Microeconomics

Economics is the study of

• how society manages its unlimited resources.

• how to reduce our wants until we are satisfied.

• how to allocate resources to best satisfy our unlimited wants.

• how to avoid having to make trade-offs.

A rational person

• buys the cheapest products at all times

• undertakes actions which produce marginal social benefits that exceed marginal social costs.

• considers the marginal utility gained from an action and chooses those activities which generate the greatest utlity

• none of these answers.

Which of the following is not part of the opportunity cost of going on holiday?

• the London City break and theatre show which you gave up to afford the holiday

• the money you could have made if you had stayed at home and worked

• the money you spent on food

Which of the following statements is normative?

• Large government deficits cause an economy to grow more slowly.

• People work harder if the wage is higher.

• The unemployment rate should be lower.

• Printing too much money causes inflation.

Positive statements are

• macroeconomic.
• microeconomic.
• statements of description that can be tested.
• statements of prescription that involve value judgments.

which of these is a cause of shifting the demand curve to the right hand side if goods are normal

• increase in income of consumer

• increase in price of substitute goods

• decrease in price of complementary goods

• all of these

if demand is perfectly elastic then demand curve would be

• horizontal

• vertical

• rectangular hyperbola

• none of these

Production Possibility Frontier can be..........

• Concave

• Convex

• Straight

• All of the above can be possible

If there is destruction of resources in an economy the PPF

• Shifts left

• Brings unemployment

• Shifts right

• None of the above

When the supply of a product or service shifts right and the demand stays the same the price will typically do what?

• rise

• fall

• stay the same

• Consumer