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WorksheetsMicro U1 and U2 review with MCQ practice
Total questions: 78
Worksheet time: 45mins
Cindy and Martin both sew t-shirts in a small factory. Using the same resources, Martin can sew twelve t-shirts and Cindy can sew nine t-shirts in one day. Which of the following can be concluded from the given information?
Martin has a higher opportunity cost of sewing t-shirts than Cindy does.
Cindy has a comparative advantage in sewing t-shirts.
Martin has a comparative advantage in sewing t-shirts.
Martin has an absolute advantage in sewing t-shirts.
Cindy has an absolute advantage in sewing t-shirts.
Using cost-benefit analysis, a local government would decide to build a new bridge if
The additional tax paid by an individual resident is greater than the additional benefit of building the bridge for all residents.
The toll paid by an individual resident crossing the bridge is less than the resident’s benefit from crossing the bridge.
The total costs of building the bridge are less than the total benefits from building the bridge.
The total costs of building the bridge are greater than the total benefits from building the bridge.
Total costs are at a minimum and total benefits are at a maximum.
Of the feasible and efficient points on the production possibilities curve (PPC) above, producing at which point will lead to the most economic growth in the future?
Point M
Point N
Point R
Point J
Point S
Assume a consumer is spending all her income on two goods: X and Y. At the current consumption combination of the two goods, if the marginal utility per dollar spent on the last unit of good X exceeds that of the marginal utility per dollar spent on the last unit of good Y, what should the consumer do to maximize utility?
Purchase more units of X and more units of Y.
Decrease the price of good X.
Purchase more units of X and less units of Y.
Increase income to buy more of both good Y and good X.
Nothing; utility is maximized at current consumption bundles.
Which of the following statements regarding specialization and trade is true?
With specialization and trade, a country’s production possibilities curve shifts out, showing an increase in productive capacity.
With specialization and trade, a country will produce a combination of goods beyond its production possibilities curve.
To gain from trade, countries specialize in producing goods and services in which they have an absolute advantage.
With specialization and trade, a country can consume beyond its production possibilities curve.
A country must have both the comparative and the absolute advantage in a product to specialize and gain from trade.
An economy produces two goods: X and Y. Its production possibilities curve is linear with the intercept on the Y axis at 1,000 units and the intercept on the X axis at 100 units. Which of the following statements is correct?
There is a constant opportunity cost with each unit of good X costing 10 units of good Y.
There is an increasing opportunity cost of producing good X, beginning with 1 unit of X costing 0.1 unit of Y.
There is an increasing opportunity cost of producing good Y but not of producing good X, which has a constant opportunity cost.
There is a constant opportunity cost with 10 units of good X costing 1 unit of good Y.
With a linear production possibilities curve, total production of goods X and Y will be the same at each point on the curve.
Which of the following describes a factor of production that is not fully scarce and that can be used simultaneously in the production of more than one good?
Unskilled labor needed to produce all goods
Machines that can produce both clothing and bedsheets
Land that is cultivated for two crops by more than one farmer
Labor that has received enhanced training in assembly-line work
Basic knowledge that enhances the organization of all manufacturing assembly lines
Which of the following statements describes an economy confronting scarcity?
An economy can produce a limitless amount of all goods.
Scarcity is eliminated by government provision of goods.
All individuals are able to satisfy their consumption desires.
If more of one good is produced, less of another good must be produced.
Scarcity only exists as a problem when there is more than one good to produce.
Which of the following will cause the demand for a normal good to increase?
A decrease in consumers’ income
A decrease in the price of a complementary good
A decrease in the price of a substitute good
A decrease in the price of the good
A decrease in the number of consumers
The concept where society has unlimited wants and limited resources is known as
(a)
Which of following are factors of production?
Land
Capital
Money
Labor
Entrepreneur
The graphically representations of opportunity cost between two goods is known as
(a)
Which points would be considered efficient?
Point N
Point M
Point S
Point R
Which points on the graph are underutilized?
Point N
Point J
Point S
Point R
How can an economy reach point M?
Increasing productivity
Trade
Letting go employees
Paying more for resources
(a) Advantage is when one country has the lower opportunity cost when producing one good or service.
(a) Advantage is when a country has no reason to trade because they are producing the most of one good or service.
Which country has the absolute advantage in producing cars?
Cuba
Mexico
Which country has the comparative advantage in sugar?
Cuba
Mexico
The comparison of costs and benefits of public goods projects to decide if they should be undertaken is known as
(a)
Projects are good for the community when...
Benefits are less than cost
Benefits are more than cost
What are the two types of cost?
