Intermediate Microeconomics
Exam Questions
Course Introduction
Intermediate Microeconomics delves into the theoretical foundations and applications of microeconomic concepts, building upon introductory material to enhance analytical and critical thinking skills. Topics covered include consumer and producer theory, market structures such as perfect competition, monopoly, and oligopoly, as well as game theory, externalities, and public goods. Students learn how individuals and firms make decisions regarding resource allocation and pricing, how markets function under various forms of competition, and the effects of government intervention. Emphasis is placed on mathematical modeling and graphical analysis to help students understand and predict real-world economic outcomes.
Recommended Textbook
Economics Canada in the Global Environment 9th Edition by Robin Bade
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Chapter 1: What Is Economics
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Sample Questions
Q1) Saskatchewan had more hospitals than Ontario, despite having one-tenth the population. The Saskatchewan government closed many of these hospitals in spite of widespread local protests. Which one of the following arguments is true?
A)Since hospitals have positive benefits, they should never be closed.
B)If Saskatchewan had more hospitals than Ontario, it must have had too many hospitals.
C)The Saskatchewan government must have thought the marginal benefit from one of these hospitals exceeded its marginal cost.
D)The Saskatchewan government must have thought the marginal benefit from one of these hospitals was less than its marginal cost.
E)The communities where these hospitals existed bore no costs from these decisions, because they did not pay for any of the hospital operating costs.
Answer: D
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3
Chapter 2: The Economic Problem
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Sample Questions
Q1) Figure 2.1.6 shows the production possibilities frontier for a firm that produces pet food. Point A is ________ and point B is ________.
A)unattainable; attainable.
B)attainable; unattainable.
C)unattainable; unattainable.
D)attainable; attainable.
E)inefficient; efficient
Answer: B
Q2) Refer to Fact 2.4.1. Which one of the following statements is true?
A)Andy has an absolute advantage in butter production.
B)Rolfe has an absolute advantage in butter production.
C)Andy has a comparative advantage in bread production.
D)Andy has a comparative advantage in butter production.
E)Rolfe has a comparative advantage in bread production.
Answer: C
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4
Chapter 3: Demand and Supply
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Sample Questions
Q1) If a turnip is an inferior good, then, ceteris paribus, an increase in the price of a turnip will
A)decrease the demand for turnips.
B)increase the demand for turnips.
C)decrease the supply of turnips.
D)increase the supply of turnips.
E)decrease the quantity of turnips demanded.
Answer: E
Q2) Refer to Table 3.4.1. If the price is $3, then the shortage is A)zero units.
B)1,050 units.
C)180 units.
D)600 units.
E)160 units.
Answer: C
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5
Chapter 4: Elasticity
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Sample Questions
Q1) Which of the following will have the most elastic demand?
A)frozen desserts
B)ice cream
C)strawberry ice cream
D)a banana split made with strawberry and chocolate ice cream
E)a banana split with Nestle strawberry and chocolate ice cream
Q2) The price elasticity of demand for airplane travel one week in advance of the departure date is most likely to be
A)equal to infinity.
B)equal to zero.
C)between zero and 1.
D)equal to 1.
E)greater than 1.
Q3) Long-run supply is
A)more elastic than momentary supply but less elastic than short-run supply.
B)less elastic than momentary supply but more elastic than short-run supply.
C)less elastic than both momentary and short-run supply.
D)more elastic than both momentary and short-run supply.
E)equal in elasticity to short-run supply.
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Page 6
Chapter 5: Efficiency and Equity
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Sample Questions
Q1) Refer to Figure 5.3.1. At the efficient quantity, the price is
A)$20 a unit.
B)$15 a unit.
C)$10 a unit.
D)$5 a unit.
E)zero.
Q2) When demand is perfectly elastic, then consumer surplus is A)infinite.
B)zero.
C)1.00.
D)-1.00.
E)between zero and 1.00.
