microeconomics revision
10- in the figure above. - at point a what is the opportunity cost of producing one more audio tape? a) 1 video tape per audio tape b) 2 video tapes per video tape c) 14 video tapes per audio tape d) there is no opportunity cost.
a
11- in the figure above, at point b what is the opportunity cost of producing 2 more audio tapes? A) 1/2 video tape per audio tape b) 1 video tape per audio tape c) 6 video tapes per audio tape d) there is no opportunity cost
a
16- the law of demand states that the quantity of a good demanded varies. a) inversely with its price. b) inversely with the price of substitute goods. c) directly with income d) directly with population.
a
21- the figure shows the market for airline tickets. if airline tickets are a normal good, then the recession in 2008 that caused people's income to decrease lead to a shift from. a) D0 to D1 b) D1 to D0 c) S0 to SI d) S1 to SO
a
24-in the figure above, a change in quantity demanded with unchanged demand is represented by a movement from. a) point a to point E b) point a to point B c) point a to point C d) none of the above
a
28- if an increase in income leads to a decrease in the demand for popcorn, then popcorn is a) an inferior good b) a neutral good c) a necessity d) a normal good
a
30) if technological advance takes place in the computer industry, then the equilibrium price of a computer will--- and the equilibrium quantity will---. a) fall: increase b) fall: decrease c) rise: increase d) rise: decrease
a
32_ suppose a market begins in equilibrium. if supply increases, then at the original equilibrium price the quantity demanded is a) is less than the quantity supplied and a surplus results b) is less than the quantity supplied and a shortage results c) exceeds the quantity supplied and a surplus results d) exceeds the quantity supplied and a shortage results
a
33-the above figure, suppose that roses are a normal good. if there is an increase in income a) the equilibrium price will rise above $25 per dozen roses. b) the equilibrium quantity will decrease below 10 dozen roses c) we cannot predict what will happen to the equilibrium price. d) we cannot predict what will happen to the equilibrium quantity
a
38- doctors find that one aspirin per day reduces heart attack. demand for aspirin will a) increase, so that equilibrium price and equilibrium quantity will increase b) decrease, so that equilibrium price and equilibrium quantity will increase. c) increase, so that equilibrium price will decrease and equilibrium quantity will increase. d) increase, but the new equilibrium price and quantity are indereminate.
a
39- if the demand curve for bottled water shifts rightward and the supply curve of bottled water shifts leftward, the equilibrium a) price of bottled water definitely increases. b) price of bottled water definitely decreases. c) quantity of bottled water definitely increases. d) quantity of bottled water definitely decreases.
a
4- if an economy is operating at a point inside the production possibilities frontier, then a) society's resources are being inefficiently utilized. b) the PPF curve will shift inward. c) society's resources are being used to produce too many consumer goods. d) economic policy must retard further growth of the economy.
a
40- in the figure, the equilibrium price is $3 per unit. if suppliers come to expect that the price of will rise in the future, but buyers do not, the current equilibrium price will a) rise b) not change c) fall 'd) perhaps rise, fall, or stay the same, depending in whether there are more demanders or suppliers in the market
a
41-in the figure, the equilibrium price is $3 per unit. if buyers come to expect that the price will rise in the future, but sellers do not, the current equilibrium price will a) rise b) not change c) fall d) perhaps rise, fall, or stay the same, depending on whether there are more demanders or suppliers in the market.
a
44- if a 9 percent decrease in the price leads to a 2.5 percent increase in the quantity demanded, the price elasticity of demand is a) 0.28 b) 27.78 c) 2.78 d) 1.278
a
45- what is the elasticity of demand for oranges when the price of oranges changes from $200 to $160 per bushel and so the quantity demanded changes from 1000 to 1400 bushels. a) 1.5 b) 0.1 c) 10.0 d) 0.67
a
57- mark's marginal utility from reading books is the---- when he reads----. a) change in his total utility: one additional book b) total utility he gets: one more book c) change in his total utility: more books d) consumer surplus he gets: books
a
60-if combination of goods consumes at point a is preferred to b then a) point a is on a higher indifference curve b) point a is on the same indifference cure but at a point where the vertical axis value is greater than point b's vertical axis value. c) point a is on a lower indifference curve. d) point a is on the same indifference curve but at a point where the horizontal axis value is greater than point b's horizontal axis value
a
66- at the point where the indifference curve is tangent to the budget line a) is the best affordable point. b) is where the marginal rate of substitution exceeds the relative price by as much as possible c) is a point on consumer's demand curve. d) all of the above answers are correct.
