Intermediate Microeconomics
Exam Bank
Course Introduction
Intermediate Microeconomics delves into the analysis of consumer choice, production decisions, and market structures beyond the fundamentals introduced in introductory courses. This course explores theories of demand and supply, elasticity, utility maximization, and cost minimization, as well as the behavior of firms and consumers under various market conditions, including perfect competition, monopoly, and oligopoly. Students will develop a deeper understanding of how prices are determined, how resources are allocated, and how individuals and firms respond to changing economic environments, using mathematical tools and graphical analysis to refine their problem-solving and analytical skills.
Recommended Textbook
Microeconomics 10th Edition by Stephen Slavin
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20 Chapters
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2
Chapter 1: A Brief Economic History of the United States
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Sample Questions
Q1) At the time of the Civil War the most important crop in the South was ________. Answer: cotton
Q2) The suburbanization of America _______________ our dependence on oil imports.
A)increased substantially B)had on effect on
C)decreased substantially
Answer: A
Q3) Which statement is true?
A)Few Americans blamed Herbert Hoover for the Great Depression.
B)The U.S.experienced a brief depression in the early 1920s.
C)Most American homes were not wired for electricity until the late 1940s.
D)None of the choices are true.
Answer: B
Q4) Andrew Carnegie was largely responsible for the development of the _________ industry; while John D.Rockefeller was largely responsible for the development of the _________ industry. Answer: steel; oil
Q5) In 1929 we produced over _____ million motor vehicles.
Answer: 5
3
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Chapter 2: Resource Utilization
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Sample Questions
Q1) The production possibilities curve tells us that if full employment exists and a nation wishes to permanently increase its production of military goods, it must
A)also increase its production of nonmilitary goods.
B)reduce its output of nonmilitary goods.
C)suffer inflation.
D)suffer unemployment.
Answer: B
Q2) The economic problem refers to A)not having enough money.
B)the attempt "to secure the greatest amount of pleasure with the least possible outlay".
C)the notion that the wealth of nations depends on that country's ability to produce goods and services.
D)the money illusion.
E)none of the choices are true.
Answer: E
Q3) In the American economy, the central figure is the _______________.
Answer: entrepreneur
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Chapter 3: The Mixed Economy
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Sample Questions
Q1) Under the old Soviet version of communism in the U.S.S.R., the questions of 'What?', 'How?', and 'For whom?' were answered by
A)a democratically elected congress called the Duma.
B)the law of supply and demand.
C)the decisions of hundreds of millions of individual consumers.
D)a government planning committee.
E)the owners of private businesses.
Answer: D
Q2) Karl Marx believed that inevitably there would be a clash between ____________ and ____________, leading to an overthrow of capitalism.
Answer: capitalists, workers
Q3) The most glaring economic problem in the former Soviet Union was A)a shortage of military goods
B)a surplus of military goods
C)a shortage of civilian goods
D)a surplus of civilian goods
Answer: C
Q4) National defense is an example of a ____________________. Answer: public good
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Chapter 4: Supply and Demand
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Sample Questions
Q1) Find equilibrium price and quantity.
Q2) If market price is below equilibrium price,
A)equilibrium price will rise.
B)equilibrium price will fall.
C)market price will rise.
D)market price will fall.
Q3) As price rises, quantity demanded ___________.
Q4) Which statement is false?
A)Rent control is a price ceiling.
B)Usury laws can lead to a surplus of loanable funds.
C)The government, to encourage family farms to stay in business, created price supports for corn and wheat.
D)Price ceilings prevent prices from rising.
Q5) As price rises, quantity demanded
A)rises.
B)falls.
C)remains the same.
Q6) As price rises, quantity supplied ____________.
Q7) A decrease in supply _____ price and _____ the quantity sold.
Q8) A decrease in supply _____ price and _____ the quantity sold.
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Chapter 5: Demand, Supply, and Equilibrium
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Sample Questions
Q1) Equilibrium price is _______ and equilibrium quantity is ______.
A)$40; 120
B)$30; 120
C)$30; 100
D)$20; 100
E)$20; 50
Q2) Assume that the demand curve for romance novels is downward sloping. If the price of a book increases from $4.95 to $5.95,
A)the demand for romance novels will increase.