Q3) Bill and Ted each consume 15 chocolate bars at the current price. If Bill's demand for chocolate bars is more elastic than Ted's demand, then
A)Bill's willingness to pay for the last chocolate bar is greater than Ted's.
B)Ted's willingness to pay for the last chocolate bar is greater than Bill's.
C)Bill's consumer surplus is greater than Ted's.
D)Ted's consumer surplus is greater than Bill's.
E)Bill's consumer surplus equals Ted's.
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Page 7
Chapter 6: Governments Actions in Markets
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Sample Questions
Q1) Daisy and Donald live in a community with rent ceilings. Both are looking for an apartment to rent. Daisy has a job paying $10 per hour and Donald has a job paying $8 per hour. Both value an apartment equally. What is the most likely outcome?
A)Daisy will spend more time than Donald searching for an apartment.
B)Donald will spend more time than Daisy searching for an apartment.
C)Both of them will spend the same amount of time searching for an apartment.
D)Daisy will find the apartment.
E)Donald will find the apartment.
Q2) Suppose the equilibrium wage is $10 an hour. A minimum wage is a price ________ that will change the quantity of employment if it is set at ________ an hour.
A)floor; $12
B)ceiling; $12
C)floor; $8
D)ceiling; $8
E)floor; $10
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Chapter 7: Global Markets in Action
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Sample Questions
Q1) A difference between a quota and a tariff is that
A)a tariff generates a higher price than does an import quota.
B)a tariff generates a greater reduction in exports than does an import quota.
C)an import quota increases profits of domestic producers more than a tariff.
D)the government collects revenue from a tariff but does not collect revenue from an import quota.
E)an import quota generates a deadweight loss and a tariff does not.
Q2) The proposition that protection is necessary to allow an infant industry to grow into a mature industry so that it can compete in world markets is the
A)infant-maturity argument.
B)infant-industry argument.
C)new industry proposition.
D)growth proposition.
E)dynamic comparative advantage argument.
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Chapter 8: Utility and Demand
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Sample Questions
Q1) Cindy has $70 a month to spend, and she can spend as much time as she likes playing golf and tennis. The price of an hour of golf is $10, and the price of an hour of tennis is $5. If Cindy equalizes the marginal utility per hour from golf and from tennis, she A)can increase her total utility by spending less time golfing and more time playing tennis.
B)can increase her total utility by spending more time golfing and less time playing tennis.
C)maximizes her total utility.
D)can increase her total utility only if the price of golf decreases.
E)cannot increase her total utility.
Q2) Lucky buys hats for $20, but Lucky will not sell one of her hats for less than $35. Lucky is
A)displaying the endowment effect.
B)making decisions using her prefrontal cortex.
C)exhibiting bounded self-interest.
D)showing unbounded willpower.
E)a behavioural economist.
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Page 10
Chapter 9: Possibilities, Preferences, and Choices
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Sample Questions
Q1) Which one of the following statements is false?
A)If the indifference curve is steep, the marginal rate of substitution is high.
B)A low marginal rate of substitution implies a flat indifference curve.
C)A flat indifference curve implies a consumer must receive a large amount of good X to compensate for a small decrease in good Y.
D)A high marginal rate of substitution implies a consumer must receive a large amount of good X to compensate for a small decrease in good Y.
E)A high marginal rate of substitution implies a consumer must receive a small amount of good X to compensate for a large decrease in good Y.
Q2) Leah consumes at a point on her budget line where her marginal rate of substitution is less than the magnitude of the slope of her budget line. As Leah moves along her budget line toward her best affordable point, she will move
A)down and left.
B)down and right.
C)up and left.
D)up and right.
E)straight up.
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Chapter 10: Organizing Production
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Sample Questions
Q1) A firm's goal is to
A)maximize revenue.
B)maximize cost while minimizing revenue.
C)maximize profit.
D)minimize costs.
E)minimize risk.
Q2) Refer to Table 10.4.1. The four-firm concentration ratio for the pizza sellers is
A)40 percent.
B)100 percent.
C)80 percent.
D)33 percent.
E)12.5 percent.
