Micro Quiz Questions

Front 1

Which economic question depends on the incomes that people earn and the prices they pay for goods and services?

Back 1

For Whom

Front 2

Computers and insurance coverage produced in the US and sold to people in other nations are categorized as

Back 2

US exports of goods and services

Front 3

Economics classify energy and water as part of which factor of production?

Back 3

Land

Front 4

A circular flow model shows the interrelationship between the ______ market and the _______markets.

Back 4

goods; factor

Front 5

Scarcity results from the fact that

Back 5

people's wants exceed the resources available to satisfy them.

Front 6

All economic questions and problems arise from

Back 6

a society's wants exceeding what scarce resources they can produce.

Front 7

Which of the following is NOT considered one of the factors of productions?

Back 7

Technology

Front 8

If Wendy can produce more of all goods than Tommy in an hour then,

Back 8

Wendy has an absolute advantage in all goods.

Front 9

Which of the following are key ideas in the economic way of thinking?

Back 9

*People act rationally when making choices.

*Choices involve trade-offs.

Front 10

A change in the demand for apples could result form any of the following except

Back 10

a change in the price of an apple

Front 11

If the demand for used cars decreases after the price of a new car falls, used cares and new cars are

Back 11

Substitute goods

Front 12

Other things remaining the same, the quantity of a good or service demanded will increase if the price of the good or service

Back 12

falls

Front 13

Which of the following increase the supply of the product?

Back 13

lower prices for the resources used to produce the product

Front 14

Which of the following increases the supply of gasoline?

Back 14

a decrease in the price of a resource used to produce gasoline, such as crude oil

Front 15

Changes in which the following factors do NOT shift the demand curve?

Back 15

The price of the good

Front 16

Assume market is in equilibrium. There is an increase in supply, but no change in demand. As a result, the equilibrium price_______ and the equilibrium quantity________

Back 16

falls; increase

Front 17

The phrase "a change in demand" most directly implies a

Back 17

shift of the demand curve

Front 18

Assume a competitive market is in equilibrium. There is an increase in demand, but no change in supply. As a result the equilibrium price____. and the equilibrium quantity_____

Back 18

rises;increase

Front 19

Which of the following would increase the Equilibrium Price?

Back 19

*A hurricane wiped out the banana crop in South America.

*Medical research that demonstrates the cancer fighting ability of banana

Front 20

Monopolistic Competition is a market structure in which

Back 20

a large number of firms compete

Front 21

Firms in monopolistic competition determine the profit-maximizing level of output by producing

Back 21

where marginal revenue equals marginal cost

Front 22

Advertising is a ______cost that is incurred by_____.

Back 22

fixed;monopolist competitive firms

Front 23

How do advertising and other selling cost affect a firm?

Back 23

They shift the average total cost curve upward.

Front 24

The Players in a game theory situation often DO NOT act in their joint ;interest because of which of the following?

Back 24

It is not in each player's self interest to cooperate.

Front 25

What is the conclusion in the prisoners' dilemma?

Back 25

Two prisoners acting in their own best interest harm their joint interest.

Front 26

When a motel is engaged in monopolistic competition with other motels, the equilibrium price is met at

Back 26

on the demand curve as a point.

Front 27

Which of the following statements are true of Monopolist Competition?

Back 27

* firms receive zero economic profits in the long-run

*market prices are higher and output is lower than under perfect cimpetition

Front 28

In a monopolist competition, each firm supplies a small part of the market. This occurs because

Back 28

there are a large number of firms

Front 29

If a monopolistically competitive seller's marginal cost is $3.56, the firm will decrease its output if

Back 29

its marginal revenue is less than $3.56

Front 30

In which of the following ways do advertising and other selling cost affect a firm's cost curves?

Back 30

1. Advertising expenditures increase total fixed cost

2. Selling cost increase total fixed cost

3. Advertising and other selling cost per unit of output decrease as output increases

Front 31

A firm faces a small number of competitors. This firm is competing in an

Back 31

oligopoly

Front 32

If an industry has an HHI of 2,500, the market structure is that of

Back 32

an oligopoly

Front 33

The fact that firms in oligopoly are interdependent means that

Back 33

one firm's profit are affected by other firms' actions

Front 34

For a single-price monopoly, price is

Back 34

greater than marginal revenue

Front 35

Which of the following must a firm be able to do to successfully price discriminate?

