consumption, efficient in production & efficient in output levels.

question

An economy is efficient in production if:

answer

D. All of the above; it has an efficient allocation of resourced, there is no way to produce more of some goods without producing less of other goods & there is no way to reallocate factors of production among producers to produce more of some goods without producing less of others.

question

Marginal Benefit equals the:

answer

Additional benefit from consuming another unit of the good.

question

Marginal Benefit:

answer

Decreases as more of a good is consumed.

question

The Marginal Cost curve is

answer

Upward sloping to reflect increasing opportunity cost.

question

When the efficient quantity of output is produced:

answer

D. All of the above answers are correct. The sum of producer surplus and consumer surplus is maximized. resources are used in the activities in which they are most highly valued. & the marginal benefit of the last unit produced is equal to the marginal cost of the last unit produced.

question

We measure the marginal ____ of a good by what a ______.

answer

benefit; person is willing to pay

question

Resource use is efficient when marginal benefit is

answer

equal to marginal cost

question

If the government imposes rent control:

answer

it may result in some landlords leaving the business because they cannot cover costs

question

Price ceilings in the housing market create

answer

Inefficiency and often cause housing to deteriorate.

question

Suppose that the average cost of a doctor's visit is $100. If the government imposes a price ceiling of $50 on the cost of a doctor's visit, there will be:

answer

an excess demand for doctor's visits.

question

The market of apples is in equilibrium at a price of $0.50 per pound. If the government imposes a price ceiling in the market at a price of $0.40 per pound which is lower than the equilibrium point, then:

answer

There will be a shortage of the good.

question

A price ceiling will have no effect if:

answer

it is set above the equilibrium price.

question

To be effective, a price floor must be set at a price:

answer

higher than the equilibrium price.

question

A price floor

answer

results in a surplus if the floor price is greater than the equilibrium price.

1 of 65

question

A key theme fundamental to all of economics is:

answer

People have unlimited wants facing limited means to satisfy them.

question

The basic concern of economics is

answer

To study the choices people make

question

The opportunity cost of something is:

answer

What is given up to acquire it.

question

Corner offices in high-rise office buildings usually cost more to rent than other offices. This best illustrates the economic principle of

answer

Scarce resources

question

Which of the following is an example of marginal analysis?

answer

What additional output does a family business produce when it hires one more worker?

question

The concept of the margin deals with

answer

D. All of the above -which are A. Making incremental choices B. One more or one less of something C. doing a little more or a little less.

question

The best example of making a choice at the margin is

answer

Drinking another cup of coffee

question

The phrase 'gains from trade' refers to the

answer

Increase in total output that is realized when individuals specialize in particular tasks and trade with each other.

question

An economy is said to have a comparative advantage in the production of one good if it:

answer

Has the lowest opportunity cost for producing a particular good.

question

The factors of production are

answer

Labor, Capital, land and entrepreneurship.

question

Reecy's Hamburger joint is a fast-food restaurant that specializes in hamburgers. It uses inputs and factors of production in the production process. Which of the following is a factor of production?

answer

The Cook (not meat, buns etc.)

question

When moving along a production possibilities curve, the opportunity cost to society of getting more of one good:

answer

is measured by the amount of the other good that must be given up.

question

A recession, during which unemployment increases, will place an ecomomy

answer

inside its production possibilities frontier.

question

Technological improvements will:

answer

shift the production possibilities curve outward

question

A nation produces a point inside its PPF

answer

When it produces inefficiently

question

By specialization and trade, two individuals can

answer

Consume at a point beyond their individual production possibilities frontiers.

question

If countries do not engage in international trade:

answer

D. All the above are true -They give up the ability to specialize in production, worldwide levels of production are lower & the world will be operating inside its production possibilities curve.

question

The relationship between two variables that move in the same direction is said to be:

answer

Positive

question

The relationship between two variables that move in opposite directions is said to be:

answer

negative

question

The ratio of the change in the variable on the vertical axis to the change in the variable on the horizontal axis, measured between two points on the curve, is the:

answer

Slope

question

A negative relationship between the quantity demanded and price is called the law of:

answer

Demand

question

A demand curve

answer

D-both b & c are correct -a demand curve has a downward slope & is a graph of the relationship between quantity demanded of a good and its price.

question

The primary difference between a change in demand and a change in the quantity demanded is:

answer

a change in quantity demanded is a movement along the demand curve and a change in demand is a shift in the demand curve.

question

A change in the quantity demanded is shown as a

answer

movement along the demand curve

question

A decrease in the price of a good will result in:

answer

an increase in the quantity demanded -NOT an increase in demand

question

The demand curve for videos has shifted to the right. What could have caused it?

