Microeconomics Quizzes
lower unemployment and higher inflation
In the short run, an increase in the money supply is likely to lead to
Department of the Treasury
The president receives tax policy advice from economists in the
buyers' responsiveness to a change in the price of a good
The price elasticity of demand measures
the quantity supplied responds to changes in the price of the good
The price elasticity of supply measures how much
the country's ability to product goods and services
The primary determinant of a country's standard of living is
efficiency
The property of society getting the most it can from scarce resource is called
market value of the inputs a firm uses in production
Total cost is the
output 1
In the circular flow diagram, which of the following is not a factor of production?
a one-unit decrease in output will increase the firm's profit
If a competitive firm is currently producing a level of output at which marginal cost exceeds marginal revenue, then
double
If a firm in a competitive market doubles its number of units sold, total revenue for the firm will
variable cost
If a firm produces nothing, which of the following costs will be zero?
substitutes
If the cross-price elasticity of two goods is positive then the two goods are
increase total revenue of donut sellers
If the demand for donuts is elastic, then a decrease in the price of donuts will
it cannot adjust the quantity of fixed inputs
When a factory is operating in the short run
inefficient and the equilibrium does not maximize the total benefit to society as a whole
When an externality is present, the market equilibrium
the price you pay for the ticket and the value of your time
When computing the opportunity cost of attending a professional football game as a spectator, you should include
Benjamin must decide between going to Florida or Brazil for summer vacation
Which of the following statements best represents the principle represented by the adage "There ain't no such thing as a free lunch?"
in trying to improve the world, economists are policy advisers
Which of the following statements is correct about the roles of economists?
Government policies cannot improve upon private market outcomes
Which of the following statements is not correct?
market quantity supplied does not change when the price changes
Which of the following statements is valid when the market supply curve is vertical?
conduct a laboratory experiment in order to generate data
Which of the following steps does an economist not take when studying the economy?
the effect on the economy of changes in the nation's unemployment rate
Which of the following would likely be studied by a macroeconomist rather than a microeconomist?
output 2
Another term for goods and services is
both supply and demand are inelastic
A decrease in supply will cause the largest increase in price when
its fixed costs but not its variable costs
A firm that shuts down temporarily has to pay
encourage the production of computer chips with subsidies
If the production of computer chips yields greater technology spillovers than the production of potato chips, the government should
free entry and exit by firms
Competitive markets are characterized by
long-run average total costs fall as output increases
Economics of scale occur when
simplify the complex world and make it easier to understand
Economists make assumptions to
economists have different values and scientific judgements
Economists sometimes give conflicting advice because
flatter the demand curve will be
Elasticity of demand is closely related to the slope of the demand curve. The more responsive buyers are to a change in price, the
change in profit
For a firm, marginal revenue minus marginal cost is equal to
tends to be elastic
For a good that is a luxury, demand
average total costs that are less than market price
Profit-maximizing firms enter a competitive market when existing firms in that market have
the equilibrium quantity is greater than the socially optimal quantity
Suppose that coal producers create a negative externality equal to $5 per ton of coal. What is the relationship between the equilibrium quantity of coal and the socially optimal quantity of coal?
accounting profit will be the same as economic profit
Suppose that for a particular business there are no implicit cost. Then
exactly 2.50
Suppose that in a competitive market the equilibrium price is 2.50. What is marginal revenue for the last unit sold by the typical firm in this market?
we are dividing fixed costs by higher and higher levels of output
The AFC curve is always declining because
people face trade-offs
The PPF provides an illustration of the principle that
property rights
The ability of an individual to own and exercise control over scarce resources is called
about 6.5 (intersection of ATC and AVC)
The firm will earn a positive economic profit in the short run if the market price is
inelastic, and the demand curve will be vertical
When large changes in price lead to no changes in quantity demanded, demand is perfectly
average total cost is falling
When marginal cost is less than average total cost
does not change
Whenever a perfectly competitive firm chooses to change its level of output its marginal revenue
outside its product possibilities frontier
Where can an economy not produce?
2.6
Which of the following could be the price elasticity of demand for a good for which a decrease in price would increase total revenue
Households and firms interacting in markets are guided by an "invisible hand" that leads them to desirable market outcomes
Which of the following observations was made famous by Adam Smith in his book The Wealth of Nations?
Shut down if TR < VC
Which of the following represents the firm's short-run condition for shutting down?
compare the marginal costs and marginal benefits of each decision
making rational decisions at the margin means that people
lease payments for the land on which a firm's factory stands
An example of an explicit cost of production would be
marginal product decreases
As the number of workers increases,
increases the value of other properties in the neighborhood
Ashlyn installed a wooden sculpture in her front yard. A positive externality arises if the sculpture
scarcity
Fundamentally, economics deals with
France and China can both benefit
If China decides to trade with France, we know that
8 bouquets
Kate is a florist. Kate can arrange 15 bouquets per day. She is considering hiring her husband Amir to work for her. Together Kate and Amir can arrange 23 bouquets per day. What is Amir's marginal production?