B)the demand for romance novels will decrease.
C)the quantity demanded of romance novels will decrease.
D)the quantity demanded of romance novels will increase.
E)the quantity demanded of romance novels will stay the same.
Q3) If price rises,
A)there may have been an increase in demand.
B)there may have been an increase in supply.
C)there may have been a decrease in demand.
D)there must have been a decrease in equilibrium quantity.
Q4) A change in consumer taste will prompt a change in ____________.
Q5) A change in the cost of production will generally prompt a change in _________.
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Chapter 6: The Price Elasticities of Demand and Supply
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Sample Questions
Q1) How much revenue will the government raise from the tax?
A)$70
B)$140
C)$210
D)$280
Q2) Demand is inelastic when
A)the percentage change in quantity is greater than percentage change in price.
B)the percentage change in price is greater than percentage change in quantity.
C)the percentage change in price is equal to percentage change in quantity.
Q3) The curve in the above graph:
A)can only be a perfectly inelastic demand curve.
B)can only be a perfectly inelastic supply curve.
C)may be either a perfectly inelastic demand curve or a perfectly inelastic supply curve.
D)can be neither a perfectly inelastic demand curve nor a perfectly inelastic supply curve.
Q4) In the __________ (short run/long run) a steel manufacturer that has fixed productive capacity and is operating its plant with one eight-hour shift, can still increase output by adding a second or third shift.
Q5) The most important determinant of the elasticity of demand is ___________.
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Chapter 7: Theory of Consumer Behavior
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Sample Questions
Q1) If the price was $8, her consumer surplus would be
A)$27.
B)$19.
C)$8.
D)$3.
E)None of the choices are correct.
Q2) If the price of milk shakes were $2.00 each, your consumer surplus would be
A)$15.00.
B)$11.00.
C)$10.00.
D)$5.00.
E)$2.00.
Q3) The law of diminishing marginal utility states that as we consume increasing amounts of a good or service, ________________________.
Q4) Which statement is false?
A)A product's utility to a buyer is measured by how much the buyer is willing to pay for it.
B)A person would maximize her total utility when she had no consumer surplus.
C)We will consume a service when its marginal utility is equal to its price.
D)As the price of a good rises the consumer surplus decreases.
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Chapter 8: Cost
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Sample Questions
Q1) Suppose you owned a 40-acre farm and worked it with two helpers. If you hired an additional six helpers, you would most likely encounter
A)increasing returns.
B)diminishing returns.
C)negative returns.
Q2) Economies of scale are most closely associated with a firm's
A)ATC curve.
B)AVC curve.
C)MC curve.
D)Demand curve.
Q3) Average total cost is found by dividing ________ by __________.
Q4) Statement I: Average total cost less average fixed cost equals average variable cost. Statement II: At an output of one, average total cost is equal to total cost.
A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.
Q5) State the minimum points (in dollars and cents) of (a) the AVC, (b) the ATC.
Q6) Specialization and quantity discounts are examples of ________________.
Page 10
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Chapter 9: Profit, Loss, and Perfect Competition
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Sample Questions
Q1) When MC > MR, the profit maximizing firm should
A)keep production unchanged.
B)increase production.
C)decrease production.
D)shut down.
E)go out of business.
Q2) Profit-maximizing level of output
A)is OR.
B)is OS.
C)is OT.
D)None of the choices are correct.
Q3) Profit maximizing (or loss minimizing) level of output
A)is OR.
B)is OS.
C)is OT.
D)None of the choices are correct.
Q4) How much is this firm's output?
Q5) A firm that accepts the price as determined by industry supply and demand is called a ______.
Q6) A perfect competitor will operate at peak efficiency only in the __________.
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Chapter 10: Monopoly
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Sample Questions
Q1) Which statement is true?
A)The monopolist's most efficient output is its most profitable output as well.
B)The monopolist charges a higher price than the perfect competitor in the long run.
C)All monopolists have control over an essential resource.
D)None of these statements are true.
Q2) If the firm is minimizing losses, total loss will be A)OMKE.
B)EKQN.
C)NQHG.
D)FIHG.
E)OLJF.
Q3) If the firm were a perfect competitor in the long run, how much would its output be?
