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Microeconomics Quiz Bank of 100 Questions

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Question;MICROECONOMICS;1. The three major economic factors of;production are natural, human, and capital. Which of the following;groups best illustrates these factors?;A. farmers, teachers, and investors.;B. rent, wages, and interest.;C. gold, bankers, and corporate stocks.;D. iron ore, bricklayers, and money.;E. water, secretaries, and desks.;2. The Toscano Pizza Company faces a demand;for its pizzas which obeys the "law of demand.;Thus, if the owner lowers the priceshe charges per pizza, the;number of pizzas sold would;A. rise as would her total revenues.;B. rise, but her total revenues would fall.;C. rise, while her total revenues could rise;fall, or even stay the same.;D. fall as would her total revenues.;E. fall, while her total revenues could rise;fall, or even stay the same.;3. Suppose some good was available in unlimited;quantities to everybody. Which of the following would be;true?;A. The price of the good would be equal to;zero.;B. The value of the good would be equal to;zero.;C. The opportunity cost of using a unit of;the good would be;equal to zero.;D. Both A and C are true.;E. A, B, and C are all true.;4. Instead of doing yardwork for $1.00 an;hourfor her neighbor, Mindy sets up a lemonade stand. In three;hoursshe is able to sell 100cups of lemonade at five;centseach. If the ingredients (the lemonade mix, sugar, water, and;cups) cost her a total of $3.00and she obtained;all her capital inputs (a table, pitcher, spoon, and sign) for free;from a company called "M.O.M.", then her economic;profits were;A. $5.00.;B. $2.00.;C. $1.00.;D. $0 (that is, she "broke even").;E. -$1.00 (that is, she suffered economic;losses).;5. What provides the bestassurance;that firms in an industry will produce efficiently and earn no economic;profits in the long run?;A. Having many firms in the industry.;B. Government regulation of the industry.;C. The existence of large economies to scale.;D. An absence of major barriers to entry in;the industry.;E. Economic rivalry among existing firms in;the industry.;6. What effect would a decrease in the price;of silicon chips (used to produce computers) and a decrease in;the price of user-friendly software have on the price and;production of personal computers?;Price Production;A. increase increase;B. indeterminable increase;C. decrease indeterminable;D. decrease decrease;E. increase decrease;7. Which of the following could cause supply;to decreasein the short run?;A. A labor union representing the workers who;produce this good is able to negotiate higher wages for;its members.;B. More producers enter this industry.;C. The price of a close substitute for this;good falls.;D. A large group of consumers decide to;boycott this good due to the political beliefs of some of the;producers.;E. A technological breakthrough in the;production of this good lowers the cost of producing it.;8. Which of the following represents a long-run;adjustment?;A. A supermarket hires two additional;checkout people.;B. A steel manufacturer cuts back on its;purchases of taconite pellets.;C. A food processor sells the real assets of;one of its branch plants.;D. The demand for tea falls in response to a;fall in the price of coffee.;E. A farmer uses an extra dose of fertilizer;on his crop.;9. A newspaper reports, "Coffee growers;in Brazil and Columbia organizedto consider world coffee;supply levels." If this group should decide to act in a concertedeffort;for the benefit of the group as a;whole, the;likely result is;A. Increased coffee production and prices.;B. Decreased coffee production and increased;prices.;C. Increased prices with no change in coffee;production.;D. Increased coffee production and decreased;prices.;E. Coffee production and prices at;competitive levels.;10. Forming and maintaining collusiveagreements;among firms is easier given all other things equal when;A. The number of firms involved is large.;B. The firms involved produce differentiated;products.;C. The demand for the product produced is;stable.;D. The firms face different cost situations.;E. There are ample opportunities to make;secret price concessions to selected buyers.;11. Duff Firewood Supply, a competitive;private logging firm, is currently maximizing its profits. Its total;costs are $1100 of which $100 are fixed;costs(insurance;on its equipment). It is currently producing and selling 20;cordsof wood at the going market price of $60.Suppose;due to its filing of a claim, its insurance premiums are raised;to $300. Then the firm should in the short run;A. increase its production of cords.;B. decrease its production of cords.;C. continue producing 20 cords.;D. increase its price.;E. shut down its operations.;12. Property(or ?unearned?)income;(that is, profits, interest, and rents) account for approximately what;percent of total