Micro 202 Exam practice questions

Refer to notes for table Given the following data on gasoline supply and demand, complete the Market Total row for each table. (a) What is the equilibrium price? per gallon (b) How much of a market surplus would exist if the government set a price floor of $4 per gallon?

$3 per gallon 9 gallon surplus

What is the opportunity cost of the first truck produced? (refer to notes for graph/table)

0.5 tanks

A change in the price of a good A)Causes a shift in the supply curve. B)Results in a change in quantity supplied. C)Results in a change in supply. D)Is a determinant of supply.

B

A factor market is any place or process where A)Finished goods are bought and sold. B)Land, labor, or capital is bought and sold. C)Finished services are bought and sold. D)None of the choices are correct.

B

A leftward shift of the market demand curve for HDTVs, ceteris paribus, causes equilibrium price to A)Increase and quantity to decrease. B)Decrease and quantity to decrease. C)Increase and quantity to increase. D)Decrease and quantity to increase.

B

According to the law of demand, during a given period of time, the quantity of a good demanded A)Increases as its price rises, ceteris paribus. B)Increases as its price falls, ceteris paribus. C)Decreases as its price falls, ceteris paribus. D)Does not change when price changes.

B

If demand is price-elastic, then A)The elasticity number E is less than 1. B)The elasticity number E is greater than 1. C)The elasticity number E is equal to 1. D)The elasticity number E is 0.

B

Refer to Figure 1.7. The benefit of producing at point G rather than point D is (Refer to notes for figure) A)OA units of food. B)KL units of clothing. C)AB units of food. D)OL units of clothing.

B

Refer to Table 19.3. If Michael has $40 to spend on cola and pretzels, what is his maximum utility possible? A)40. B)174. C)190. D)208.

B

Rosa is willing to pay $200 for the iPhone, but the actual price is $400. This means A)Rosa will enjoy a consumer surplus of $200 if she buys the iPhone. B)Rosa will not buy an iPhone. C)Rosa will buy this product but will not receive any consumer surplus. D)The iPhone is overpriced.

B

The fundamental problem of economics is? A)The law of increasing opportunity costs. B)The scarcity of resources relative to human wants. C)How to get government to operate efficiently. D)How to create employment for everyone.

B

The law of diminishing marginal utility states that A)The total utility of consuming the next unit of a good falls. B)As a consumer enjoys successive units of a good, eventually marginal utility will fall. C)Marginal utility always falls to zero after two or three units of a good consumed. D)The total utility of a good rises at a fast rate as more units of a good are consumed.

B

The law of supply implies that A)Supply curves are flat. B)Supply curves are upward-sloping to the right. C)Supply curves are downward-sloping to the right. D)A change in a determinant of demand shifts the supply curve.

B

How much food production is sacrificed when North Korea moves from point P to point B? (Refer to notes for figure) A)AG B)GC C)G0

C

In Table 19.2, the total utility when four units are consumed is (notes for table) A)33 B)30 C)6 D)3

Change in TU/Change in Quantity (TU2-TU1)/(Q2-Q1) A

Complete table 19.2 In Table 19.2, the marginal utility of the third unit is (Look at notes) A)3 B)5 C)6 D)30

Change in TU/Change in Quantity (TU2-TU1)/(Q2-Q1) C

A demand curve that is completely elastic is A)Horizontal. B)Upward-sloping. C)Downward-sloping. D)Vertical.

A

Microeconomics is concerned with issues such as A)The demand for bottled water by individuals. B)The level of inflation in the economy. C)Maintaining a strong level of economic growth. D)All of the choices are correct.

A

Opportunity cost may be defined as the A)Goods or services that are forgone in order to obtain something else. B)Dollar prices paid for final goods and services. C)Dollar cost of producing a particular product. D)Difference between wholesale and retail prices.

A

Suppose income falls 5 percent in a year, and as a result, housing construction falls from 10 million to 5 million units annually. Based on this information, housing starts are A)A normal good. B)An inferior good. C)Price-elastic. D)Price-inelastic.

