Microeconomics PEQ 1

Which of the following is generally considered a microeconomics question?

A shift in the consumer's demanding for good X CANNOT result from a change in the:

In an Edgeworth exchange box diagram, if the two consumer's indifference curves intersect at point A, then:

If both supply and demand for a good increases at the same time, which of the following must also increase?

The explicit cost of production equals:

Marginal Utility is ______?

Bob has the following utility function U(I)=I^.5
He faces the following situation:
Income if employed:
Income if fired:
What sure income provides the same utility as the current risky expected income Bob faces?

Which of the following statements is true?

Which of the following describes the bandwagon effect?

A network effect exists when an individual consumer's demand for a good is affected by other individuals:

A farmer can produce 10,000 pears if he uses the whole of his one acre farmland. If he uses the same land for apple cultivation, a total of 5,000 apples can be produced. However, he decided to produce both and the opportunity cost of producing either fruit is constant. IF his production possibility frontier (PPF) is graphed with apples on the Y-axis and pears on the X axis, what will be the slope of his PPF?

When a consumer is in equilibrium this means that he or she is:

Assume that Bill and Terry consume two goods, X and Y, so that their marginal rates of substitution are equal.; Under these conditions, we can conclude that:

Which of the following is true of a legislated price ceiling?

Which of the following is a consequence of subsidizing consumers using a per-unit excise subsidy for the purchase of some good or service as opposed to a lump-sum payment of an equal amount?

A consumer is willing to pay a maximum of $5 for the first pretzel, $4 for the second pretzel, $3 for the third pretzel, $2 for the fourth pretzel, $1 for the fifth pretzel, and nothing for the sixth pretzel. If the price per unit of pretzel is $2, calculate the total benefit of the consumer.

Which of the following is generally considered a microeconomic question?

An increase in quantity supplied occurs when:

John will eat peanut butter and jelly sandwiches only when they are made with exactly two ounces of peanut butter and one ounce of jelly. If peanut butter is on the horizontal axis (PB. and jelly on the vertical axis (J), John's indifference curve for peanut butter and jelly is:

Which of the following is an example of a normative statement?

For two goods which are perfect complements, the substitution effect of a price decrease is:

Why is it difficult to compare two efficient points and decide which one is better?

Suppose hamburger is on the horizontal axis and pizza on the vertical axis. If you were consuming at a point on a standard indifference curve such that the slope at that point was -4 (4 in absolute value), which of the following best describes your consumption bundle?

Two goods are allocated efficiently between consumers when _____.

Figure 5-2 shows the quantity demanded of a good at various prices. Based on Figure 5-2, the deadweight loss of an excise tax (that raises price from P2 to P1) is the area _____.

The substitution effect of a price decrease:

Compared to an equal-cost cash grant, an excise subsidy on clothing results in the purchase of:

Differences in the _____ of resources in the production of various commodities explain the per-unit opportunity cost associated with a concave production possibility frontier

An individual who is considering consumption between two time periods (year 1 and year 2) has an endowment of $20,000 in year 1 and $15,000 in year 2. If the interest rate is 5 percent, what is the maximum approximate amount that can be spent on consumption in year 1?

Table 6.1 lists five baskets of two goods, pizza and coke, for each of two consumers, Jane and Bill. Jane and Bill are indifferent between all of these baskets. From the information in Table 6.1, you can conclude that MRSPC is:

When the market for a good, such as gasoline, is competitive and its price suddenly increases substantially, we can infer:

When the marginal rates of substitution for two consumers differ:

If a consumer is at a corner solution, this means that:

Assume that a market demand curve is constructed from one hundred identical individual demand curves. Assume also that at a price of $4, the elasticity of individual demand is 0.6. Then the elasticity of the market demand curve derived from these individual demand curves must be:

Which of the following is generally considered to be a microeconomic question?

With a composite good on the vertical axis with a price of $1, the slope of the budget line is _____.

If price changes from $4.75 to $5.25 and quantity demanded changes from 1,025 to 975 units, then the price elasticity of demand is approximately:

Which of the following statements is not true about a demand curve?

A consumer is willing to pay a maximum of $5 for the first pretzel, $4 for the second pretzel, $3 for the third pretzel, $2 for the fourth pretzel, $1 for the fifth pretzel, and nothing for the sixth pretzel. If the price per unit of pretzel is $2, calculate the total benefit of the consumer.