Back 35

1. divide buyers into different groups according to there willingness to pay

2. Prevent resale of goods and services

3. Identify into which group(highest willingness to pay and lowest willingness to pay) a buyer falls

Front 36

To maximize it profit, a perfectly competitive firm produce so that______and a single-price monopoly produces so that____.

Back 36

MR=MC; MR=MC

Front 37

In contrast to competitive firms, single-price monopolies

Back 37

can make an economic profit indefinitely

Front 38

Once a monopoly has determined how much it produces, it will charge a price that

Back 38

is determined by its demand curve

Front 39

We define monopoly as a market with

Back 39

one supplier with barriers to entry

Front 40

Which of the following are characteristics of monopoly?

Back 40

1. Firm produces a unique product

2. There are barriers to entry in the market.

Front 41

Which of the following describes a barrier to entry?

Back 41

anything that protects a firm from the arrival of new competition

Front 42

A price-discriminating monopoly is a monopoly that

Back 42

sells different units of a good or service at different prices

Front 43

Which of the following is an example of price discrimination?

Back 43

Albert pays 25 percent less on prescription drugs because he is a senior citizen

Front 44

Last week, "Dreamz" baby products company produced 50 cribs and 200 crib mattresses. This week, they produced 55 cribs and 250 mattresses. If the current week's production lies on the company's PPF and production possibilities have not changed over the last two weeks, then we can assume that:

Back 44

The production during last week was inside the company's PPF and therefore, inefficient

Front 45

Last week, "Dreamz" baby products company produced 55 cribs and 250 crib mattresses. This week, they produced 40 cribs and 400 mattresses. and thought this combination was more suitable to their business. If both production levels lie on the company's PPF and production possibilities have not changed over the last two weeks, than we can assume that

Back 45

The company made a trade-off in production to better adapt to their business performance.

Front 46

Which of the following describes the reason why scarcity exist?

Back 46

Wants exceed the resources available to satisfy them

Front 47

Economics is the social science that studies____.

Back 47

The choices made to cope with scarcity, how incentives influence those choices and how the choices are coordinated

Front 48

What are the key ideas of the economic way of thinking?

Back 48

1. People make rational choices by comparing cost and benefits

2. A rational choice is made at the margin.

3. choices respond to incentives

Front 49

A rational choice___.

Back 49

is made by comparing marginal benefit and marginal cost

Front 50

The following best illustrates the marginal benefit of studying...

Back 50

What you are willing to give up to study for one additional hour

Front 51

The following is a positive statement

Back 51

Competition among cell phone providers across the borders of Canada, Mexico and the US has driven roaming rates down.

Front 52

Today most stores use computers to keep their inventory records, whereas 20 years ago most stores used paper records. Answers what kind of question is this?

Back 52

How question

Front 53

Health-care professionals and drug companies recommend that Medicaid drug rebates be available to anyone in need. Answers what kind of question is this?

Back 53

For Whom question

Front 54

A doubling of the gas tax might lead to a better public transit system. Answers what kind of question?

Back 54

What and For Whom question

Front 55

For a syrup producer in central Vermont, profit is maximized at the level of output for which total

Back 55

revenue exceeds total cost by the largest amount

Front 56

Marginal revenue is

Back 56

the change in total revenue from a one-unit increase in the quantity sold

Front 57

A firm maximizes its profit by producing the amount of output such that

Back 57

marginal revenue equals marginal cost

Front 58

The long-run average cost curve is U-shaped because of the following?

Back 58

economies and diseconomies of scale

Front 59

A perfect competitive firm maximizes it profit by producing at the point where

Back 59

marginal revenue is equal to the marginal cost

Front 60

If it does not shut down, a perfectly competitive firm produces where MC is = to MR...

Back 60

always to maximize profits

Front 61

In a perfectly competitive market, if the market price is $40 a unit, to maximize it profit(or minimize loss) the firm should

Back 61

produce 40 units

Front 62

Which of the following statements is true for a perfectly competitive firm in the long-run?

Back 62

1.The firm will produce the quantity where MC is = to MR

2. The firm's average costs will be at their minimum level

3. the firm makes zero economic profit

Front 63

The long run average cost curve_____

Back 63

shows the lowest average cost facing a firm as it increases output changing both its plant and labor forces

Front 64

The following are examples of explicit cost of production_______

Back 64

1. wages paid to workers

2. the electric bill

3. Purchases of raw material

Front 65

Which of the following are correct statement about implicit and explicit cost?

