Introduction to Microeconomics Exam Preparation Guide
Course Introduction
Introduction to Microeconomics explores the fundamental principles governing individual decision-making and market interactions. This course examines how consumers, firms, and governments allocate scarce resources, and how their choices are influenced by incentives, prices, and market structures. Topics include supply and demand analysis, elasticity, consumer and producer surplus, the role of competition and monopoly, and the impact of government interventions such as taxes and subsidies. Through theoretical models and real-world examples, students gain insights into how microeconomic principles apply to everyday life and public policy issues.
Recommended Textbook Microeconomics 9th Edition by William Boyes
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22 Chapters
2413 Verified Questions
2413 Flashcards
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Page 2
Chapter 1: Economics: The World Around You
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90 Verified Questions
90 Flashcards
Source URL: https://quizplus.com/quiz/48925
Sample Questions
Q1) Economics is the study of how people use:
A)their scarce resources to satisfy their basic wants.
B)their scarce resources to attempt to satisfy their unlimited wants.
C)the natural resources to satisfy their basic wants.
D)the natural resources to attempt to satisfy their unlimited wants.
E)their resources to influence the tastes and preferences of others.
Answer: B
Q2) Economics is the study of how people cope with:
A)limited human wants.
B)scarcity.
C)unlimited resources.
D)greed.
E)limited time and unlimited income.
Answer: B
Q3) Microeconomics is concerned primarily with how individuals make their economic decisions.
A)True
B)False
Answer: True
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Page 3
Chapter 2: Choice, opportunity Costs, and Specialization
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95 Verified Questions
95 Flashcards
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Sample Questions
Q1) Specialization according to comparative advantage followed by free trade makes every economy better off.
A)True
B)False
Answer: True
Q2) Refer to Figure 2.2.If there is an increase in the effectiveness of pesticides,which of the following graph(s) will represent(s) the resulting shift in the production possibilities curve [PPC]?
A)Graph A
B)Graph B
C)Graph C
D)Graph A and B
E)Graph B and C
Answer: B
Q3) Gains from trade can be realized if each country specializes in its comparative advantage good.
A)True
B)False
Answer: True
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Page 4
Chapter 3: Markets, Demand and Supply, and the Price System
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98 Verified Questions
98 Flashcards
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Sample Questions
Q1) A supply curve slopes downward because of the law of supply.
A)True
B)False Answer: False
Q2) The market supply curve for any product:
A)always depends on the market demand for that product.
B)depends on the general income level of the consumers in the market.
C)is a summation of individual firms' supply curves.
D)equals the total revenue generated through sale of the commodity.
E)is affected by the prices of related products.
Answer: C
Q3) Assume that the supply curve for tomatoes is upward sloping.If the price per pound increases from $0.99 to $1.89,a greater quantity of tomatoes will be supplied to the market.
A)True
B)False Answer: True
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Page 5
Chapter 4: The Market System and the Private and Public Sector
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100 Verified Questions
100 Flashcards
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Sample Questions
Q1) In a market system,consumer demands dictate _____ and the search for profit defines _____.
A)for whom goods and services are produced; how goods and services are produced
B)what is produced; for whom goods and services are produced
C)where goods and services are produced; for whom goods and services are produced
D)what is produced; where goods and services are produced
E)what is produced; how goods and services are produced
Q2) Which of the following does not constitute a household consumption item?
A)A pair of jeans
B)A bottle of Beck's beer
C)A haircut
D)An electronic scanning machine
E)A packet of breakfast cereals
Q3) National economic policies are usually set by the local government in the U.S.,making it the focus of economic discussions.
A)True
B)False
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Page 6
Chapter 5: Elasticity: Demand and Supply
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132 Flashcards
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Sample Questions
Q1) Suppose that the absolute value of the price elasticity of demand for firms A,B,C,and D is 0,0.8,1,and 1.5 respectively.An increase in the price would reduce quantity demanded for:
A)firms A,B,C,and D.
B)firms B,C,and D only.
C)only firm A.
D)firms C and D only.
E)only firm D.
Q2) The point elasticity is a measure of the sensitivity of consumers to a larger price change - a range from one price to another.
A)True
B)False
Q3) Given the above equation,the income elasticity of demand for noodles is _____.
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Chapter 6: Consumer Choice
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142 Verified Questions
142 Flashcards
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Sample
Questions
Q1) Which of the following explains why indifference curve I<sub>2</sub> should not cross indifference curve I<sub>1</sub> as shown in Figure 6.1?
A)The consumer is not indifferent between A and B.
B)The consumer is not indifferent between A and C.
C)The consumer is not indifferent between B and C.
D)The consumer is not indifferent between D and E.
E)There is no reason why indifference curve I2 should not cross indifference curve I1 as shown.