a
67- the marginal rate of substitution a) is equal to the magnitude of the slope of an indifference curve b) always equals the relative price of the product measured along the horizontal axis c) increases as income increases d) decreases when income increases.
a
9- an inferior good is defined as a good for which the demand curve a) shift leftward as income increase b) shift rightward as income increases c) slopes downward to the right d)is perfectly price elastic
a
12- if a decrease in the price of gasoline increases the demand for large cars, then a) gasoline large cars are substitutes in consumption b) gasoline large cars are complements in consumption c) gasoline is an inferior good. d) large cars are an inferior good.
b
15- people buy more of good 1 when the price of good 2 rises. these goods are. a) complement b) substitutes c) normal goods. d) inferior goods.
b
19- the above figure shows the market for pizza. which figure shows the effect of an increase in the price of a complement such as soda? a) figure a b) figure b c) figure c d) figure d
b
2-joe likes to sleep late in the morning and play tennis in the afternoon. the opportunity cost of joe attending his morning class for one hour is a) an hour of tennis given up b) an hour of sleep given up c) both the tennis given up and the sleep given up. d) nothing because he is paying for his class.
b
23- if the apple iPhone and the Samsung galaxy are considered substitutes, then, other things equal, an increase in the price of the iPone will a) decrease the demand for the iPhone b) increase the demand for the galaxy c) increase the quantity demanded for the galaxy d) increase the quantity demanded for the iPhone
b
25- in the figure above, a change in quantity supplied with unchanged supply is represented by a movement from a) point a to point E b) point b to point a c) point E to point C d) point b to point E
b
26- what is the difference between an increase in demand and an in crease in quantity demanded a) there is no difference: they both refer to a shift of the demanded curve b) an increase in demand is represented by a rightward shift of the demand curve while an increase in quantity demanded is represented by a movement along a demand curve c) there is no difference: they both refer to a movement downward along a given demanded curve. d) an increase in demand is represented by a movement along a given demand curve, while an increase in quantity demanded is represented by a rightward shift of the demand curve.
b
3-a point outside a production possibilities frontier indicates. a) that resources are not being used efficiently. b) an output combination that society cannot attain given it's current level of resources and technology c) that resources are being used very efficiently. d) that both goods are characterized by increasing costs.
b
35-increase the demand for computers and a decrease in the number of sellers of will a) increase the number of computers bought b) increase the price of a computer c)increase the price of a computer and the number of computers bought d) not change the price of a computer and increase the number of computers bought.
b
36-the cost of producing aspirin increases as doctors find that one aspirin per day reduces the risk of heart attacks. the supply of aspirin---- and the demand for aspirin---- so that equilibrium price of aspirin----. a) increases, increases, rises b) decreases, increases, rises c) increases, decrease, might rise or fall or stay the same d) decrease, increase, might rise,fall, or stay the same
b
43- suppose Soha always eats ice cream and chocolate together. if the price of chocolate increases by 20 percent, and the cross elasticity of demand is -4, the demand for ice cream. a) increases by 2 percent. b) decreases by 80 percent. c) decreases by 2 percent. d) increases by 80 percent.
