Microeconomics for Business Exam Practice Tests
Course Introduction
Microeconomics for Business explores the fundamental principles of microeconomic theory and their direct application to decision-making in the business environment. The course covers topics such as supply and demand, consumer behavior, production and costs, market structures, pricing strategies, and the role of government in markets.
Emphasis is placed on understanding how individuals and firms respond to changing market conditions, maximize profits, and allocate resources efficiently. Through the analysis of real-world business cases and current economic issues, students will develop critical thinking and quantitative skills essential for effective managerial decision-making.
Recommended Textbook
Principles of Microeconomics 5th Edition by Robert Frank
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14 Chapters
1737 Verified Questions
1737 Flashcards
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Chapter 1: Thinking Like an Economist
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134 Verified Questions
134 Flashcards
Source URL: https://quizplus.com/quiz/59315
Sample Questions
Q1) A firm employs Pam to assemble personal computers.Pam can assemble 1 computer if she works 1 hour,4 computers in 2 hours,8 computers in 3 hours,10 computers in 4 hours,and 11 computers in 5 hours.Each computer consists of a motherboard that costs $200,a hard drive that costs $100,a case that costs $20,a monitor that costs $200,a keyboard that costs $60 and a mouse that costs $20.The cost of employing Pam is $40 per hour.
What is the marginal cost of producing the computers Pam assembles during her 3<sup>rd</sup> hour of work?
A) $1,200
B) $1,240
C) $2,400
D) $2,440
Answer: D
Q2) The principle of scarcity applies to:
A) the poor exclusively.
B) all consumers.
C) all firms.
D) everyone-consumers,firms,governments,and nations.
Answer: D
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Page 3
Chapter 2: Comparative Advantage
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109 Verified Questions
109 Flashcards
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Sample Questions
Q1) If a nation has the lowest opportunity cost of producing a good,that nation has a(n):
A) comparative advantage.
B) absolute advantage.
C) comparative advantage and an absolute advantage.
D) absolute advantage and possibly a comparative advantage.
Answer: A
Q2) According to the textbook,the largest factor explaining the variance in the performance of the economies of the world is the:
A) degree of specialization.
B) technological sophistication.
C) location of the country.
D) type of government.
Answer: A
Q3) If Scout has an absolute advantage over Dill:
A) Scout has more money than Dill.
B) the problem of scarcity applies to Dill,but not to Scout.
C) the problem of scarcity applies to Scout,but not to Dill.
D) Scout can accomplish more in a given period of time than can Dill.
Answer: D
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Page 4
Chapter 3: Supply and Demand
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120 Verified Questions
120 Flashcards
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Sample Questions
Q1) A decrease in the price of pizza will cause a(n):
A) increase in demand.
B) increase in quantity demanded.
C) decrease in quantity demanded.
D) decrease in the number of consumers.
Answer: B
Q2) For two goods X and Y to be classified as substitutes,it must be the case that:
A) X and Y are identical.
B) consumers tend to purchase both items.
C) when the price of X rises,the demand for Y decreases.
D) when the price of X rises,the demand for Y increases.
Answer: D
Q3) A good example of central planning at work in the U.S.would be:
A) Burger King's value meal price control.
B) McDonald's fries being the same everywhere in the U.S.
C) union wages.
D) New York City's rent control.
Answer: D
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5
Chapter 4: Elasticity
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130 Verified Questions
130 Flashcards
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Sample Questions
Q1) If the slope of the demand curve is -1.4,price is $5 and quantity demanded is 13 units,the price elasticity of demand is:
A) 0.27.
B) 0.38.
C) 1.4.
D) 1.8.
Q2) The change in quantity supplied that results from a change in price is known as the:
A) cross-price elasticity of supply.
B) slope of the supply curve.
C) price elasticity of supply.
D) cross-price elasticity of demand.
Q3) Suppose that the company that owns all of the vending machines on your campus has doubled the price of a can of soda.They notice that they are selling approximately 15% fewer sodas.Price elasticity of demand for sodas from the campus vending machines is:
A) inelastic
B) unitary elastic
C) elastic
D) infinite
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Page 6
Chapter 5: Demand
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103 Verified Questions
103 Flashcards
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Sample Questions
Q1) If the marginal utility of the 3<sup>rd</sup> cup of coffee is 23 and the marginal utility of the 4<sup>th</sup> cup is 15,then
A) it is optimal for the consumer to have 3 cups of coffee.