Q2) Which one of the following is based on the idea that marginal utility of income diminishes as income increases?
A)Progressive taxation
B)Capital controls
C)Minimum wages
D)Price controls
E)Employee compensation regulations
Q3) In order to have a meaningful measure of marginal utility,we must define the time period during which consumption is occurring.
A)True
B)False
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Chapter 7: Supply: The Costs of Doing Business
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106 Verified Questions
106 Flashcards
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Sample Questions
Q1) Using the information in Table 7.3 we can conclude that the marginal-cost curve intersects the average-variable-cost curve at ____ unit(s) of output. A)1 B)2 C)5 D)4
E)6
Q2) Why does the law of diminishing return not apply in the long run?
A)All the factors of production are fixed
B)There are no fixed factors of production
C)There are some fixed and some variable factors
D)The producer is required to produce a fixed level of output
E)The producer can change the level of output only by changing the variable factors,fixed factors remaining unchanged
Q3) If a firm experiences economies of scale throughout it will have a horizontal long-run average total cost curve.
A)True
B)False
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Chapter 8: Profit Maximization
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122 Verified Questions
122 Flashcards
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Sample Questions
Q1) Firms under perfect competition produce:
A)homogeneous products.
B)unique products.
C)either standardized or differentiated products.
D)differentiated products.
E)antique products.
Q2) The marginal revenue curve of a firm coincides with the average revenue curve under perfect competition.
A)True
B)False
Q3) Which of the following characteristics distinguishes oligopoly from other market structures?
A)Firms operating in an oligopoly are independent of each other.
B)Firms operating in an oligopoly are interdependent.
C)Oligopoly is the simplest of all the other market structures.
D)An oligopolist does not face a downward-sloping demand curve.
E)Entry into an oligopolistic market is easier than entry into a monopolistically competitive market.
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Chapter 9: Perfect Competition
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135 Flashcards
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Sample Questions
Q1) Refer to Figure 9.4.At the profit-maximizing output level,which of the following is true?
A)The firm is making a profit of $10 per unit.
B)The firm is making a profit of $45 per unit.
C)The firm is losing $35 per unit.
D)The firm is losing $10 per unit.
E)The firm is breaking even.
Q2) Perfect competition describes firm behavior when:
A)there are few firms producing identical products.
B)there are few firms producing highly differentiated products.
C)there are many firms producing identical products and entry is easy.
D)there are many firms producing highly differentiated products.
E)there are so few firms operating that government intervention is required to ensure fairness.
Q3) In Figure 9.1,the firm's profit is equal to the area:
A)OIWR.
B)JKEF
C)OKET
D)LMNG
E)OJFS
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Page 11
Chapter 10: Monopoly
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118 Verified Questions
118 Flashcards
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Sample Questions
Q1) A monopolist sells a lesser quantity at a higher price compared to a perfect competitor.
A)True
B)False
Q2) Which of the following will be the best example of a monopoly firm?
A)The US Bank
B)The Bank of America
C)National City Bank
D)The Federal Reserve
E)Washington Mutual Funds Bank
Q3) For a monopolist with a linear demand curve,total revenue is maximum when:
A)marginal revenue is positive.
B)marginal revenue is at its maximum.
C)the price elasticity of demand is greater than unity.
D)the price elasticity of demand is equal to unity.
E)the marginal revenue is at its minimum.
Q4) A monopolist can charge whatever price it wants and can therefore reap phenomenal profits.
A)True
B)False
Page 12
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Chapter 11: Monopolistic Competition and Oligopoly
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114 Verified Questions
114 Flashcards
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Sample Questions
Q1) Both monopolistically and perfectly competitive firms earn only normal profits in the long run.
A)True
B)False
Q2) Why is each firm in a monopolistically competitive industry considered as a "mini" monopoly?
A)There is a large number of sellers in the market
B)Each firm in monopolistic competition is a price taker
C)The product of each firm is unique in some way or the other
D)Each firm faces a perfectly elastic demand curve
E)There exists a large number of close substitutes of the products
Q3) A monopolistically competitive market is characterized by:
A)one firm selling a homogeneous product.
B)many firms selling identical products.
C)many firms selling similar but differentiated products.
D)few firms selling identical products.
E)few firms selling similar but differentiated products.
Q4) By forming a cartel the member firms can actually raise their profits.
A)True
B)False
Page 13
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Chapter 12: Antitrust and Regulation
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100 Verified Questions
100 Flashcards
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Sample Questions
Q1) Refer to Figure 12.1.If the regulatory agency sets the fair-rate-of-return price,the monopolist will:
A)suspend production.
B)just break even.
C)earn super normal profits.
D)incur losses.
E)be able to cover only the variable costs.
Q2) Under George W.Bush's administration,antitrust policy:
A)became much more strict.