b
49- if demand is inelastic, an increase in the price will a) decrease total revenue. b) increase total revenue c) not change total revenue d) increase the quantity demanded
b
5- people must make choices because a) most people enjoy shopping b) of scarcity c) there are many goods available d) none of the above answers is correct
b
51- if a given moment, no matter what the price, producers cannot change the quantity supplies, the momentary supply. a) has unit elasticity b) has zero elasticity c) has infinite elasticity d) does not exist
b
52- if a good is produced using inputs for which there are many substitutes, the good's a) elasticity of supply is likely to be small b) elasticity of supply is likely to be large c) elasticity of demand will be small d) elasticity of demand will be large
b
53-if a price hike of 10 percent decreases the quantity demanded of another good by 2 percent, the goods must be---- and the cross elasticity of demand equals----. a) substitutes:-0.2 b) complements:-0.2 c) substitutes:0.2 d) complements: 0.2
b
58- we can represent what the consumers prefer by a) budget lines b) indifference curves c) relative prices d) household income
b
59- if peter enjoys his first pancake of the morning much more than his fifth pancake of the morning, he is exhibiting a) utility maximizing behavior b) diminishing marginal utility. c) irrational behavior d) diminishing total utility
b
6- when a country decides to produce fewer bombers and more public housing projects, it's answering the part of one of two big economics questions. a) how b) what c)defense d)for whom
b
61-As consumption increases, total utility increases a) at an increasing rate b) at a decreasing rate c) at a constant rate d)and marginal utility increases.
b
62-Jake plans to spend $150 on fried chicken and Pepsi. The price of a fried chicken is $10and Pepsi is $5per bottle. If Jake buys 5fried chickens how many bottles of Pepsi can he buy? a) 50 b) 20 c) 25 d) 75
b
63- we can define marginal utility as a) total satisfaction that a person gets from the consumption of all of the units of a good consumes. b) change in satisfaction that results from a one-unit increase in the quantity of a good consumed. c) maximum price that a consumer is willing to pay for an additional unit of a good. d) additional cost to a consumer when an additional unit of good is consumed
b
65- as Walid's consumption of apples increases, his a) marginal utility is positive and increasing b) marginal utility is positive but decreasing c) marginal utility is negative but increasing d) marginal utility is negative and decreasing
b
68- if an individual's income increases a) the person's indifference curves shift inward in a parallel manner. b) the person's budget line shifts outward in a parallel manner. c) there will be no impact on the individual's budget line or indifference curves. d) none of the above answers is correct
b
8- at one point along a PPF 40 tons of what are produced while 80 tons of rice are produced. at another point along the same PPF, 41 tons of wheat are produced while 70 tons of rice are produced. the opportunity cost of producing a ton of wheat between these point is ----- per ton wheat. a) 1/2 ton of rice b) 10 tons of rice c) 1/10 tons of rice d) 4/7 tons of rice
b
the figure shows the market for pizza. which figure shows the effect of a decrease in the price of a hamburger, which for consumers is a substitute for pizza? a) figure a b) figure b c) figure d d) figure a and b
b
1-when an economist talks of scarcity, the economist is referring to the a) ability of society to employ all of it's resources b) ability of society to consume all that is produces. c) inability of society to satisfy all human wants because of limited resources. d) ability of society to make technological breakthrough and increase production.
c
13-if the price of chocolate chip cookies falls, then a) the supply curve of chocolate chip cookies shifts rightward. b) the supply curve of chocolate chip cookies shifts leftward. c) there is a movement downward along the supply curve of chocolate chip cookies d) there is a movement upward along the supply curve of chocolate chip cookies
c
14- if consumers' income increase and the demand for bus rides decrease. a) bus rides are a normal good. b) consumers are behaving irrationally. c) bus rides are an inferior good. d) none of the above
c
20- the above figure shows the market for pizza. which figure shows the effect of an increase in the price of the tomato sauce to produce pizza? a)figure a b) figure b c) figure c d) figure d
c
22- the figure above shows the market for airline tickets. in early 2008 the price of jet fuel rose. the figure is shown in the figure as a shift form a) D0 to D1 b) D1 to D0 c) S0 to S1 d) S1 to S0
c
34- using the above figure, suppose there is a decrease in the number of suppliers. then a) the equilibrium price will decrease below $25 per dozen roses b) we cannot predict what will happen to equilibrium quantity. c) the equilibrium quantity will decrease below 10 dozen roses d) both the equilibrium price and quantity will increase
c
42-suppose that the cross elasticity of demand for Playstations with respect to joysticks is-2.1. if playstation lowers it's price by 5 percent, other things being equal, what will be the percentage change in the quantity of joysticks demanded a) increase by 2.4 percent. b) decrease by 10.5 percent. c) increase by 10.5 percent d) decrease by 42 percent.