B) the price of a cup of coffee must be relatively low.
C) it is optimal for the consumer to have 4 cups of coffee.
D) there is evidence of the law of diminishing marginal utility.
Q2) Utility maximization means that people try to allocate their ______ to maximize their ___________.
A) utility,spending
B) resources,satisfaction
C) time,work
D) limited resource,desires
Q3) When the price of a good rises,the ratio of the marginal utility of that good divided by its price _______ and as a result,consumers purchase _______ of that good.
A) rises;more
B) falls;more C) rises;less
D) falls;less
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Chapter 6: Perfectly Competitive Supply
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108 Verified Questions
108 Flashcards
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Sample Questions
Q1) Which of the following is NOT true of a perfectly competitive firm?
A) It faces a perfectly elastic demand curve.
B) It is unable to influence the market price of the good it sells.
C) It seeks to maximize revenue.
D) Relative to the size of the market,the firm is small.
Q2) The location of a firm will be a _________ factor of production in ________ run.
A) variable;the short
B) fixed;both the short and long
C) variable;the long
D) fixed;the long
Q3) Which of the following is most likely to be a fixed factor of production at a university?
A) The number of personal computers.
B) The number of lecture halls.
C) The number of professors and lecturers.
D) The amount of chalk.
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8
Chapter 7: Efficiency, Exchange, and the Invisible Hand in Action
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115 Verified Questions
115 Flashcards
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Sample Questions
Q1) Suppose several United States software design companies compete with each other in a perfectly competitive environment.If one company decides to move some of its offices to a low-wage country in order to reduce operating costs:
A) the other companies will still be able to remain profitable while operating solely in the United States.
B) the company that moves to the lower-wage country will earn positive economic profits in the long run because it will keep a cost advantage.
C) the other companies will also move to the low wage country in order to remain in the industry.
D) the first company to move will charge a lower price than the companies remaining in the United States.
Q2) Which of the following would not be included in the calculation of accounting profits?
A) Wages of workers.
B) The salary the owner could have earned working elsewhere.
C) Rent.
D) Medical insurance coverage for workers.
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Chapter 8: Monopoly, Oligopoly, and Monopolistic Competition
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104 Verified Questions
104 Flashcards
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Sample Questions
Q1) Compared to a monopolist charging a single price to everyone,perfect price discrimination makes:
A) the monopolist better off and some consumers worse off.
B) society worse off.
C) the monopolist worse off and consumers better off.
D) the monopolist and all consumers better off.
Q2) Compared with charging a single price,all else equal,imperfect price discrimination:
A) sometimes hurts customers with low ability to pay while benefiting wealthy customers.
B) always hurts all customers while increasing firm profits.
C) sometimes benefits customers with low ability to pay while reducing firm profits.
D) sometimes benefits customers with low ability to pay while increasing firm profits.
Q3) Which of the following firms is most likely to be a monopolist?
A) The clothing retailer with the best location in a mall
B) The grocery store in a large city
C) The most popular hot dog vendor on a city street corner
D) The one grocery store in a small town
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Page 10
Chapter 9: Games and Strategic Behavior
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113 Verified Questions
113 Flashcards
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Sample Questions
Q1) One thousand adults live in Milltown.All of them leave work at 4:30 p.m.every day and arrive home at exactly 5:00.They all go to bed at 9 p.m.Three fundraisers,Alpha,Beta,and Charlie,have targeted Milltown's population.Because the charities raising the funds are identical,the first to call a willing donor will get the donation. Refer to the information given above.Beta's manager has decided that the best time to call is 7:00 because it is exactly halfway between 5:00 p.m.and bedtime.Which of the following is true?
A) Beta is certain to generate the most donations because all potential donors are 2 hours or less away from a phone call.
B) Alpha and Charlie will have an incentive to also make calls at 7:00,causing clustering at the halfway point in the evening.
C) Alpha and Charlie will divide up the rest of the market,with one choosing to call at 6:00 and the other at 8:00.
D) Beta's manager did not choose wisely.