B)prohibited every merger attempts.
C)focused increasingly on environmental concerns.
D)became more relaxed.
E)ignored financial regulation and corporate scandals.
Q3) An example of the opportunity costs involved with social regulation would be:
A)the monetary costs of hiring administrative assistants to fill out OSHA safety reports.
B)the environmental costs of pollution control required under the Clean Air Act.
C)the monetary costs of laboratory trials required to try out a new drug.
D)the lives that are lost because new drugs are not introduced quickly enough.
E)the monetary cost of manufacturing a life saving drug.
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Page 14
Chapter 13: Market Failures, Government Failures, and Rent Seeking
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121 Verified Questions
121 Flashcards
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Sample Questions
Q1) A market failure occurs when:
A)the market outcome is viewed as unfair by a majority of consumers.
B)a market fails to provide the good at a zero price.
C)quantity demanded exceeds quantity supplied.
D)the market outcome is not the socially efficient outcome.
E)prices are determined by the interaction of the forces of demand and supply and not through central planning.
Q2) Asymmetric information arises when:
A)both the parties to an exchange have perfect information about the good.
B)none of the parties to exchange have any information about the good.
C)one party to an exchange knows more than the other party.
D)a good is provided by the government.
E)the market is perfectly competitive.
Q3) It is often impossible for a business firm to determine its private costs of production.
A)True
B)False
Q4) Both the principles of rivalry and mutual excludability apply for club goods.
A)True
B)False
Page 15
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Chapter 14: Resource Markets
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112 Verified Questions
112 Flashcards
Source URL: https://quizplus.com/quiz/48912
Sample Questions
Q1) The marginal-revenue product (MRP) is the:
A)value of the additional output that an extra unit of a resource can produce.
B)cost of hiring an additional unit of a resource.
C)extra cost of producing an additional unit of output.
D)increase in total output when an additional unit of an input is hired.
E)change in total revenue when an additional unit of a good is sold.
Q2) For a perfectly competitive firm,the marginal-revenue product is equal to the marginal product multiplied by the output price.
A)True
B)False
Q3) The producer can raise the level of profit by hiring more units of a resource if:
A)the marginal revenue product of the resource is equal to the marginal factor cost.
B)the marginal factor cost becomes negative.
C)the marginal revenue product of the resource is greater than the marginal factor cost.
D)the marginal revenue product falls to zero.
E)the marginal revenue product of the resource is less than the marginal factor cost.
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Page 16
Chapter 15: The Labor Market
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117 Verified Questions
117 Flashcards
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Sample Questions
Q1) The Civil Rights Act of 1964 in the United States led to _____.
A)the introduction of the concept of discrimination.
B)complete elimination discrimination from the labor force.
C)creation of equal opportunities for men and women.
D)creation of equal opportunities for the members of different races.
E)establishment of a much clearer definition of discrimination.
Q2) Which of the following refers to human capital?
A)Money spent by business to acquire labor
B)The acquired skill and productivity of workers
C)The plant and equipment used with labor
D)Money spent on education.
E)Money that workers save
Q3) Which of the following reasons will most likely explain why discrimination that is notrelated to personal prejudice can occur?
A)A desire to avoid associating with certain groups of people
B)A lack of communication skills of workers seeking jobs
C)A lack of information
D)A lack of proper technical expertise
E)Too many people applying for the same job
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Page 17
Chapter 16: Capital Markets
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100 Verified Questions
100 Flashcards
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Sample Questions
Q1) When the rate of interest rises,the resulting change in the demand for capital is shown graphically by:
A)a movement down along the demand curve.
B)a rightward shift of the demand curve.
C)a leftward shift of the demand curve.
D)a movement up along the demand curve.
E)an outward rotation of the demand curve.
Q2) During the stock market bubbles,the price/earnings [P/E] ratio:
A)hits high levels.
B)falls to zero.
C)becomes negative.
D)remains constant.
E)declines to a very low level.
Q3) If a mutual fund with a back-end-load is not sold within the stipulated time period,the investor is not required to pay any fee to the fund manager.
A)True
B)False
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18
Chapter 17: The Land Market and Natural Resources
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55 Verified Questions
55 Flashcards
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Sample Questions
Q1) Gold mining and the supply of gold not only depend on its price but also on the market rate of interest.
A)True
B)False
Q2) An increase in economic rent is accompanied by an increase in the quantity supplied of a resource.
A)True
B)False
Q3) For resources with upward-sloping supply curves:
A)earnings consist solely of economic rent.
B)earnings consist of both transfer earnings and economic rent.
C)earnings are called transfer earnings.
D)earnings are called dividends.
E)earnings consist entirely of in-kind transfers.
Q4) The supply of hydro electric power:
A)can be varied infinitely in the short run.