Q3) A market in which the Herfindahl-Hirschman Index (HHI)lies between 1,000 and 1,800 is regarded as being
A)a monopoly.
B)an oligopoly.
C)a perfectly competitive market.
D)a moderately competitive market.
E)a potential matter of concern for regulators.
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Page 12
Chapter 11: Output and Costs
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Sample Questions
Q1) Which one of the following statements is true?
A)The highest value of average product occurs where average product is greater than marginal product.
B)When the average product curve is rising, marginal product is less than average product.
C)When the average product curve is falling, marginal product is greater than average product.
D)The maximum total product occurs at minimum marginal product.
E)The highest value of average product occurs where average product equals marginal product.
Q2) The AFC curve shifts upward if
A)factor prices rise.
B)a new technology is introduced.
C)more workers are hired.
D)all of the above
E)none of the above
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Chapter 12: Perfect Competition
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Sample Questions
Q1) Refer to Table 12.2.1, which gives the total revenue schedule and total cost schedule of a perfectly competitive firm. If the firm produces 3 units of output, it will
A)make an economic profit of $4.
B)make an economic profit of $90.
C)incur an economic loss of $4.
D)break even.
E)incur an economic loss of $86.
Q2) If a profit-maximizing firm in a perfectly competitive market is making an economic profit, then it must be producing a level of output where
A)price is greater than marginal cost.
B)price is greater than marginal revenue.
C)marginal cost is greater than marginal revenue.
D)marginal cost is greater than average total cost.
E)average total cost is greater than marginal cost.
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14
Chapter 13: Monopoly
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Sample
Questions
Q1) Refer to Figure 13.4.2. Assume this monopolist practises perfect price discrimination. This means that
A)the monopoly's behaviour is illegal.
B)one price is charged to young people and a different price to older people.
C)a different price can be charged to each buyer.
D)price will rise as the number of buyers increases.
E)the quantity sold will be less compared to the case of no price discrimination.
Q2) Donna owns the only dog grooming salon on Lonely Island. If Donna can price discriminate between dog owners who are seniors and those who are not, her economic profit will be ________ than if she does not price discriminate and the number of dog groomings will be ________ if she does not price discriminate. A)greater; more than B)greater; less than C)less; more than D)less; less than E)greater; the same as
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Chapter 14: Monopolistic Competition
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Sample Questions
Q1) Refer to Fact 14.3.2. Tommy Hilfiger uses advertising as a signal because
A)when Tommy Hilfiger advertises, it forces its competitors to advertise, which raises the competition's average total cost and increases the possibility of the competition incurring an economic loss and leaving the market.
B)only firms that can afford advertising have longevity and will be able to honour any future obligations to its customers.
C)by spending large sums of advertising Tommy Hilfiger is signalling that its jackets are high quality.
D)advertising encourages people to spend regardless of the quality.
E)advertising always increases demand and creates a more efficient market.
Q2) A firm in a monopolistically competitive market
A)faces an upward-sloping demand curve.
B)faces a downward-sloping demand curve.
C)does not practice product differentiation.
D)faces a horizontal demand curve.
E)has few competitors.
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Chapter 15: Oligopoly
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Sample Questions
Q1) A merger is unlikely to be approved if
A)there are fewer than 6 firms in a market.
B)it prevents or substantially lessens competition.
C)the good produced in the market has been deemed a necessity.
D)the industry is government regulated.
E)all of the above
Q2) Refer to Table 15.2.7. Disney and Fox must decide when to release their next films. The revenues received by each studio depend in part on when the other studio releases its film. Each studio can release its film at Thanksgiving or at Christmas. The revenues received by each studio, in millions of dollars, are given in the payoff matrix above. Which of the following statements correctly describes Disney's strategy given what Fox's release choice may be?
A)If Fox chooses a Thanksgiving release, Disney should choose a Christmas release.
B)If Fox chooses a Christmas release, Disney should choose a Thanksgiving release.
C)Disney should release on Thanksgiving regardless of what Fox does.
