Microeconomics

Economics is the study of

• How society manages its unlimited resources.

• How to reduce our wants until we are satisfied.

• How society manages its scarce resources.

• How to fully satisfy our unlimited wants

• How to avoid having to make trade-offs

A study of how increase in the corporate income tax rate, will affect the natural unemployment rate is an example of:

• Macro Economics

• Descriptive Economics

• Micro Economics

• Normative Economic

The statement, "An increase in inflation tends to cause unemployment to fall in the short run," is normative.

• True

• False

Which of the following statements about opportunity costs is TRUE?

I. The opportunity cost of a given action is equal to the value foregone of all feasible alternative actions.

II. Opportunity costs only measure direct out of pocket expenditures.

III. To calculate accurately the opportunity cost of an action we need to first identify the next best alternative to that action.

• III only.

• I and III only.

• II only.

• None of the statements is true.

The market supply curve shows

• The effect on market demand of a change in the supply of a good or service.

• The quantity of a good that firms would offer for sale at different prices.

• The quantity of a good that consumers would be willing to buy at different prices.

• All of the above are correct

An increase in the demand for a good will cause

• An increase in equilibrium price and quantity

• A decrease in equilibrium price and quantity

• An increase in equilibrium price and a decrease in equilibrium quantity

• A decrease in equilibrium price and an increase in equilibrium quantity

An increase in the supply of a good will cause

• An increase in equilibrium price and quantity

• A decrease in equilibrium price and quantity

• An increase in equilibrium price and a decrease in equilibrium quantity

• A decrease in equilibrium price and an increase in equilibrium quantity

If the cost of computer components falls, then

• The demand curve for computers shifts to the right.

• The demand curve for computers shifts to the left.

• The supply curve for computers shifts to the right

• The supply curve for computers shifts to the left

A price ceiling

• Sets an upper limit on how much producers are allowed to purchase

• Sets the maximum legal price for a product

• Sets a minimum legal price for a product

• Sets a lower limit on how much consumers are allowed to buy

A price ceiling set below the current equilibrium price

• Leads to a surplus

• Has no impact

• Changes the equilibrium

• Leads to a shortage