A

The marginal utility per dollar of the third pretzel is A)4. B)5. C)6. D)12.

A

Which of the following is the best measure of the effects of a recession? A)Income elasticity of demand. B)Price elasticity of demand. C)Utility-maximizing rule. D)Cross-price elasticity of demand.

A

Assume Amanda always maximizes her total utility given her budget constraint. Every morning for breakfast she has two eggs and three sausages. If the marginal utility of the last egg is 10 utils and the price of eggs is $1 each, what can we say about the marginal utility of the last sausage if the price of each sausage is $2? A)It must be equal to 20 utils. B)It must be equal to 10 utils. C)It must be equal to 5 utils. D)It must be equal to 1 utils.

A MU/P=MU/P

When an economy is producing efficiently, it is A)Producing a combination of goods and services beyond the production possibilities curve. B)Getting the maximum goods and services possible from the available resources. C)Experiencing decreasing opportunity costs. D)Producing equal amounts of all goods.

B

Which of the following is an assumption under which the production possibilities curve is drawn? A) Total unemployment is zero. B)The supply of resources is fixed. C)The price level is changing. D)Technology is changing.

B

A lower quantity demanded of a good reflects, ceteris paribus, A)Lower income. B)A downward shift of the supply curve. C)A higher price of the good. D)Fewer units actually purchased.

C

Assume peanut butter and jelly are complements. Ceteris paribus, an increase in the price of peanut butter will cause the equilibrium price of jelly to A)Increase and the equilibrium quantity of jelly to decrease. B)Increase and the equilibrium quantity of jelly to increase. C)Decrease and the equilibrium quantity of jelly to decrease. D)Decrease and the equilibrium quantity of jelly to increase.

C

If an economy is producing inside the production possibilities curve, then A)There is full employment of resources. B)It is operating efficiently. C)It can produce more of one good without giving up some of another good. D)There are not enough resources available to produce more output.

C

The formula for the elasticity of supply is A)The percentage change in price divided by the percentage change in quantity supplied. B)The percentage change in price divided by the percentage change in quantity demanded. C)The percentage change in quantity supplied divided by the percentage change in price. D)The percentage change in quantity supplied divided by the percentage change in income.

C

A market is said to be in equilibrium when A)Demand is fully satisfied at all alternative prices. B)The buying intentions of all consumers are realized. C)The supply intentions of all sellers are realized. D)The quantity demanded equals the quantity supplied.

D

If the price elasticity of demand is 1.0, and a firm raises its price by 10 percent, the total revenue will A)Rise by 100 percent. B)Rise by 10 percent. C)Fall by 10 percent. D)Not change.

D

Refer to Table 19.3. Suppose Michael has $28 to spend on cola and pretzels. What combination should he purchase in order to maximize his utility? (Notes) A)Three colas and four pretzels. B)One cola and five pretzels. C)Three colas and one pretzel. D)Two colas and three pretzels.

D

Suppose the price of video games falls from $40 to $20 and as a result the quantity demanded of scooters falls from 40,000 to 10,000 per year. The value of the cross-price elasticity of demand is A)1.00. B)0.83. C)0.56. D)1.80.

D

The basic factors of production include? A)Land, labor, money, and capital. B)Land, labor, money, and inputs. C)Labor and money. D)Land, labor, capital, and entrepreneurship.

D

The marginal utility for a good is computed as A)Total utility divided by quantity. B)Quantity divided by total utility. C)The change in quantity divided by total utility. D)The change in total utility divided by the change in quantity.

D

When a surplus exists for a product, A)Producers increase supply. B)Consumers increase demand. C)Government purchases decrease. D)Producers reduce the level of output and reduce price.

D

When the prices of postage stamps rise, the demand for Internet service increases, ceteris paribus. Postage stamps and Internet service are therefore A)Elastic. B)Complements. C)Inelastic. D)Substitutes.

D

Suppose movie downloads cost $2 apiece and game downloads cost $4. If the marginal utility of movie downloads at the optimal mix of consumption is 25 utils, what is the marginal utility of a game download?

MU/P=MU/P x=50