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Chapter 10: Externalities and Property Rights
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127 Verified Questions
127 Flashcards
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Sample Questions
Q1) Early settlers in the town of Dry Gulch drilled wells to pump as much water as they wanted from the single aquifer beneath the town.(An aquifer is an underground body of water. )As more people settled in Dry Gulch,the aquifer level fell and new wells had to be drilled deeper at higher cost.
Refer to the information given above.In Dry Gulch,the supply of water is:
A) perfectly inelastic.
B) perfectly elastic.
C) upward sloping.
D) downward sloping.
Q2) According to the textbook,if all linemen in the NFL took anabolic steroids,the rank ordering of linemen (1<sup>st</sup>,2<sup>nd</sup>,3<sup>rd</sup>,etc. )would be unchanged.This assumes that:
A) anabolic steroids have no effect on performance.
B) anabolic steroids improve the performance of all NFL linemen by the same amount.
C) steroid usage is widespread.
D) anabolic steroids are legal.
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Chapter 11: The Economics of Information
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145 Verified Questions
145 Flashcards
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Sample Questions
Q1) Mel is thinking of going on a cruise.Mel values a cruise in nice weather at $2,000 and values a cruise in bad weather at $50.According to a very reliable source,the probability of nice weather is 60% and the probability of bad weather is 40%.Trip insurance is sometimes available.If purchased,it allows travelers to delay the cruise until the weather is nice.
Suppose that the price of the cruise is $1200.If Mel is not risk averse,Mel should buy trip insurance
A) never.
B) only if it costs less than $780.
C) only if it costs less than $20.
D) only if it costs less than $50
Q2) A risk-neutral individual will
A) accept only better than fair gambles.
B) see risk as neither good or bad.
C) accept any gamble with an expected value of zero or greater.
D) accept only gambles with an expected value of one or greater.
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13
Chapter 12: Labor Markets, Poverty, and Income Distribution
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145 Verified Questions
145 Flashcards
Source URL: https://quizplus.com/quiz/59304
Sample Questions
Q1) Arguments in favor of programs that tax income to redistribute wealth include:
A) these programs provide a financial incentive to work harder.
B) these programs provide a financial incentive to invest in human capital.
C) these programs help to reduce poverty.
D) these programs discourage firms from discriminating in their hiring.
Q2) The degree of income inequality produced by competitive markets,in Professor Rawls' view,is
A) minor.
B) greater than the amount people would prefer.
C) consistent with the ideal amount.
D) acceptable.
Q3) In professional baseball,some players earn over $6 million per year while the average salary is $1.2 million.The explanation for this rests with A) a winner-take-all labor market.
B) the best players being nearly six times better than average players.
C) undisciplined owners overspending on players' salaries.
D) racial discrimination.
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Page 14
Chapter 13: The Environment, Health, and Safety
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140 Verified Questions
140 Flashcards
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Sample Questions
Q1) Suppose that all workers value a 1% reduction in the workplace injury rate at $1,000.The cost of reducing the injury rate by 1% is $200 per worker.Firms currently pay $20,000 per year to workers,without any effort to improve safety. Suppose new firms began to offer workers $19,500 and a 1% reduction in the injury rate.The new firms would find that A) no workers are applying for their jobs.
B) their costs of wages and injury reduction exceed the costs of the existing firms. C) workers would be willing to accept their offer. D) only injury prone workers would apply.
Q2) The textbook cites a study comparing a group of consumers with first-dollar coverage and a group with a $1000 deductible.The study results indicate that those with the deductible used __________ amount of medical services and had __________ health outcomes.
A) a smaller;the same B) a larger;better
C) a larger;the same
D) a smaller;worse
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Page 15
Chapter 14: Public Goods and Tax Policy
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144 Verified Questions
144 Flashcards
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Sample Questions
Q1) According to the textbook,a solution to the externality of greenhouse emissions will be difficult to achieve because
A) the scientific evidence is weak.
B) the technology to reduce emissions is extremely expensive.
C) an international political organization is necessary to enforce the solution.
D) the technology to reduce emissions is undeveloped.
Q2) The combination of pork barrel spending and logrolling leads to
A) inefficiently large government spending.
B) the largest net benefit for society.
C) the quick termination of projects that are wasteful of irrelevant.
D) under provision of public goods.
Q3) The most appropriate level of government to provide public goods is A) local.
B) state.
C) dependent on the specific public good in question.
D) federal.
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Page 16