MICROECON Quiz 1

From an economic perspective, a student's decision to go to the movies instead of studying for a test indicates that in the student's thinking the marginal a. cost of going to the movies is less than the marginal benefit of going to the movies. b benefit of studying is greater than the marginal cost of studying. c. benefit of studying is greater than the marginal benefit of going to the movies. d. cost of going to the movies is greater than the marginal cost of studying.

a. cost of going to the movies is less than the marginal benefit of going to the movies.

Suppose that a more efficient way to produce a good is discovered, thus lowering production costs for the good. This will cause a(n) a. increase in supply. b. increase in quantity supplied. c. decrease in quantity supplied. d. decrease in supply.

a. increase in supply.

There is an excess supply in a market for a product when a. quantity demanded is less than quantity supplied. b. the current price is lower than the equilibrium price. c. quantity demanded is greater than quantity supplied. d. supply is less than demand.

a. quantity demanded is less than quantity supplied.

Macroeconomics approaches the study of economics from the viewpoint of a. the entire economy. b. the operation of specific product and resource markets. c. governmental units. d. individual firms.

a. the entire economy.

Other things being equal, the law of demand suggests that as a. the price of iPads decreases, the quantity demanded will increase. b. the price of iPads decreases, the quantity demanded will decrease. c. income increases, the quantity of iPads demanded will increase. d. the demand for iPads increases, this will cause the price to increase.

a. the price of iPads decreases, the quantity demanded will increase.

In the market above, the marginal cost of 600th unit is a. $10. b. $15. c. $20. d. $25.

b. $15.

Which statement best illustrates the concept of diminishing marginal utility? a. As one consumes more hamburgers per week, one would be willing to pay a higher price for additional hamburgers. b. A typical consumer will receive less satisfaction from consuming the fourth hamburger in a week than from the third hamburger. c. A decrease in the price of hamburgers will cause consumers to buy more hamburgers because they can afford to buy more d. Some consumers will receive less satisfaction from consuming hamburgers than from consuming fried chicken.

b. A typical consumer will receive less satisfaction from consuming the fourth hamburger in a week than from the third hamburger.

Microeconomics is concerned with a. how government debt affects aggregate economic activity. b. a detailed examination of specific economic units that make up the economic system. c. the establishing of an overall view of the operation of the aggregate economic system. d. the aggregate or total levels of income, employment, and output.

b. a detailed examination of specific economic units that make up the economic system.

In the circular flow model of the market system, households a. sell products and resources. b. buy products and sell resources. c. sell products and buy resources. d. buy products and resources.

b. buy products and sell resources.

Prices usually allocate resources efficiently because they allocate a. resources to the lowest value good or service. b. consumption to the lowest value good or service. c. resources to the highest value good or service. d. consumption to the highest cost of good or service.

b. consumption to the lowest value good or service.

In a market, buyers want to pay the _____ possible price and sellers want to charge the _____ possible price. a. lowest, lowest b. lowest, highest c. highest, highest d. highest, lowest

b. lowest, highest

An "increase in the quantity supplied" suggests a a. movement down along the supply curve. b. movement up along the supply curve. c. leftward shift of the supply curve. d. rightward shift of the supply curve.

b. movement up along the supply curve.

Other things being equal, the law of demand suggests that as a. the price of iPads decreases, the quantity demanded will decrease. b. the price of iPads decreases, the quantity demanded will increase. c. income increases, the quantity of iPads demanded will increase. d. the demand for iPads increases, this will cause the price to increase.

b. the price of iPads decreases, the quantity demanded will increase.

A result of a fall in the price of gasoline, consumers can afford to buy more gasoline for more driving trips. This is an illustration of a. consumer sovereignty. b.the income effect. c. the substitution effect. d.diminishing marginal utility.

b.the income effect.

If a price floor is set above the equilibrium price in a market a. shortages will develop. b.the quantity supplied will exceed the quantity demanded. c. rationing will be unnecessary. d. the quantity demanded will exceed the quantity supplied.

b.the quantity supplied will exceed the quantity demanded.