Q4) If the firm were operating at optimal efficiency it would have an output of A)0J.
B)0K.
C)0L.
D)0M.
Q5) The monopolist operates on a _____________ scale than the perfect competitor.
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Chapter 11: Monopolistic Competition
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Sample Questions
Q1) Which of the following is a reason for the fast-food outlet McDonald's to be considered a monopolistic competitor?
A)McDonald's produces an identical product.
B)McDonald's competes with almost a quarter million other fast-food outlets.
C)McDonald's demand curve is a horizontal line.
D)None of these statements support a monopolistic competitor.
Q2) Monopolistic competition is similar to monopolies in that
A)both have downward sloping demand curves.
B)both have identical demand and marginal revenue curves.
C)both make zero economic profits in the long run.
D)both have unique products with no close substitutes.
Q3) Which statement is true?
A)The monopolistic competitor breaks even in the long run.
B)The monopolistic competitor operates at an output that is less than peak efficiency.
C)The monopolistic competitor has a small influence on price because its products are differentiated.
D)Monopolistic competitors have very elastic demand curves.
E)All of the choices are true.
Q4) Product differences are ___________ physical.
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Chapter 12: Oligopoly
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Sample Questions
Q1) Fill in the table.
Q2) Oligopoly is characterized by all of the following except A)some industries that produce identical products.
B)frequent price wars.
C)high barriers to entry.
D)prices that are above the minimum of the ATC curve.
Q3) The tobacco, healthcare wholesale, and beverage industries all have a concentration ratio of over ____.
A)10
B)50
C)80
D)100
Q4) An example of an oligopoly market would be one in which ___ firm(s) sell(s) ____% of the output.
A)1; 95
B)3; 10
C)4; 80
D)250; 35
E)1,000; 99
Q5) How much is the concentration ratio in this industry?
Page 14
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Chapter 13: Corporate Mergers and Antitrust
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Sample Questions
Q1) The first antitrust law was the _________________________.
Q2) A vertical merger takes place when
A)a firm acquires a conglomerate.
B)a firm acquires a competitor.
C)a firm integrates its production backward toward its source of supply or forward in its marketing chain.
D)firms merge in order to diversify.
Q3) Which is the most accurate statement?
A)The Justices of the Supreme Court used the "rule of reason" in the 1920s and 1930s to ensure that the Sherman Act was vigorously enforced.
B)Until the Alcoa Case in 1945, the Supreme Court held that you had to be both big and bad before you were found guilty under the Sherman Act.
C)The Alcoa Case established the precedent that having a near monopoly was not, in itself, illegal.
D)Alcoa lost its case largely because of its anticompetitive behavior rather than that it was very big.
Q4) The largest mergers have been in the ___________ industry.
Q5) A merger between Bank of America and Citibank would be a ____ merger.
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Chapter 14: Demand in the Factor Market
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Sample Questions
Q1) A firm will continue hiring labor as long as the MRP of labor _______ the market wage rate.
A)is equal to B)determines
C)is less than D)is greater than
Q2) You can find the MRP by multiplying marginal physical product by price for A)both the perfect competitor and the imperfect competitor. B)neither the perfect competitor nor the imperfect competitor.
C)only the perfect competitor.
D)only the imperfect competitor.
Q3) In general, when the quantities of a complementary resource are increased, the productivity of the other resources A)rise.
B)fall.
C)remain the same.
Q4) The demand for a resource is derived mainly from the demand for __________.
Q5) The most important influence on a firm's demand for a factor of production is
Page 16
Q6) Is the firm a perfect competitor or an imperfect competitor?
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Chapter 15: Labor Unions
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Sample Questions
Q1) The labor supply curve of an inclusive union is perfectly ______.
Q2) The establishment of "right-to-work" laws came about with the passage of the A)Sherman Antitrust Act.
B)Taft-Hartley Act.
C)National Labor Relations Act.
D)Landrum-Griffin Act.
Q3) ______% of Wal-Mart employees are union members.
Q4) The worst year for strikes in the United States was _________.
Q5) The AFL was headed by ___________ from 1886 until 1924.
Q6) The buyer of a single product for which there are no close substitutes is called a ________.
Q7) Which statement is true?
