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WorksheetsMicroeconomics
Total questions: 84
Worksheet time: 7mins
When the price of a complementary good increases, the demand for the good in question
increases
decreases
The LRAS curve corresponds to
PPC
Laffer Curve
LRPC
AD
rGDP
A PPC that is bowed out entails
resources used for goods involved are very different
resources used for goods involved are interchangeable
resources used for goods involved are very similar
resources used for goods involved are very interdependent
A PPC that is a straight line entails
the same resources are used to produce the goods
different resources are used to produce the goods
similar resources are used to produce the goods
A PPC that is bowed out entails
increasing opportunity costs
constant opportunity costs
decreasing opportunity costs
A PPC that is bowed in entails
increasing opportunity costs
constant opportunity costs
decreasing opportunity costs
A PPC that is a straight line entails
increasing opportunity costs
constant opportunity costs
decreasing opportunity costs
Luxuries have an elasticity
> 1
< 1
0
1
= 1
Necessities have an elasticity
> 1
< 1
0
1
= 1
Inferior goods have an elasticity
> 1
< 1
0
1
< 0
Normal goods have an elasticity
0
< 0
> 0
= 1
Goods that are unit elastic have an elasticity
= 0
= 1
> 1
> 0
< 0
A perfectly competitive firm's demand curve is
horizontal
vertical
downward sloping
upward sloping
The demand curve for an individual firm
> equilibrium market price
= equilibrium market price
< equilibrium market price
Firms with losses will continue to produce in the short run if revenues
> VC
< VC
= VC
Private goods are
rivalrous and excludable
rivalrous and non-excludable
non-rivalrous and non-excludable
non-rivalrous and excludable
Common goods are
rivalrous and excludable
rivalrous and non-excludable
non-rivalrous and non-excludable
non-rivalrous and excludable
Club goods are
rivalrous and excludable
rivalrous and non-excludable
non-rivalrous and non-excludable
non-rivalrous and excludable
Public goods are
rivalrous and excludable
rivalrous and non-excludable
non-rivalrous and non-excludable
non-rivalrous and excludable
Occam's razor states the optimum amount of assumptions to perform analysis is
the minimum
the equilibrium
indeterminate
the maximum
The payment firms make to households in exchange for their labor
wages
rent
interest
profit
The payment firms make to households in exchange for land
wages
rent
interest
profit
The payment firms make to households in exchange for capital
wages
rent
interest
profit
The payment to entrepreneurs who start or own a business
wages
rent
interest
profit
When a tax is introduced in a market with an inelastic supply, hurts
producers
consumers
In a market where both the demand and supply are very elastic, the imposition of an excise tax generates
low revenue
high revenue
An excise tax on a good for which supply is more elastic than demand hurts
consumers
producers
If the cross price elasticity is positive, the goods are
substitutes
normal
inferior
complements
If the cross price elasticity is negative, the goods are
substitutes
normal
inferior
complements
A positive XED coefficient means goods are
substitutes
normal
inferior
complements
a positive YED coefficient means the good is
substitutes
normal
inferior
complements
In the short-term, a firm's total costs =
fixed costs + variable costs
fixed costs - variable costs
variable costs - fixed costs
fixed costs x variable costs
The economies of scale curve is a
short-run average cost
long-run average cost
long-run total cost
short-run total cost
Economies of scale refer to a situation where, as the level of output increases,
the average cost decreases
variable costs decreases
the total cost decreases
fixed costs decrease
Profit =
total revenue − total cost
total revenue − average cost
total revenue − variable costs
Price x Quantity
Total Revenue =
Price x Quantity
Price ÷ Quantity
Profit − Total Cost
Profit − Fixed Costs
Wages that a firm pays its employees or rent that a firm pays for its office are
explicit costs
implicit costs
In a perfectly competitive market, price is equal to
the marginal cost of production
the total cost of production
the average cost of production
the sum of variable and fixed costs of production
Allocative efficiency is when
P = MC
P > MC
P < MC
P = ATC
The socially-preferred point on the PPC is known as
allocative efficiency
productive efficiency
When goods are being produced and sold at the lowest possible average cost there is
allocative efficiency
productive efficiency
When the price of a substitute good increases, the demand for the good in question
increases
decreases
On a graph, Fixed Costs are
horizontal
vertical
upward sloping
downward sloping
Labor, electricity, and raw materials are all examples of
Variable Costs
Fixed Costs
Marginal Costs
Average Fixed Costs continually
increase
decrease
Average Variable Cost curve continually