national income?;A. 90% B. 70% C. 50% D. 20% E. 10%;13. Assume labor is the only variable input;and that an additional input of labor increases total output per;day from 20 to 28 units. If the product produced;sells for $6per unit, the additional worker should be hired;as long as the prevailing daily wage rate is less than;A. $6 C. $48 E. $144;B. $24 D. $120;14. Which type of merger creates the greatest;threat of increasedmonopoly power?;A. Conglomerate.;B. Horizontal.;C. Vertical.;D. Diagonal.;E. Multi-national.;15. Assuming that the market for a good is in;equilibrium, the initial effect of an increase in demand is;A. the generation of a surplus of the good.;B. the generation of a shortage of the good.;C. a shift in the supply of the good.;D. an increase in the price of the good.;E. a decrease in the price of the good.;16. Which of the following would most likely;be considered a free goodby an economist?;A. Your high-school education.;B. Network television programs received in;your home.;C. Whales.;D. The "prize" in a Cracker-Jack;box or in a box of cereal.;E. None of these.;17. Which of the following would be;considered a productive economic resource?;A. IBM stocks. C. Gold bullion. E. AT&T;bonds.;B. $100 in cash. D. A savings account.;18. When two or more individuals join;together to form a business where their liability is notlimited;to the;business' assets, their business is called a: A. Corporation.;B. Co-op.;C. Partnership.;D. Merger.;E. Cartel.;19. Which of the following is necessary for perfectly-competitive markets to exist?;A. Economies of scale in production.;B. Advertising.;C. Barriers to entry for new entrepreneurs.;D. Firms with products which are perfect;(identical) substitutes for each other.;E. A few firms each with a large market;share.;20. What might cause the demandfor a;good to increase?;A. A decrease in consumers' income (due;perhaps to a tax increase).;B. New research indicates there is a strong;link between use of this good and heart disease.;C. The price of a close substitute for this;good rises.;D. A large group of consumers decide to;boycott this good due to the political beliefs of some of the;producers.;E. Technological breakthroughs in the;production of this good dramatically lower the cost of producing;it.;21. Public goodstend to be underproduced;in a pure market economy because;A. They cost more to produce than private;goods.;B. They are over-advertisized relative to;private goods.;C. Individuals have an incentive to;understate their true demand for them.;D. Suppliers have an incentive to restrict;their production in order to secure higher prices (and;profits).;E. Only government can provide these goods.;22. What is the opportunity costof;buying a new car?;A. The value of other goods and services you;could have purchased with the money you spent on the;car.;B. The price you paid for the car.;C. The cost of operating and maintaining the;car.;D. The difference between the price of the;car and the price of a used car.;E. The difference between what the car costs;now and what a similar car like it will cost a year from;now.;23. Which of the following is notcharacteristic;of oligopolies?;A. Large expenditures on advertising and;product development.;B. The existence of significant barriers to;entry.;C. "Price-setting" through informal;price leadership;arrangements.;D. Considerable concentration of the means of;production.;E. Extensive price competition to gain market;shares.;24. In the simple circular flow modelof;a market economy;A. households earn income in the product (or;goods and;services) markets.;B. firms (or businesses) are suppliers in the;resource;(or factors of production) markets.;C. households are demanders in all markets;and firms are;suppliers in all markets.;D. firms earn their revenues in the product;markets.;E. only product markets are considered.;25. Which of the following are capitalas;defined by economists?;A. stocks and bonds.;B. water and air.;C. gold and silver.;D. computers and wrenches.;E. cabins and boats.;26. Suppose Mindy's happiness could be;measured in units called;utils." If one shirt gives her 20;utilsof happiness, then;what amount of utils is it possible for two;shirts to give;her without violating the usual assumptions;economists make;about people's wants and desires?;A. 15. B. 20. C. 30. D. 40. E. 45.;27. An industry has one firm producing 40% of;the industry's;total output, two firms producing 20% each;and four firms;producing 5% each. The four-firm;concentration ratiofor;this industry is;A. 85%. B. 20%. C. 15%. D. 70%. E. 50%.;28. The law of demandessentially says;that;A. the price of a good is the most important;determinant of;its demand.;B. as a person's income rises, so does;his/her demand for;goods.;C. as the price of a good falls, people tend;to buy more of;the good.;D. the amount of a good purchased each year;depends mainly;on the size of the population.;E. the quantity of a good