A)About one-quarter of all collective bargaining negotiations end in strikes.
B)Nearly all union contracts now have escalator, or cost-of-living clauses.
C)Productivity increases are a key collectively bargaining issue.
D)None of the choices are true.
Q8) The predecessor to the AFL was the ___________.
Q10) The job of a(n) ___________ is to impose a settlement. Page 17
Q9) The region of the country that is least hospitable to union organizing is the ___________.
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Page 18
Chapter 16: Labor Markets and Wage Rates
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Sample Questions
Q1) Economic rent is associated with A)high wages.
B)low wages.
C)factory workers.
D)agricultural workers.
Q2) Winner-take-all markets
A)don't exist.
B)explain why CEOs of large corporations make so much money.
C)explain why American CEOs make so much less money than their foreign counterparts.
D)explain the difference between the primary and secondary labor markets.
Q3) As of July 2009, the legal hourly minimum wage was ________.
A)$5.15
B)$6.20
C)$7.25
D)$12.30
Q4) Many conservative economists want to __________ the minimum wage.
A)raise
B)lower
C)abolish
Page 19
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Chapter 17: Rent, Interest, and Profit
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Sample Questions
Q1) What is the present value of $1,000 received 3 years from now if the interest rate is 6%?
Q2) If the usury law was in effect, how much money would be lent out?
Q3) Corporate profits and proprietors' profits in 2009 constituted about ____% of national income.
Q4) Rent, after the change in demand from D/1 to D/2, would be
A)$1,500.
B)$1,000.
C)$500.
D)impossible to determine with the information available.
Q5) With this usury law in effect there is a _______ of $________ billion.
A)surplus; 10
B)surplus; 20
C)shortage; 10
D)shortage; 20
Q6) Paying rent to landlords was opposed by both _____________ and _____________.
Q7) How much money would be loaned out if there was no usury law?
Page 20
Q8) How much would the interest rate be if there was no usury law?
Q9) What is the present value of $1,000 paid to you in six years if the interest rate is 9%? Work it out to the nearest cent.
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Page 21
Chapter 18: Income Distribution and Poverty
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Sample Questions
Q1) If we were on curve J, the lowest three quintiles received about _______% of income.
A)20
B)40
C)50
D)60
E)80
Q2) Which statement is true?
A)There are over 50 million Americans living below the poverty line.
B)The poverty line is raised each year.
C)Nearly all the nation's poor people live in the South.
D)Poverty is a greater problem today than at any time since the end of World War II.
Q3) What percentage of American families pay more payroll tax than they pay in income tax?
A)40.
B)60.
C)75.
D)80.
Q4) The typical welfare family consists of a ____________ and ____________ children.
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Chapter 19: International Trade
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Sample Questions
Q1) Our merchandise balance of trade has been negative since the year
A)1971.
B)1976.
C)1981.
D)1986.
E)1991.
Q2) Which of the following accounted for over 85% of our trade deficit in goods and services in 2009?
A)Imports from China.
B)Imports from Japan.
C)Imports of Oil.
D)Imports of steel.
Q3) Which is the most accurate statement?
A)Our trade problems with Japan and China are very similar.
B)Japanese markets have been at least somewhat closed to imports.
C)If Japan and China traded fairly, our trade deficits with those two countries would disappear.
D)Our trade deficits with Japan and China account for almost our entire trade deficit.
Q4) What is Germany's opportunity cost of 2 cameras?
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Chapter 20: International Finance
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Sample Questions
Q1) The U.S. was the world's leading net creditor nation until A)1971.
B)1973.
C)1982.
D)1990.
Q2) When the United States has a deficit on its current account, this means that
A)the dollar value of goods exported must exceed the dollar value of goods imported.
B)in this year, Americans supplied more dollars than were demanded by foreigners for purchasing American goods and services and for interest and investment income.
C)in this year, Americans supplied fewer dollars than were demanded by foreigners for purchasing American goods and services and for interest and investment income.
D)the dollar value of goods imported must exceed the dollar value of goods exported.
Q3) If the dollar was initially valued at 20 rubles and its value rises to 23 rubles, then the value of a ruble (in terms of dollars) has ____________.
Q4) The U.S. dollar is backed by ___________.
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