A family's preferences toward schooling, before and after a fixed-quantity subsidy, are shown in Figure 5-5. Prior to the subsidy, the family is in equilibrium at point J. Assume that public schooling can be supplemented with private tutoring. Refer to Figure 5-5. Suppose the government offers education vouchers of value $B instead of a fixed-quantity subsidy. The budget line will become _____.

Which of the following is likely to occur if a consumer's income declines with no change in the price level?

Suppose there are two goods, X and Y, with X measured on the horizontal axis and Y measured on the vertical axis. Which of the following statements about a budget line relating the two goods is correct?

"Goal-oriented behavior" can best be described as:

Unlike an equivalent-sized cash transfer, an excise subsidy on good X:

Two goods are allocated efficiently between consumers when _____.

Economic theory:

Which of the following properties is not assumed to hold for a typical consumer's preferences?

When the market for a good, such as gasoline, is competitive and its price suddenly increases substantially, we can infer:

Economic efficiency is sometimes referred to as _____.

Corn farmers in a country are colluding to reduce the market supply of corn. This will successfully raise the farmers' incomes only if the demand for corn is:

At his current consumption of lobster and hamburgers, Ike's marginal utility from eating lobster is 30 and from hamburger is 6. If the price of a hamburger is $3, and the price of lobster is $20, Ike should:

The test of a theory is whether:

Everything else being equal, when the price of a normal good increases, consumer surplus:

John will eat peanut butter and jelly sandwiches only when they are made with exactly two ounces of peanut butter and one ounce of jelly. If peanut butter is on the horizontal axis (PB. and jelly on the vertical axis (J), John's indifference curve for peanut butter and jelly is:

Which of the following economic decisions is not a part of the study of microeconomics?

The market equilibrium in a n-person setting is an:

Which of the following policies would work best towards reducing traffic jams?

Qualifications to the tenet that voluntary exchange is mutually beneficial include the criterion that _____.

. Figure 5-4 shows a family's preferences for public and private healthcare. Refer to Figure 5-4. Suppose the government offers a fixed quantity subsidy of healthcare valued at B (that cannot be added to). The new budget line becomes _____.

Compute the income elasticity of the demand for oats, if a 12% decrease in an individual's income increases his demand for oats by 6%.

The bandwagon effect causes the market demand to become:

In an Edgeworth box diagram, which of the following statements is incorrect?

Figure 6-2 shows an Edgeworth box with the preferences of Kathy and Tom toward bread and candy. In Figure 6-2, a movement from A to D will:

Expected return is defined as _____.

The demand curve for water is downward sloping, indicating that:

The income effect of a price change:

Negatively-sloped, straight-line indifference curves imply:

The assumption of rationality implies that market participants:

Which of the following is an assumption usually made about markets and market participants by economists?

Price ceilings are often associated with:

Which of the following best explains the concept of a corner solution?

Along the contract curve _____.

A consumer attains equilibrium by _____.

If price changes from $4.75 to $5.25 and the quantity demanded changes from 1,025 to 975 units, then the price elasticity of demand is approximately:

The consumer's optimal consumption bundle is at the point where:

A family's preferences toward schooling, before and after a fixed-quantity subsidy, are shown in Figure 5-5. Prior to the subsidy, the family is in equilibrium at point J. Assume that public schooling cannot be supplemented with private tutoring. Refer to Figure 5-5. The fixed-quantity subsidy reduces schooling by _____.

Figure 5-1 shows the preferences of a consumer for food and other goods. He is initially in equilibrium at point A where the budget line MN is tangent to the indifference curve. In Figure 5-1, the total outlay on other goods before the excise subsidy is given by _____.

Which of the following is true of the contract curve?

If a consumer's marginal utility was 10 utils per unit of meat and 5 utils per unit of potatoes:

Suppose the total consumer surplus enjoyed by eight people from consuming one hamburger each was $9 + $8 + $7 + $7 + $7 + $6 + $6 + $5. If the price of hamburgers was $2 each, what was the total benefit enjoyed by these consumers?

Which of the following is true of an excise subsidy?

Consider a budget line graph with hamburger on the X-axis and cheese crackers on the Y-axis. The outbreak of mad cow disease, which will change the price of hamburgers, will:

Which of the following statements is true of price ceilings?

In which of the following cases can a subsidy possibly harm its recipients?