Microeconomics Quizzes

An increase in the price of ice cream causes the demand for sprinkles to decrease. In this case, ice cream and sprinkles are:

complementary goods.

The supply curve slopes up and to the right because:

due to increasing opportunity costs, producers must charge more to produce more in order to cover their costs.

If the price of a product falls by 15%, and the quantity supplied falls by 25%, we can say that the elasticity of supply is:

elastic.

The Medicare tax is a:

flat tax.

A demand curve that is inelastic:

has an elasticity value less than 1.

Production efficiency occurs when goods are:

produced with the lowest possible resource cost.

In economic terms, the short run is:

the time over which at least one factor of production is fixed.

(Table) Using the data for the market for lattes in the table, at $2:

there is a shortage and the price will rise.

If a given product has a diagonal downward sloping demand curve, then Ed will:

vary throughout the range of the curve.

Which of the following is a microeconomic statement?

About 15% of the teachers were laid off last week.

______ describe(s) a type of barrier to entry for a monopoly where one firm can operate more efficiently than two or more firms.

Economies of scale

What of the following is a reason why infomercials only provide their special prices to consumers for a fixed time?

The less time a consumer has to search for a substitute product the more market power the seller has.

A monopolist participates in price discrimination when they charge:

a lower price to consumers whose demand is more elastic.

(Figure: Interpreting Supply Shifts) The shift of the supply curve from A to B is an example of:

a change in supply.

Government regulators calculate that the share of industry sales accounted for by Industry X's eight largest firms is 22%. This is an example of:

a concentration ratio.

A $2 maximum price on a gallon of gasoline would be an example of:

a price ceiling.

Total costs are a combination of:

fixed costs plus variable costs.

Which of the following leads to an increase in the quantity supplied of soccer balls?

an increase in the price of soccer balls

Production levels to the left of the PPF are:

attainable but inefficient.

If the public utility commission allows the water company to earn a normal profit, then it is enforcing a(n):

average cost pricing rule.

If a nation selects a product mix focused on ___________ goods, the production possibilities frontier will expand at a greater rate than if the nation produced mostly ___________ goods.

capital; consumption

The success rate of cartels is slim because:

cheating is likely to occur due to profitability.

In the case of an average cost pricing rule for a natural monopoly:

consumers pay a higher price than under the marginal cost pricing rule.

Minimum wage laws:

create a price floor below which workers cannot be legally paid.

Which of the following is NOT an explicit cost?

earnings that the owner could have earned at an alternate job

An economic institution that combines factors of production into outputs for consumers is a(n):

firm

The fundamental reason why supply curves slope upward is:

increasing costs.

Bus tickets are often considered _____ goods because _____.

inferior; as income rises, demand for bus tickets falls

Macroeconomics deals with all of the following, EXCEPT:

markets for semiconductor chips.

Which of the following is a characteristic of an oligopoly market structure?

mutual interdependence

Which of the following conditions will NOT contribute to a cartel's stability?

nonprice discounts

Allocative efficiency occurs when:

people who wants a product the most gets it.

The demand curve for an individual perfectly competitive firm is:

perfectly elastic.

The government often provides funding for the arts when markets do not do so sufficiently. This funding is to overcome which market failure?

positive externality (external benefits)

It is recognized that customers of monopolistically competitive firms will pay more than they would for products that are sold in a perfectly competitive market structure. The higher price:

represents the value that consumers place on product differentiation and innovation.

If sellers expect the price of their product to rise in the future, they are likely to:

restrict their supply in the near term.

Suppose that quantity supplied of a product equals 5 and quantity demanded equals 8. In this market, there is a:

shortage of this product and the price should rise.

The theory of comparative advantage says that countries:

should export those goods they can produce at a lower opportunity cost than another country.

(Table) If the toy-making firm in the table faces a market price of $20 in the short run it should:

shut down.

Consider the corn industry (a perfectly competitive industry). The price per bushel is $2 and there are constant returns to scale. If the long-run, minimum ATC is $1.50 per bushel, it should follow that (ceteris paribus):

the long-run price will be $1.50 per bushel.

Normal profits for a competitive firm occur when:

the price equals average total cost.

If a firm sells a product that has a perfectly inelastic demand curve, then, if price doubles, it can be expected that:

total revenue will double.

When economists say that all societies face scarcity, they are describing:

tradeoffs societies must make.

Suppose that a customer's willingness to pay for a product is $79, and the seller's willingness to sell is $64. If the negotiated price is $68, how much is consumer surplus?

$11

Figure: Interpreting Market Equilibrium) The equilibrium price and quantity in this market are:

$15 and 3,000.

Suppose that a customer's willingness to pay for a product is $79, and the seller's willingness to sell is $64. If the negotiated price is $68, how much is producer surplus?

$4

A firm in a perfectly competitive industry is maximizing its profits at 400 units. If the marginal revenue and marginal cost are each $35 and the firm's average total cost is $25, this firm's profit is:

$4,000.

(Figure: Wheat and Autos in the United States and Korea) According to the graph, for every extra:

car South Korea wants to produce, it must give up half a bushel of wheat.

(Table) In the table, a combination of 4,500 iPads and 2,000 HDTVs:

is unattainable.

The perfectly competitive firm faces a perfectly elastic demand curve because:

it has no ability to control price.