decreases until it intersects Average Variable Costs
decreases until it intersects Marginal Costs
increases until it intersects Fixed Costs
increases until it intersects Average Total Costs
Diminishing marginal returns causes marginal costs to
increase at higher quantities
decrease at higher quantities
increase at lower quantities
decrease at lower quantities
As long as the cost of producing one more unit of output is higher than the current average, the average will
increase
decrease
When the long-run average total cost curve is downward sloping, higher quantities have a
higher average cost
lower average cost
When a firm can increase resources used by a small amount while increasing output much more
increasing returns to scale
decreasing returns to scale
constant returns to scale
diseconomy of scale
When firms can increase output at the same rate as they increase resources
increasing returns to scale
decreasing returns to scale
constant returns to scale
diseconomy of scale
When firms can increase output at a smaller rate as they increase resources
increasing returns to scale
decreasing returns to scale
constant returns to scale
diseconomy of scale
Lump sum taxes or subsidies, rent payments, and insurance payments are examples of
Variable Costs
Fixed Costs
Marginal Costs
Changing a Fixed Cost will cause a shift in
ATC
AVC
ATC and AVC
ATC, AVC, and MC
MC
Changing a Variable Cost will cause a shift in
ATC
AVC
ATC and AVC
ATC, AVC, and MC
MC
Productive Efficiency is producing the quantity where
ATC is at a minimum
AVC is at a minimum
MC is at a minimum
AFC is at a minimum
Profit-maximizing firms will continue to produce as long as
MR = MC
MR > MC
MR < MC
MR ≤ MC
MR ≥ MC
Accounting Profit is always
higher than Economic Profit
lower than Economic Profit
equal to Economic Profit
Monopolies price
above MC
below MC
at MC
Monopolies are
allocatively efficient, but not productively efficient
productively efficient, but not allocatively efficient
allocatively and productively efficient
neither allocatively nor productively efficient
A perfectly competitive firm's total revenue rises at
an increasing rate
a decreasing rate
a constant rate
Precious metals are an example of
increasing cost industries
decreasing cost industries
constant cost industries
Microchips are an example of
increasing cost industries
decreasing cost industries
constant cost industries
A country with a completely equal distribution of income (socialism) would have a coefficient
= 0
> 0
< 0
= 1
A country with a completely unequal distribution of income (one person earns all of the income and everyone else owns nothing) will have a gini coefficient
= 0
> 0
< 0
= 1
Why are Demand Curves downward sloping?
income effect
substitution effect
diminishing marginal utility
all of the above
none of the above
A change in consumers' incomes causes
a shift in demand
a change in quantity demanded
a shift in supply
a change in quantity supplied
Taxes and subsidies cause a
a shift in demand
a change in quantity demanded
a shift in supply
a change in quantity supplied
A change in prices causes
a shift in demand
a change in quantity demanded
a shift in supply
a change in quantity supplied
A subsidy causes a
an increase in supply
an increase in demand
an increase in quantity supplied
an increase in quantity demanded
a decrease in supply
A tax causes
a decrease in supply
a decrease in quantity supplied
a decrease in demand
a decrease in quantity demanded
an increase in supply
If a product has no externalities, a tax will
create deadweight loss
reduce deadweight loss
increase deadweight loss
If a product has positive externalities, a per-unit tax will
create deadweight loss
reduce deadweight loss
increase deadweight loss
If a product has negative externalities, a per-unit tax will
create deadweight loss
reduce deadweight loss
increase deadweight loss
If a product has no externalities, a subsidy will
create deadweight loss
reduce deadweight loss
increase deadweight loss
If a product has no externalities, a subsidy will
create deadweight loss
reduce deadweight loss
increase deadweight loss
If the product produces a positive externality, a per-unit subsidy will
create deadweight loss
reduce deadweight loss
increase deadweight loss
If the product produces a negative externality, a per-unit subsidy will
create deadweight loss
reduce deadweight loss
increase deadweight loss
The factor market is driven by
demand in the goods and services market
supply in the good and services market
In the factor market...
households are sellers and businesses are buyers
businesses are sellers and households are buyers
In the goods and services market...
households are sellers and businesses are buyers
businesses are sellers and households are buyers
Income inequality is shown on
PPC
Laffer Curve
LRPC
AD-AS Model
Lorenz Curve
A per-unit subsidy
decreases ATC
decreases MC
decreases ATC and MC
A per-unit tax
increases MC and ATC
increases ATC
increases MC