D)Disney should release on Christmas regardless of what Fox does.
E)Both answers A and B are correct.
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Chapter 16: Externalities
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Sample Questions
Q1) Refer to Figure 16.3.1. The figure shows the marginal private benefit curve, the marginal social benefit curve, and the market supply curve. If production is left to the private market, then at the equilibrium quantity the marginal social benefit from consumption is
A)less than the marginal cost to producers.
B)less than the marginal social cost of production.
C)equal to the marginal cost to producers.
D)equal to the marginal private benefit from consumption.
E)greater than the marginal cost to producers.
Q2) Refer to Figure 16.3.2. The figure shows the market for good B. Under public production, consumers pay ________ for each unit of B.
A)zero
B)$1
C)$2
D)$3
E)$4
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Chapter 17: Public Goods and Common Resources
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Sample Questions
Q1) Suppose in a country there are only two persons. Person A is willing to pay $50 to have one unit of a public good produced; person B is willing to pay $60 to have one unit of a public good produced and $50 to have two units produced. A point on the country's marginal social benefit curve for this public good is a price of ________ and quantity demanded of ________.
A)$50; 1 unit
B)$60; 1 unit
C)$110; 2 units
D)$110; 1 unit
E)$55; 1 unit
Q2) For a common resource, the marginal private cost curve slopes ________ and the marginal social cost curve slopes ________.
A)upward; upward
B)upward; downward
C)downward; upward
D)downward; downward
E)upward or downward; in the same direction as the marginal private cost curve
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Chapter 18: Markets for Factors of Production
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Sample Questions
Q1) All of the following statements are correct except
A)the supply of capital is derived from the value of marginal product of capital.
B)the lower the rental rate of capital, other things remaining the same, the greater is the quantity of capital demanded.
C)the higher the rental rate, other things remaining the same, the greater is the quantity of capital supplied.
D)profit-maximizing firms hire the quantity of capital services that makes the value of marginal product of capital equal to the rental rate of capital.
E)if the present value of the future rental payments of an item of capital equipment is less than the cost of buying the capital, the firm will rent or lease the equipment.
Q2) If the wage rate increases, the income effect gives a household the incentive to A)raise its reservation wage.
B)increase leisure and decrease work.
C)increase work and decrease leisure.
D)increase both work and leisure.
E)decrease both work and leisure.
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Chapter 19: Economic Inequality
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Sample Questions
Q1) If the average tax rate decreases as income increases, the income tax is
A)progressive.
B)proportional.
C)negative.
D)regressive.
E)redistributive.
Q2) Refer to Figure 19.3.5. This figure shows the labour supply curves and the value of marginal product curves for high-skilled and low-skilled workers. If there is an increase in the supply of high-skilled workers and the supply of high-skilled workers is now equal to the supply of low-skilled workers, then
A)wages paid to high-skilled workers would fall to $4 an hour.
B)wages paid to high-skilled workers would fall to $5 an hour.
C)wages paid to high-skilled workers would fall to $6 an hour.
D)there would be no change in the wages of high-skilled workers, because high-skilled workers always earn more than low-skilled workers.
E)there would be no change in the wages of high-skilled workers, because their value of marginal product is unchanged.
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Chapter 20: Measuring Gdp and Economic Growth
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Sample Questions
Q1) Nominal GDP will increase
A)only if the average level of prices rises.
B)only if the quantity of goods and services produced increases.
C)only if the unemployment rate rises.
D)only if both the average level of prices rises and the quantity of goods and services produced increases.
E)if either the average level of prices rises or the quantity of goods and services produced increases.
Q2) Which of the following is not a reason for GDP incorrectly measuring the value of total output?
A)leisure time
B)household production
C)underground economic activity
D)depreciation
E)environmental quality
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Chapter 21: Monitoring Jobs and Inflation
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Sample Questions
Q1) Suppose that the natural unemployment rate is 4.5 percent and the actual unemployment rate is 3.5 percent. Then cyclical unemployment is
A)1 percent.
