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?