answer

an increase in the income of buyers

question

If steak and potatoes are complements, when the price of steak goes up, the demand curve for potatoes:

answer

Shifts to the left (or decreases)

question

Given that chicken and beef are substitute goods, if the price of chicken decreases substantially, there would be:

answer

a decrease in the demand for beef.

question

If people demand more of product A when the price of B falls, then A and B are:

answer

complements

question

A supply curve

answer

Both B & C; slopes upward & is a graph of the relationship between quantity supplied of a good and its price.

question

With other things remaining the same, suppose the price of bread increases from $2 per loaf to $2.20 per loaf, and a bakery increases the quantity it supplies. This event describes

answer

the law of supply

question

A decrease in supply means

answer

a shift to the left of the entire supply curve

question

Which one of the following would not cause the supply curve to shift?

answer

A change in the price of the good; All of the following, would, cause a shift: technology, factor costs, or a change in suppliers expectations of prices.

question

If the quantity supplied in a market exceeds the quantity demanded in a market, we would expect price to:

answer

decrease

question

A competitive market with flexible prices and many buyers and sellers will:

answer

D. Accomplish all of the above; eliminate surpluses & shortages, and reach an equilibrium where the market has no surpluses or shortages.

question

If the market for corn is in equilibrium

answer

the price is at a level where the quantity of corn produced is equal to the quantity of corn consumed.

question

Suppose the equilibrium price of oranges is $2.00 per pound. If the price is above the equilibrium price a:

answer

surplus exists and the price falls to restore equilibrium.

question

Economists know that a particular good can be classified as an inferior good if a(n) _______ in buyers income causes a(n) _______

answer

Increase; decrease in demand

question

If income increases and the demand for bus rides decreases

answer

bus rides are an inferior good.

question

If macaroni and cheese is an inferior good, then a decrease in income results in

answer

an increase in the demand for macaroni and cheese.

question

Which of the following always results in an increase in price and quantity?

answer

an increase in demand with no change in supply.

question

In many parts of the US when Wal-Mart opens a new store, some smaller retailers go out of business. One of the reasons for this development could be that:

answer

Consumers in those areas receive a larger consumer surplus from shopping at WalMart than from the smaller stores.

question

Along a given supply curve, an increase in the price of a good will

answer

increase producer surplus

question

Along a given demand curve, an increase in the price of a good will:

answer

decrease consumer surplus

question

If the price of a good rises, then producer surplus:

answer

will increase

question

Producer surplus definitely exists when the

answer

Price exceeds marginal cost. Remember, it's not benefit as that's related to Demand.

question

If there is an increase in demand, total surplus:

answer

Will increase

question

If more agricultural land is devoted to producing peanuts, total surplus in the peanut butter market

answer

will increase

question

Markets function best when

answer

D. Both A & B exist; prices function as economic signals & property rights are well defined

question

Which of the following is true when a market is in equilibrium and there is no government intervention?

answer

D. All of the above; total surplus is maximized, the dead-weight loss is eliminated & no mutually beneficial trades are missed.

question

To achieve efficiency, an economy must meet which of the following criteria?

answer

D. All of the above; it must be efficient in consumption, efficient in production & efficient in output levels.

question

An economy is efficient in production if:

answer

question

Marginal Benefit equals the:

answer

Additional benefit from consuming another unit of the good.

question

Marginal Benefit:

answer

Decreases as more of a good is consumed.

question

The Marginal Cost curve is

answer

Upward sloping to reflect increasing opportunity cost.

question

When the efficient quantity of output is produced:

answer

question

We measure the marginal ____ of a good by what a ______.

answer

benefit; person is willing to pay

question

Resource use is efficient when marginal benefit is

answer

equal to marginal cost

question

If the government imposes rent control:

answer

it may result in some landlords leaving the business because they cannot cover costs

question

Price ceilings in the housing market create

answer

Inefficiency and often cause housing to deteriorate.

question

Suppose that the average cost of a doctor's visit is $100. If the government imposes a price ceiling of $50 on the cost of a doctor's visit, there will be:

answer

an excess demand for doctor's visits.

question

answer

There will be a shortage of the good.

question

A price ceiling will have no effect if:

answer

it is set above the equilibrium price.

question

To be effective, a price floor must be set at a price:

answer

higher than the equilibrium price.

question

A price floor

answer

results in a surplus if the floor price is greater than the equilibrium price.

Order an Essay Now & Get These Features For Free:

Turnitin Report

Formatting

Title Page

Citation

Outline

Place an Order