B)-1 percent.
C)8 percent.
D)0 percent.
E)3.5 percent.
Q2) Refer to Table 21.3.1. The reference base period is 2002. The CPI in 2014 is A)1,340.
B)158.
C)100.
D)96.
E)63.
Q3) Which of the following are not included in the working-age population?
A)discouraged searchers
B)involuntary part-time workers
C)retired workers
D)students over the age of 15
E)children under the age of 15
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Page 23
Chapter 22: Economic Growth
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Sample Questions
Q1) Refer to Figure 22.3.1. The country of Kemper is on its aggregate production function at point W in the above figure. If the population increases with no change in capital or technology, the economy will
A)move to point such as Y.
B)remain at point W.
C)move to point such as X.
D)move to point such as Z.
E)either remain at point W or move to point X.
Q2) When the population increases with no change in labour productivity, employment ________ and potential GDP ________.
A)decreases; decreases B)increases; increases
C)decreases; increases D)increases; decreases E)increases; does not change
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24
Chapter 23: Finance, Saving, and Investment
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Sample Questions
Q1) At the beginning of the year, Tom's Tubes had capital of 5 tube-inflating machines. During the year, Tom scrapped 2 old machines and purchased 3 new machines. Tom's net investment for the year is
A)1 machine.
B)2 machines.
C)3 machines.
D)6 machines.
E)5 machines
Q2) Refer to Table 23.2.1. Government saving is
A)$15 million.
B)-$5 million.
C)$5 million.
D)$45 million.
E)$20 million.
Q3) If the economy's capital increases over time,
A)net investment is positive.
B)depreciation is less than zero.
C)depreciation exceeds gross investment.
D)gross investment equals depreciation.
E)gross investment is zero.
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Chapter 24: Money, the Price Level, and Inflation
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Q1) If people decide to transfer their currency into their bank deposits then, all else constant, their decisions will
A)cause the quantity of money to decrease.
B)cause lower inflation.
C)cause higher real interest rates.
D)cause the quantity of money to increase immediately.
E)increase the actual reserves of banks.
Q2) The quantity theory of money begins with the equation of exchange, MV = PY, and then adds the assumptions that
A)velocity varies inversely with the interest rate, and the price level is independent of the quantity of money.
B)velocity and the price level are independent of the quantity of money.
C)potential GDP and the quantity of money are independent of the price level.
D)potential GDP and the price level are independent of the quantity of money.
E)velocity and potential GDP are independent of the quantity of money.
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Chapter 25: The Exchange Rate and the Balance of Payments
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Sample Questions
Q1) In 2010, the largest item in the current account was A)exports.
B)imports.
C)net interest income.
D)net transfers.
E)foreign investment in Canada.
Q2) If a country's central bank does not intervene in the foreign exchange market, the country has
A)a crawling peg exchange rate policy.
B)a fixed exchange rate policy.
C)a flexible exchange rate policy.
D)no exchange rate policy.
E)a responsible exchange rate policy.
Q3) Choose the statement that is incorrect.
A)The world's largest net borrower is the United States.
B)Canada is a net borrower.
C)China is a net lender.
D)Saudi Arabia is a net lender.
E)Japan is a net borrower.
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Chapter 26: Aggregate Supply and Aggregate Demand
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Sample Questions
Q1) The quantity of real GDP demanded does not depend on decisions made by A)foreigners.
B)households.
C)suppliers.
D)governments.
E)firms.
Q2) When the actual unemployment rate is equal to the natural unemployment rate, then the
A)inflation rate must be zero.
B)long-run aggregate supply curve is upward sloping.
C)short-run aggregate supply curve is vertical.
D)economy is operating at potential GDP.
E)the money wage rate will rise.
Q3) The long-run aggregate supply curve is A)vertical.
B)negatively sloped.
C)positively sloped but extremely steep.
D)almost flat.
E)positively sloped at low levels of real GDP and vertical at high levels of real GDP.