c
47- demand is inelastic if a) a large change in quantity demanded results in a small change in price b) the quantity demanded is very responsive to changes in price c) the price elasticity of demand is less than 1. d) the price of elasticity of demand is greater than 1
c
50- if the price elasticity of demand for airline travel is 0.52 in the short run and 1.46 in the long run, then the demand for airline travel is----- in the short run and----- in the long run a) elastic: elastic B) elastic: inelastic c) inelastic: elastic d) inelastic: inelastic
c
55- last year, jack's income was $37,000 and he bought 65 bags of potato chips. this year his income is $43,000 and he buys 73 bags of potato chips. therefore, jack's a) income elasticity of demand for potato chips is 0.0773. b) price elasticity of demand for potato chips is 0.0773. c) income elasticity of demand for potato chips in 0.773. d) price elasticity of demand for potato chips is 0.773.
c
64- the budget line shows the combination between. a) what is desired and what is not desired. b) what is needed and what is not needed. c) what is affordable and what is not affordable. d) what is available and what is not available.
c
17- if the price of aluminum used to make bicycles increases, the price of a bicycle rises because of a. a) rightward shift of the demand curve for bicycles. b) rightward shift of the supply curve of bicycles. c) leftward shift of the demand curve for bicycles. d) leftward shift of the supply curve of bicycles.
d
29- economic growth can be represented by a) a movement down the production possibilities(PPF) b) a movement up the production possibilities frontier(PPF) c) an inward shift of the production possibilities frontier(PPF) d) an outward shift of the production possibilities frontier(PPF)
d
31- when the price is less than the equilibrium price a) there will be a shortage b) some consumers will be willing to pay a price higher than the prevailing price c) the price will be forced higher d) all of the above answers are correct
d
37- which of the following always lowers the equilibrium price? a) an increase in both demand and supply b) a decrease in both demand and supply. c) an increase in demand combined with a decrease in supply. d) a decrease in demand combined with an increase in supply
d
46- suppose the price elasticity of teenagers' demand for cigarettes is 2.0. if the government impose a tax on cigarettes that raises the price by 10 percent, by how much will it reduce teenaged smoking? a) by 5 percent b) by 10 percent c) by 15 percent. d) by 20 percent
d
48- if a product has very few substitutes, demand elasticity is likely to be a) 1 b) elastic c) infinitely elastic d) inelastic
d
54- if the cross elasticity of demand between two goods is 0.56, then a fall in the price of one good leads to a---- shift in the ----- of the other good a) rightward: demand b) rightward: supply c) leftward: supply d) leftward: demand
d
56- demand is unit elastic when a) the slope of the demand curve is -1 b) a shift of the supply curve leads to no change in price c) a shift of supply curve leads to an equal shift of the demand curve d) a change in the price of the product leads to no changes in the total revenue.
d
69- Bianca consumes apples and bananas and is in consumer equilibrium. the marginal utility of the last apple is 10 and the marginal utility of the last banana is 20. if the price of an apple is $0.50, then what is the price of the banana a) $0.10 b) $0.25 c) $0.50 d) $1.00
d
7. Entrepreneurs do all of the following except a) organize labor, land, and capital b) come up with new ideas about what and how to produce c)bear risk from business decisions d) own all the other resources used in the production process
d
27- the question should economics majors or sociology majors earn more after they graduate? is an example of a question a) how b) what c) for whom d) opportunity cost e) none of the above
e