Which of the following is the study of “what is” rather than “what ought to be”?
Question 1Which of the following is the study of “what is” rather than “what ought to be”?
normative theory
institutionalism
subjectivism
positive theory
Question 2Along with the other social sciences, economics is specifically and primarily concerned with __________.
the behavior of human beings both as individuals and in groups
the actions of international monetary agencies
the laws of mathematics as they apply to decision making
the economic practices of international agencies
Question 3Irene, who is an economist, tells Ronald, who is a business columnist, that if interest rates remain this low, she expects next year’s inflation rate to be 7%. This statement is a(n) __________.
positive theory
microeconomic calculation
prediction that derives from a model
economic forecast
Question 4In a market economy system, who most often enforces property rights?
the government
consumers
central planners
businesses
Question 5Which of the following is LEAST likely to be a public good?
a park
an army
a party
a sunset
Question 6Which of the following would be described as capital by an economist?
a corporation’s petroleum reserves
the power lift in a service station
common stocks
government bonds
Question 7The directing function of prices ensures that __________.
consumers and businesses participate in proper markets
production will increase for goods with more intense demands
consumers know how to get correct market information
prices will always move in the right direction
Question 8Best Western University wants to increase the size of its student body by shifting the demand curve for its educational services to the right. Which of the following will most likely NOT shift its demand curve to the right?
a “best buy” rating in a national magazine
an improved record in student job placements
really popular, winning sports teams
lower tuition and lower prices on textbooks
Question 9Following the law of demand, if the U.S. Postal Service raises the price of first-class mail, ceteris paribus, what will happen to the demand for postage stamps?
Demand will increase.
Demand will be unchanged, but quantity demanded will fall.
Demand will decrease.
Demand will be unchanged, but quantity demanded will rise.
Question 10What does an economist suggest that efficient allocation of resources by the market means?
Producers determine what to produce, and consumers buy it.
Adam Smith’s “invisible hand” has been circumvented.
Every individual who wants a product gets it.
The products desired by a society are produced.
ECO204 Principles of Microeconomics
Week 2 Quiz
Question 1A tax on the purchase of a particular good, such as liquor, cigarettes, or electricity, or a broad class of goods, such as food, is called __________.
an excise tax
a luxury tax
a property tax
an income tax
Question 2Using Table 4.1, the demand curve schedule for a straight-line demand curve, what is the percentage change in quantity demanded from 10 units to 25 units?
Table 4.1: Demand curve schedule for straight-line demand curve in Figure 4.5
Price Quantity demanded
$0.50 25
1.00 20
1.20 18
1.40 16
1.60 14
1.80 12
2.00 10
2.20 8
2.40 6
2.60 4
2.80 2
3.00 0
250%
25%
15%
150%
Question 3Any movement along a demand curve occurs in response to a change in price and is referred to as a change in __________.
quantity demanded
quantity needed
supply demanded
supply needed
Question 4Westhill is a town where people typically buy more ground beef than steak. One month, Westhill’s EatWell grocery store raised its price on ground beef. Consequently, the substitution effect dictates that more consumers will switch __________.
from steak to ground beef
to a ground beef substitute
to another grocery store
from ground beef to steak
Question 5If the government were to provide free health care, people would most likely consume this service until the marginal utility of the last unit was __________.
= 1
d. > 1
= 0
a. < 1
Question 6When the fourth cup of coffee is expected to provide less additional pleasure than the third cup of coffee, this is called the principle of __________.
diminishing returns
diminishing marginal utility
total utility
long-acting utility
Question 7What are the two characteristics of public goods?
nonexclusivity and nonrivalry
exclusivity and nonrivalry
productivity and rivalry
exclusivity and rivalry
Question 8Free riding is a market concern because free riders __________.
do not pay federal taxes
make it difficult for the market to measure actual demand
might consume all of a public good
make it difficult for others to enjoy a public good
Question 9What is the most frequently cited example of an externality?
service charges
public protest
sales taxes
pollution
Question 10What happened when—regardless of the market demand—the United Kingdom made laws to ban smoking in enclosed workplaces?
Respiratory illness declined sharply among workers.
Restaurant and pub owners sued the UK’s Parliament.
Restaurant and pub owners generally disregarded the law.
Respiratory illness was monitored for the first time.