Back 65

1. Normal profit is an implicit cost

2. Wages are an explicit cost

Front 66

A normal profit is defined as

Back 66

The return to entrepreneurship

Front 67

Jennifer owns a pig farm near Salina, Kansas. Last year she earned $39,000 in total revenue while incurring $38,000 in explicit cost. She could have earned $27,000 as a teacher in Salina. These are all her revenue and cost. Therefore Jennifer earned an

Back 67

accounting profit of $1000 but incurred an economic loss of $26,000

Front 68

Suppose a firm's total revenue is $1,000,000. The firm has incurred explicit costs of $750,000. There is also $50,000 of forgone wages by the owner, $10,000 of forgone interest by the owner, $3000 worth of economic depreciation and $20,000 worth of normal profit. What is the firm's economic profit?

Back 68

$167,000

Front 69

Economies of scale are a result of _____, ______.

Back 69

1. Specialization of labor

2. Specialization of capital

Front 70

Samantha has a budget of $40 and buys beef jerky and fried pork rinds. Her budget does not change and the price of both beef jerky and fried pork rines increases. As a result_____>

Back 70

Samantha's consumption possibilities have decreased.

Front 71

Nadir and Nina consume the same goods. If Nadir has more income than Nina, then Nina's budget line will___.

Back 71

lie to the left of Nadir's budget line.

Front 72

The fact that diamonds have a much higher price than water_______

Back 72

does not violate the rules of utility maximization because water's marginal utility is low.

Front 73

The solution to the paradox of value os found by looking at what______

Back 73

the difference between marginal utility and total utility.

Front 74

Billy has $20 budget to spend on yogurt and cereal. Yogurt cost $2 each and cereal cost $4 each. Suppose that the quantity of yogurt is on the vertical axis and the quantity of cereal is on the horizontal axis. The budget line's vertical intercept equals what_____

Back 74

10 yogurts

Front 75

To resolve the paradox of value, you must____

Back 75

distinguish between marginal and total utility.

Front 76

One reason why the price of diamonds is so high because of the _______.

Back 76

Marginal utility of diamonds is high.

Front 77

Why does the paradox of value between diamonds and water arise?

Back 77

Because water has a low price and a low marginal utility, while diamonds have a high price and a high marginal utility.

Front 78

Related to the paradox of value-The following statement is correct_____.

Back 78

The marginal utility of water is small but the total utility is enormous.

Front 79

The paradox of value with respect to water and diamonds can be explained using consumer surplus because_______

Back 79

Water is cheap but provides a large consumer surplus, while diamonds are expensive with a small consumer surplus.

Front 80

The paradox of value refers to the______.

Back 80

fact that water is vital but cheap while diamonds are relatively useless but expensive.

Front 81

________ in consumer surplus occurs when the price of a good_______.

Back 81

An increase; decreases and consumers can buy more of the good at the lower price.

Front 82

A budget line does what______

Back 82

1. Shifts outward with no change in its slope if the budget increase and prices don't change.

2. Has a slope equal to the opportunity cost.

Front 83

Externalites can________.

Back 83

either be benefits or costs

Front 84

For a product with an external cost, the supply curve____

Back 84

Is the same as the marginal private cost curve.

Front 85

For a firm, its labor cost are________

Back 85

A private cost

Front 86

A marginal external cost of a product is equal to ____

Back 86

the cost someone other than the producer incurs when another unit is produced.

Front 87

What is the equation for marginal social cost?

Back 87

MSC=MC+marginal external cost

Front 88

If the marginal social cost of generating a kilowatt of electricity is $0.10 and the marginal private cost $0.08, what is the marginal external cost?

Back 88

$0.02

Front 89

When a person receives a flue vaccination, the ____is the additional benefit the person receives from getting the shot.

Back 89

Marginal private benefit

Front 90

If the marginal private benefit of attending college for Shelly is $40,000 and the marginal external benefit is $15,000, she will attend college of the cost of attendance is ore than___.

Back 90

$40,000

Front 91

If the government action is designed to achieve efficiency, the the action must have the market produce the amount of output so that the___

Back 91

marginal social cost equals marginal social benefit.

Front 92

if all education in the united States were provided by private, tuition-charging schools then____

Back 92

Too little education would be consumed

Front 93

A good or service with a positive externality are the following:

Back 93

1. the MSB exceeds MPB

2. There will be underproduction of the good.