Extra
Explicit
Total
Implicit
_______ costs are the monetary payments that are taken place right now for the choices you made.
explicit
implicit
Marginal utility is...
the total satisfaction
the additional satisfaction
minus satisfaction
Utility is measure in (a)
Law of diminishing marginal utility states...
more you purchase or consumer of one good the more satisfied you will be
more you purchase or consumer of one good the least additional satisfied will be gained
more you purchase the more you get
What is the MU for quantity 2?
5 utils
25 utils
30 utils
50 utils
What is the MU for quantity 5?
5 utils
30 utils
10 utils
25 utils
Marginal utility per price is calculated by...
taking your total utils and dividing it in half
taking your total utils and timing it by half
taking your additional utils and dividing it by price
taking your price and dividing it by your additional utils
What is the MU/P at quantity 1?
20
60
4
2
What is the MU/P at quantity 4?
50
35
55
10
How many of good A should I buy when maximizing my utility at a budget of 10$?
4
5
2
1
What is the correct combination of good A and good B I need to maximize my utility?
1 of good A and 2 of good B
2 of good A and 4 of good B
4 of good A and 5 of good B
0 of good A and 5 of good B
What are the three rules we must follow to maximize utility?
All income will be spent
only two goods will be purchased
Income spent can exceed the budget
good with great MU/P will be purchased next
Demand is the consumers...
willingness to buy something
ability to buy something
willingness and ability to buy something
something I need really badly
Why is the Demand curve always downward sloping?
Inverse relationship between price and quantity
Law of diminishing marginal utility
Direct relationship between price and quantity
Income Effect
Substitution Effect
Which of the following are the shifters of Demand?
Taste and Preference
Number of Consumers
Income
Price of Related Goods
Future Expectations
Which of the following will NOT shift the Demand curve?
Taste and Preferences
Number of Consumers
Price
Price of Related Goods
Which of the following would cause the increase in Demand?
Decrease in number of consumers
Price of strawberries go down
Bathing in chocolate makes you live longer
BOGO chocolate bars will happen next week
Supply is the producers...
willingness to sell something
ability to sell something
willingness and ability to sell something
something a producer should really sell
Why is the supply curve always upward sloping?
Inverse relationship between price and quantity
Income effect
Direct relationship between price and quantity
Substitution effect
Which of the following are shifters of the Supply curve?
Price of input/resource costs
Number of Sellers
Government Action
Future Expectations
Technology
What would have caused the increase in supply?
Decrease in sellers
Increase in resource costs
Decrease in resource costs
A hurricane
The point where the Demand and Supply curve is known as...
disequilibrium
equilibrium
equal point
equity
Price elasticities of demand is (a) when it is less than 1.
The formula for PED is...
% change Q / % change in Y
% change P / % change Q
% change D / % change S
% change Q / % change P
The formula for PES is...
% change Q / % change in Y
% change P / % change Q
% change QS / % change P
% change QD / % change P
XED is the...
responsiveness to change in price of a related good
responsiveness to change in price
responsiveness to change in demand of a related good
responsiveness to change in demand of supply
Price elasticity of supply is (a) when it is greater than 1.
Price ceilings are set by the government to...
protect producers by setting min price
protect consumers by setting max price
protect producers by setting max price
protect consumers by setting min price
Price floors are set (a) the equilibrium point in order to protect producers.
Which line is elastic?
Blue
Green
Quotas are set by the government to...
prevent supply
prevent harm to environment
prevent demand
protect producers
Government imposed tax will...
increase supply
decrease supply
If hot dogs are an inferior good, an increase in income will result in:
an increase in the quantity demanded for hot dogs
an increase in the demand for hot dogs
a decrease in the quantity demanded for hot dogs
a decrease in the demand for hot dogs
no change in the demand for hot dogs
Assume that coal is a normal good. If the price of coal increases and the quantity sold increases, which of the following is consistent with these observations?
The price of oil, a substitute for coal, increased
A wage increase was given to coal miners
New machinery made coal mining more efficient
Consumers' incomes fell
The demand curve is inelastic
During a football game, it starts to rain and the temperature drops. The senior class, which runs the concession stand, and is studying economics, raises the price of coffee from 50 cents to 75 cents a cup. They sell more than ever before. Which answer explains this?
The supply of coffee increased
The demand curve for coffee was elastic
The supply of coffee decreased
The demand for coffee increased
The demand curve for coffee was inelastic
Which one of the following statements best reflects the law of diminishing marginal utility?