demanded and its;price tend to;move in the same direction.;29. "US companies are taking advantage;of falling oil prices;resulting from increased world output by;switching to oil;for fuel. This is expected to depress coal;prices and;output.In terms of conventional;demand and supply analysis;statement is best described as a;A. shift in the demand curves for both oil;and coal.;B. movement along the demand curves for both;oil and coal.;C. shift in the demand curve for oil and a;movement along;the demand curve for coal.;D. movement along the demand curve for oil;and a shift in;the demand curve for coal.;E. change in prices, but not a change in demand;for either;oil or coal.;30. Which of the following is notusually;considered to be a;barrierfor new resources to enter;into an industry?;A. economies of scale.;B. extensive brand-loyalty on the part of;consumers.;C. the existence of patent rights.;D. control of vital inputs (including;technological "knowhow").;E. the existence of fairly standardized;products.;31. Externalitiesare the resultof;A. a misallocation of resources by markets.;B. the existence of monopoly or economic;power.;C. undefined or unenforced property rights.;D. illegal or covert market transactions.;E. governmental restraints of trade.;32. From the perspective of efficiency;if the production of;more widgets reduces the quality of the;environment, more;widgets should;A. not be produced.;B. be produced since they would add to the;economy's gross;domestic product.;C. be produced as long as their value exceeds;the value of;the lost environmental quality and other;resources used.;D. be produced only if the producers of them;install;equipment to ensure that the quality of the;environment;is not reduced.;E. not be demanded by society.;33. Car manufacturers offering rebatesto;purchasers is an;example of;A. sellers responding to a surplus on the;market.;B. buyers responding to a surplus on the;market.;C. sellers responding to a shortage on the;market.;D. buyers responding to a shortage on the;market.;E. non-price competition between sellers.;34. Which of the following would nothelp;unions meet boththeir;objectives of higher wages and more;employmentof members?;A. collective bargaining which leads to a;higher than;equilibrium wage.;B. increases in members' productivity.;C. increases in the demand for the products;produced by;union members.;D. decreases in immigration quotas.;E. increased entry requirements into the;labor market (such;as competency tests, longer apprenticeships;etc.).;35. Which of the following would likely in;the short runlead to;an increase in the priceof VCRs?;A. the elimination of all import restraints;on VCRs.;B. a technological improvement which lowers;the cost of;producing VCR's.;C. the entry of more VCR producers into the;industry.;D. a decrease in the price of purchasing;video tapes of;recent movies.;E. a recession.;36. Which of the following statements is false;about the;income received from the selling or leasing;of property;resources (that is, land, capital, and;natural resources)?;A. It accounts for well over half of all;income earned in;the United States each year.;B. The majority of it is received by a very;small;proportion (less than 2%) of the U.S.;population.;C. Individuals in socialistic economies can;not generally;earn income from this source.;D. It is referred to as "unearned;income by the Internal;Revenue Service of the U.S.;E. It is viewed as a cost by those using;these resources.;37. A college education usually leads to higher;future wages;because;A. the extra cost of obtaining a college;degree limits the;number of people with such a background.;B. people with a college degree tend to be;less productive;workers.;C. the demand for people with college degrees;is low;relative to the supply.;D. the minimum wage that employers can pay;workers with a;college degree is set higher by the;government.;E. going to college teaches people how to;make more money.;38. Interest rates on loans tend to be lower;the;A. shorter the period to maturity.;B. greater the risk of default;(non-repayment).;C. the lower the amount of the loan.;D. greater the expected rate of inflation.;E. none of the above.;39. Suppose A is currently a low-wage area;and B is a high-wage;area. In the long run (assuming resources are;fairly mobile);one would expect all of the following except;A. The supply of labor will increase in B.;B. The demand for labor will increase in A.;C. Wages will rise in A.;D. Workers will migrate to B.;E. Employment levels will fall in A.;40. A shortageof good A;A. indicates that its current price is too;high.;B. is a possible result of a;government-imposed price;ceiling.;C. could be eliminated by an decrease in the;price of A.;D. can only be eliminated by producing more;of good A.;E. indicates that government intervention;into the market

 

Paper#58108 | Written in 18-Jul-2015

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