ECO204 Principles of Microeconomics
Week 3 Quiz
Question 1The addition to total product resulting from employing one more unit of a productive resource is the __________.
marginal input
marginal product
average product
total product
Question 2An example of a horizontally integrated firm is one that __________.
owns several plants, each manufacturing the same product
owns several plants, each handling a different stage of production
has several factories making different products within the same region
produces a variety of goods and sells them in widely disparate markets
Question 3A description of the amounts of output expected from various combinations of inputs is called __________.
technical efficiency
a production function
economic efficiency
an economic forecast
Question 4In a production function, in the short run, some inputs are fixed. In the long run, all inputs are __________.
fixed
variable
increasing
decreasing
Question 5If Geeta buys wood and piano wire every month to manufacture pianos in the plant she has leased for 4 years, she is operating __________.
without a production function
in the short run
in the long run
a vertically integrated firm
Question 6A firm should leave production unchanged when __________.
marginal cost ≥ marginal revenue
marginal cost > marginal revenue
marginal cost = marginal revenue
marginal cost < marginal revenue
Question 7A company’s profits are greatest when __________ by the largest possible amount.
marginal revenue exceeds total revenue
explicit costs exceed opportunity costs
short-run profits exceed long-run profits
total revenue exceeds total cost
Question 8Economic profit is calculated as __________.
total revenue – opportunity costs
total revenue – implicit costs
total revenue – (explicit costs + implicit costs)
total revenue – explicit costs
Question 9The rate of return that is necessary to keep capital and enterprise in an industry is known as __________ profit.
accounting
opportunity
economic
normal
Question 10The long-run decision regarding the size of a firm’s physical operations is determined by the selection of the desired __________.
short-run AC curve
long-run AC curve
plant size that matches the fixed quantity of labor
quantity of labor supported by the fixed capital
ECO204 Principles of Microeconomics
Week 4 Quiz
Question 1All of the following are among the six basic assumptions about perfect competition EXCEPT __________.
many buyers
many sellers
mobile resources
differentiated products
Question 2If a firm is making an economic profit, then productive resources are earning __________.
their opportunity costs in the long run
more than their opportunity costs
their opportunity costs in the short run
less than their opportunity costs
Question 3In a perfectly competitive industry, if TR > TC, then in the long run, __________.
there will be no change in the number of firms
firms will attempt to expand into monopolies
new firms will enter the industry
firms will exit the industry
Question 4Imagine that Congress has put high tariffs on how much wool can be imported into this country. What type of barrier to entry is this?
corporate
legal
artificial
natural
Question 5Which 1917 legislation prohibited a company from acquiring stock of a competing company if such an acquisition would substantially lessen competition?
the Sherman Antitrust Act, Section 1
the Sherman Antitrust Act, Section 2
the Clayton Act
the New York State Antitrust Statute
Question 6Which of the following is an example of a monopoly that loses money?
the U.S. Postal Service
Apple
the Olympic Games
Microsoft
Question 7All of the following are characteristics of a cartel EXCEPT that they __________.
pursue a moderate pricing policy
have effective sanctions on sellers who cheat the cartel
have many members for more income
have buoyant world demand (high income elasticity)
Question 8The greater the price elasticity of the demand curve that a firm faces in monopolistic competition, the __________.
more sales the firm will gain from a price increase
higher the degree of competition in the industry
fewer substitutes for the good produced
lower the degree of competition in the industry
Question 9For what purpose do economists use a concentration
ratio?
to compare the percentage of an industry’s total sales to another industry’s total sales
to compare, in fraction form, the smallest firm’s size to the largest firm’s size
to measure the average economic success of all the firms in a market
to measure the distribution of economic power among the top firms in a market
Question 10What is a group of firms producing the same, or at least similar, products called?
a monopoly
a corporation
an oligarchy
an industry
ECO204 Principles of Microeconomics
Week 5 Quiz
Question 1The profit-maximizing firm equates the marginal benefit of labor to the marginal __________.
cost of labor
profit
units of labor
production
Question 2Salaries for professions (such as architect or medical doctor) that require a long period of study are typically higher than those for other jobs. The reasons for this are all of the following EXCEPT __________.
future income is worth less than present income
long periods of schooling incur greater current costs
status deserves more reward in the form of wages
students sacrifice a good deal of present income
Question 3In a perfectly competitive labor market, if a firm’s unit of labor adds more to revenue than to cost, it would be profitable for the firm to __________.
lower the price on each unit of product
add more buildings to the firm’s plant
add more capital to the firm
purchase more units of labor
Question 4Which of the following is NOT an example of an in-kind transfer?
unemployment compensation
food stamps
Medicaid
rent subsidies
Question 5The typical American worker tends to have the highest personal income in __________.
youth
the 20s to 30s
retirement years
middle age
The answer can be found in Chapter 13, Section 13.1, Personal Distribution of Income.
Question 6The poverty measure used in the United States includes all but which of the following as income?
Social Security payments
Temporary Assistance for Needy Families
food stamps
unemployment compensation
Question 7In many industrialized areas of the world, privatization has been the norm for about 30 years. In which of the following areas is this NOT the case?
China
France
Latin America
the United Kingdom
Question 8Monopoly rent seeking is a(n) __________.
efficient allocation of resources
extra cost of monopoly
benefit to society
advantage for large corporations
The answer can be found in Chapter 14, Section 14.2, Rent Seeking.
Question 9The “rent” involved in rent seeking __________.
represents a transfer from producer to government
is artificially created by a government or quasigovernment unit
represents a transfer from producer to consumer
is artificially created by a monopoly or oligopoly
Question 10The commitment of scarce resources to capture returns created politically is called __________.
rent seeking
cost minimizing
profit maximizing
logrolling
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