"I have to have a scoop of ice cream on my pie"
"I'll never get tired of your cooking"
"The last bite tastes just as good as the first"
"I couldn't eat another doughnut if you paid me"
"I prefer to eat several small meals a day, rather than three large ones"
If the cost of producing automobiles increases, the price, equilibrium quantity, and consumer surplus will most likely change in which of the following ways:
Price increases, quantity increases and consumer surplus increases
Price increases, quantity decreases, and consumer surplus increases
Price increases, quantity decreases, and consumer surplus decreases
Price decreases, quantity increases, and consumer surplus decreases
Price decreases, quantity decreases, and consumer surplus decreases
Compare 2011 with 2012 in the chart. Which of the following statements is true.
Demand has increased
Supply has decreased
Demand has increased and quantity supplied has increased
Demand has increased and supply has decreased
Demand has increased, quantity demanded has increased and supply has increased
During the 1990s, the price of VCRs fell by about 30 percent, and quantity sold decreased by the same amount. The demand for VCRs must:
be inelastic
be elastic
be unit elastic
have shifted to the right
have shifted to the left
Which of the following will occur if a legal price floor is placed on a good below its free market equilibrium?
Surpluses will develop
Shortages will develop
Underground markets will develop
The equilibrium price will ration the good
The quantity sold will increase
A marketing survey shows that gate receipts would increase if the price of tickets to a summer rock concert increased, even though the number of tickets sold would fall. What does this imply about the price elasticity of demand for concert tickets?
Demand is inelastic
Demand is elastic
Demand is unit elastic
Demand is perfectly inelastic
Demand is perfectly elastic
According to the graph above, which of the following will occur if a legal price ceiling is imposed at price X?
Shortages will occur
Surpluses will occur
Demand will increase
Q2 will be purchased
Supply will decrease
Which of the following statements about price controls is true?
A price ceiling causes a shortage if the ceiling price is above the equilibrium price
A price floor causes a surplus if the price floor is below the equilibrium price
A price ceiling causes an increase in demand if the ceiling price is set below the equilibrium price
A price ceiling causes a decrease in demand if the price floor is set above the equilibrium price
Price ceilings and price floors result in a misallocation of resources
If the price of lunch at the school cafeteria increases and cafeteria revenue remains constant, the price elasticity of demand for a school lunch must be:
elastic
perfectly elastic
unit elastic
inelastic
perfectly inelastic
If an excise tax is imposed on a product, consumer surplus and producer surplus for this good will most likely change in which of the following ways:
Consumer surplus decreases and producer surplus decreases
Consumer surplus decreases and producer surplus increases
Consumer surplus decreases and producer surplus does not change
Consumer surplus does not change and producer surplus increases
Consumer surplus does not changes and producer surplus does not change
If the price of paperback books increases and consumer expenditures on paperback books also increase, which of the following is likely true?
Paperback books are normal goods
Paperback books are inferior goods
The demand for paperback books is unit elastic
The demand for paperback books is elastic
The demand for paperback books is inelastic
The substitution effect causes a consumer to buy less of a product when the price increases because the:
product is now less expensive compared to similar products
product is now more expensive compared to similar products
consumer's real income has decreased
consumer's real income has increased
consumers will buy more inferior goods and fewer normal goods
Based on the information in the table above, which product(s) is/are inferior?
Product A only
Product B only
Product D only
Products A and C only
Products B and D only
If the price of a good decreases by 3 percent and total revenue increases, the absolute value of the price elasticity of demand for the good could possibly be:
1.3
1
0.8
0.2
0
Advocates of higher minimum wages for unskilled labor defend their position by arguing that:
low-income workers deserve to earn incomes above the poverty level
higher wages boost worker productivity and efficiency
higher wages will cause employers to reduce the payroll, but the total wages of remaining workers will be higher
higher wages induce more workers into the labor market and thus reduce unemployment
it is more efficient for the private sector to provide a higher wage than for the government to provide transfer payments to low-income workers
In a competitive market the value of consumer surplus is:
$0
$11
$18
$33
$42
If the government decided that only 4 units of Good X could be sold, the deadweight loss of this policy would be shown by area:
ABC
ACEJ
AHJ
CFE
BGJ
When there is a bountiful harvest of grapefruit, total consumer surplus in the grapefruit market:
will increase
will decrease
will remain the same
may change but we cannot tell how
will be eliminated
Identify the area(s) that represent the gain in consumer surplus to those consumers already participating in the market when the price falls from P1 to P2. Which of the following is correct?
A and B
B
B and C
C
E
Which of the following area(s) represent producer surplus when the price is equal to P2?
D, E and F
B and C
D and E
A, B and C
C and E
Luis is willing to sell his pool table for $600, but he receives $840 for the table. The producer surplus Luis receives is ________.
$600
$840
$240
$1,440
$1,240
