G10: Microeconomics Review

What can a central bank increase in order to reduce consumer borrowing?

• commercial bank deposits

• government spending

• the exchange rate

• the rate of interest

To help reduce the price of oil, new supplies are needed. However, objectors opposed exploration of new sites because of the environmental damage it may cause. Why is this statement an example of the basic economic problem?

• Oil is a limited resource.

• Oil is expensive.

• The exploration involves demand and supply.

• There are external costs involved in production.

What is an advantage of labor-intensive production?

• each item can be individually made

• keeps unemployment up

• workers don't have pride in the product

• workers have to work hard

What is an advantage of capital-intensive production?

• average costs of production are low

• fixed costs are high

• machinery may break down

• there is no ready market for the product

Which of the following is a characteristic of money?

• acceptability

• cash

• store of value

• medium of exchange

Which of the following is not a function of money?

• medium of exchange

• durability

• store of value

• standard of deferred payments

The diagram shows total cost (TC), total fixed cost (TFC) and total variable cost (TVC). Which costs are shown by W, X and Y?

• W: TC

  X: TFC

  Y: TVC

• W: TC

  X: TVC

  Y: TFC

• W: TFC

  X: TC

  Y: TVC

• W: TVC

  X: TFC

  Y: TC

Which government policy measure might likely lead to an increase in a country’s supply of labor?

• increasing unemployment benefits

• raising the age of retirement

• lowering interest rates

• raising income tax

Which of the following describes a monopoly market structure?

• There is easy entry into the market.

• A monopolist’s product has many substitutes.

• There are no external costs.

• A monopolist may determine the price of its product.

Which of the following is not a characteristic of a perfectly competitive market?

• no company holds a substantial market share

• there is high restrictions to entering an industry

• there are multiple products produced

• there is competition among firms