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Chapter 27: Expenditure Multipliers
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Sample Questions
Q1) As real GDP decreases,
A)induced consumption decreases.
B)planned investment increases.
C)exports increase.
D)imports increase.
E)induced consumption increases.
Q2) Complete the following sentence. A household
A)consumes or pays taxes out of disposable income.
B)consumes, saves, or pays taxes out of disposable income.
C)consumes or saves out of disposable income.
D)only consumes out of disposable income.
E)saves more than it consumes.
Q3) In a recent study, the University of Underfunded argued that it created four times as many jobs as people that it hired directly. This argument illustrates the idea
A)of the marginal propensity to consume.
B)of the multiplier.
C)of government spending.
D)of the tax multiplier.
E)that universities are wasting taxpayers' dollars.
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Page 29
Chapter 28: The Business Cycle, Inflation, and Deflation
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Sample Questions
Q1) In real business cycle theory, the supply of labour
A)increases if the real interest rate falls.
B)increases if the real interest rate rises.
C)increases if the demand for labour decreases.
D)is not influenced by changes in the real interest rate.
E)increases if the demand for loanable funds decreases.
Q2) Refer to Figure 28.1.1. Suppose the economy moves from point D to point B. According to the monetarist theory of the business cycle, what could have caused this movement?
A)a decrease in the money wage rate
B)an increase in uncertainty about future sales and profits
C)an increase in the growth rate of the quantity of money
D)an increase in the money wage rate
E)a decrease in exports
Q3) An increase in the expected rate of inflation shifts the
A)short-run Phillips curve downward.
B)short-run Phillips curve upward.
C)long-run Phillips curve rightward.
D)long-run Phillips curve leftward.
E)long-run Phillips curve upward.
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Page 30
Chapter 29: Fiscal Policy
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Sample Questions
Q1) The structural deficit is the deficit
A)in a recession.
B)in an expansion.
C)that would occur at potential GDP.
D)caused by the business cycle.
E)that would occur at the trough of the business cycle.
Q2) The effect of a change in taxes is less than the same sized change in government expenditure because
A)the amount by which consumption initially changes is equal to MPC times the tax change.
B)some people do not pay their taxes.
C)changes in government expenditure do not directly affect consumption.
D)tax rates are the same regardless of income levels.
E)none of the above
Q3) Government debt is
A)equal to revenues minus outlays.
B)always increasing.
C)a phenomena that occurs only during times of war.
D)the total amount of government borrowing.
E)the result of a rising price level.
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Chapter 30: Monetary Policy
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97 Verified Questions
97 Flashcards
Source URL: https://quizplus.com/quiz/29211
Sample Questions
Q1) A decrease in the overnight loans rate leads to all of the following except
A)an increase in the quantity of money.
B)a fall in the exchange rate.
C)an increase in exports.
D)an increase in consumption expenditure.
E)an increase in imports.
Q2) Which of the following issues is a concern that critics express about the use of an inflation-control target?
A)The policy control rests in the hands of civil servants rather than in the hands of elected officials.
B)The policy control rests in the hands of elected officials rather than in the hands of civil servants.
C)It encourages a focus on real GDP growth at the expense of employment and of inflation.
D)It encourages a focus on inflation at the expense of employment and real GDP growth.
E)Monetary policy tends to be sensitive to the state of employment while focusing on inflation control targets.
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32
Chapter 31: Macro Only: International Trade Policy
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126 Verified Questions
126 Flashcards
Source URL: https://quizplus.com/quiz/29212
Sample Questions
Q1) The winners from a tariff on imports are
A)producers and government.
B)producers only.
C)consumers only.
D)consumers, producers, and government.
E)government only.
Q2) The effects of offshoring from opening up call centres in India are similar to the effects from
A)free trade.
B)tariffs.
C)import quota.
D)voluntary export restraints.
E)export subsidies.
Q3) Of the following, in which decade were Canada's tariffs at their lowest level?
A)1990s
B)1970s
C)1950s
D)1930s
E)1890s
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