If the government imposed a price ceiling of $15, then buyers will be intending to buy ___, but they will be able to legally buy ____. a. 36 units, 30 units b. 30 units, 24 units c. 36 units, 24 units d. 24 units, more than 24 units

c. 24 units, more than 24 units

Refer to the table. At a price of $4, the weekly market quantity demanded for hamburger is a. 23. b. 17. c. 37. d. 24.

c. 37.

A person should consume more of something when its marginal a. cost equals its marginal benefit. b. cost exceeds its marginal benefit. c. benefit exceeds its marginal cost. d. benefit is still better.

c. benefit exceeds its marginal cost.

Farmers withholding some of their current corn harvest from the market because they anticipate a higher price of corn in the near future would cause a a. movement down along the current supply curve of corn. b. rightward shift in the current supply of corn. c. leftward shift in the current supply of corn. d. movement up along the current supply curve of corn.

c. leftward shift in the current supply of corn.

The law of demand states that, other things equal, a. the larger the number of buyers in a market, the lower the product price will be. b. price and quantity demanded are directly related. c. price and quantity demanded are inversely related. d. consumers will buy more of a product at high prices than at low prices.

c. price and quantity demanded are inversely related.

If the price in this market is fixed at $2 per bushel, then a. sellers will not be able to sell all the corn that they intended to sell. b. buyers will find too much corn in the market. c. sellers will quickly run out of corn that they bring to market. d. buyers will be able to get as much corn as they wish to buy.

c. sellers will quickly run out of corn that they bring to market.

If a price floor is set above the equilibrium price in a market a. rationing will be unnecessary. b.the quantity demanded will exceed the quantity supplied. c.the quantity supplied will exceed the quantity demanded. d. shortages will develop.

c.the quantity supplied will exceed the quantity demanded.

Which statement is true about supply? a. Supply refers to the amount of inventory that sellers have in their warehouses. b. As price decreases, producers are willing to put more of the good on the market for sale. c. There is an inverse relationship between price and quantity supplied. d. To entice producers to offer more of a good on the market for sale, price must rise.

d.

Which best expresses the law of diminishing marginal benefit? a. The total benefit from the product decreases as more of the product is consumed. b.The marginal benefit from a product increases as more of the product is consumed. c. The marginal benefit of a product decreases as less of the product is consumed. d. The marginal benefit of the product increases as less of the product is consumed.

d. The marginal benefit of the product increases as less of the product is consumed.

Economists use the term "demand" to refer to a. a particular price-quantity combination on a stable demand curve. b. the total amount spent on a particular commodity over a fixed time period. c. an upsloping line on a graph that relates consumer purchases and product price. d. a schedule of various combinations of market prices and amounts/quantities demanded.

d. a schedule of various combinations of market prices and amounts/quantities demanded.

An "increase in the quantity supplied" suggests a a. rightward shift of the supply curve. b. movement down along the supply curve. c. leftward shift of the supply curve. d. movement up along the supply curve.

d. movement up along the supply curve.

If product Y is an inferior good, a decrease in consumer incomes will a. shift the demand curve for product Y to the left. b. not affect the sales of product Y. c. make buyers want to buy less of Product Y. d. shift the demand curve for product Y to the right.

d. shift the demand curve for product Y to the right.

If a price floor is set above the equilibrium price in a market a. shortages will develop. b. the quantity demanded will exceed the quantity supplied. c. rationing will be unnecessary. d. the quantity supplied will exceed the quantity demanded.

d. the quantity supplied will exceed the quantity demanded.

In order to derive a market demand curve from individuals' demand curves, we add up the a. incomes of all buyers, assuming that their tastes remain constant. b. various prices that each buyer is willing and able to pay. c. total number of buyers in the market at each time period. d. various individuals' quantities demanded at each price level.

d. various individuals' quantities demanded at each price level.

In this competitive market, the price and quantity will settle at a. $15 and 1,600 units. b.$20 and 900 units. c.$10 and 2,000 units. d.$25 and 1,200 units.

d.$25 and 1,200 units.