B)remains fixed in the long run.
C)decreases with increase in price in the short run.
D)reduces in the future due to continuous consumption today.
E)increases with increase in price in the long run.
Page 19
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Chapter 18: Aging, Social Security and Health Care
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88 Verified Questions
88 Flashcards
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Sample Questions
Q1) The existence of new drugs reduces the demand for drugs as they are highly expensive.
A)True
B)False
Q2) Why are black markets for human organs less efficient than free markets?
A)Prices are lower in black markets than in free markets.
B)Traders are discreet in free markets.
C)There are a more traders in the black market compared to the free markets.
D)Buyers cannot meet openly with the sellers in black market as they can in free markets.
E)There is a steady supply of human organs in the free market while the supply in black market is unpredictable.
Q3) One proposal for solving the social security problem is privatization.This means:
A)refusing to provide retirement benefits,thereby forcing people to use private savings.
B)providing retirement benefits only to those who had worked for a private firm.
C)providing retirement benefits only to those who also save privately.
D)allowing participants to choose how their tax funds are to be invested.
E)preventing participants from paying taxes on their retirement income.
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Page 20
Chapter 19: Income Distribution,Poverty and Government Policy
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115 Verified Questions
115 Flashcards
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Sample Questions
Q1) In Figure 19.1,which of the following could occur in the short run given the introduction of a regressive income tax?
A)The Lorenz curve OZB would shift to OYB.
B)The Lorenz curve OYB would coincide with the line OXB.
C)The Lorenz curve OZB would coincide with the line OXB.
D)The Lorenz curve OYB would coincide with the horizontal axis.
E)The Lorenz curve would shift from OYB to OZB.
Q2) Measures which aim at eliminating the income disparity between the rich and the poor affect incentives to work,innovate,take risks,acquire education,and so on.
A)True
B)False
Q3) For the negative income tax to eradicate poverty:
A)the guaranteed level of income has to be equal to the poverty line.
B)the break-even income has to be equal to the poverty line.
C)the negative income tax rate has to equal 50 percent.
D)the guaranteed level of income has to be equal to the break-even income.
E)the guaranteed level of income has to be equal to the tax paid.
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Page 21
Chapter 20: World Trade Equilibrium
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112 Verified Questions
112 Flashcards
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Sample Questions
Q1) The product life cycle theory predicts that comparative advantage shifts away from the country of origin if:
A)the product is introduced in many countries simultaneously.
B)the product is highly demanded in international markets.
C)the demand for the product drastically declines in the domestic market of the country where it was invented.
D)other countries have lower manufacturing costs using the now-standardized technology.
E)other countries develop highly skilled labor forces to improve product quality.
Q2) Workers in industrial countries earn much higher wages than workers in developing countries because:
A)the industrial countries are labor rich and capital poor economies.
B)the industrial countries lack a steady supply of unskilled laborers.
C)the industrial countries produce labor intensive goods.
D)the marginal productivity of labor is low in the industrial economies.
E)the marginal productivity of labor is high in the industrial economies.
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Chapter 21: International Trade Restrictions
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109 Flashcards
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Sample Questions
Q1) The trade-creation effect refers to:
A)a reduction in economic efficiency as a result of a preferential trade agreement.
B)a production shift to a higher-cost producer as a result of a preferential trade agreement.
C)the outcome of a preferential trade agreement that allows a country to obtain goods at a lower cost than is available at home.
D)diversion of production from a country that has comparative advantage.
E)a production shift to a country that does not have comparative advantage.
Q2) Typically,restrictions to "save domestic jobs" simply redistribute jobs by creating:
A)employment in the protected industry and reducing employment elsewhere.
B)employment in nonprotected industries and reducing employment in the protected industry.
C)inflation in the overall economy.
D)employment in the primary sector at the expense of the secondary sector.
E)labor unions in the protected industries at the expense of employment in nonunionized industries
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Chapter 22: Exchange Rates and Financial Links Between Countries
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Sample Questions
Q1) A fixed exchange rate can be an equilibrium rate even if there is a permanent shift in the foreign exchange market supply and demand curves.
A)True
B)False
Q2) The gold standard fixes the:
A)future price of gold in terms of silver.
B)price of gold in terms of international currencies.
C)future price of silver in terms of gold.
D)money supply in terms of paper currency.
E)past exchange rate and the future exchange rate.
Q3) If the price of an ounce of gold is 200 ZARs in South Africa and $75 in Canada,what will be the South African Rand (ZAR) per Canadian dollar (C$) exchange rate?
A)C$1 = 4.25 ZAR
B)C$1 = 1.75 ZAR
C)C$1 = 2 ZAR
D)C$1 = 2.67 ZAR
E)C$1 = 4 ZAR
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Page 24