WorksheetsMicroeconomics
Total questions: 124
Worksheet time: 1hrs 2mins
In a recent article it was suggested that a new machine designed to pick strawberries in Florida could be faster and less expensive than human strawberry pickers. This is an example of what?
A change in the process used to produce strawberries
The substitution of relatively inexpensive capital for relatively expensive labor
A change in technology
All of these
None of these
"The unemployment rate is 4.2%" is a what?
Normative statement
Positive statement
Rhetorical statement
None of these
Chris eats lunch at a local restaurant by herself every day. One day friends offer to pay for Chris’s lunch if Chris join them uptown. In this case Chris’s lunch is costless. True or false?
False, Chris must give up having lunch by themself
False, the price of lunch is not a factor
True, the price of lunch is always important
True, Chris was going to have to pay for lunch otherwise
What is economics?
The study of the allocation of limited resources across unlimited wants
The allocation of limited wants across unlimited resources
The study of how to run a business
All of these
None of these
Computers are capital. True or false?
True, computers are technology and capital is another form of resource
True, capital is a resource and computers are technology
False, technology is the same thing as computers
False, it is more efficient to use technology than capital as they are complements
None of these are correct
Which of the following is an example of land?
Fish in the ocean
A dirt road
A dam on a river
All of these
None of these
Farmer Avery and Farmer Brown have farms right next to one another. One raises wheat and the other raises dairy cows. This is an example of what?
Absolute advantage
Comparative advantage
Decreasing opportunity cost
Technological change
The PPC can shift out...
if the amount of our inventory of technology decreases
never, as we assume the PPC is always fixed
tomorrow if we increase the amount of resources produced today
today with an increase in amount of capital produced today
today with less unemployment today
Money is a resource. True or false?
True
False
Uncertain
Changes in technology will...
change the quantity demanded
shift the PPF
shift demand to the left
all of these
none of these
The only reason for international trade is to import goods that a nation cannot produce themselves. True or false?
True, there is no reason to import goods one can produce at home
True, absolute advantage is necessary for trade to exist
False, if each country specializes in goods that they can produce at a lower opportunity cost than others, then they should trade
False, comparative advantage is not necessary for trade
What is an example of a normative statement?
We are experiencing record economic growth
Economic growth is too high
both of these
none of these
On a PPF, what points would be inefficient?
A point inside the curve
A point outside the curve
A point on the curve
On a PPF, which points would be efficient?
A point on the curve
A point inside the curve
A point outside the curve
On a PPF, which points are not possible in the current economy?
A point inside the curve
A point on the curve
A point outside the curve
On a PPF, which points would be most beneficial to society?
A point on the curve
A point inside the curve
A point outside the curve
We cannot tell with this information
What point on a PPF would allow the economy to increase the amount of the good at zero opportunity cost?
A point inside the curve
A point on the curve
A point outside the curve
None of these
If the price of a good increases and the number of unit people want to buy decreases, we call this a change in quantity demanded. True or false.
True
False
If good A and B are normal and the price of A increases, what will happen to the demand for good B?
increase
decrease
stay the same
we cannot tell with this information
If price on an inferior good increases...
demand will fall
quantity demanded will fall
demand will increase
quantity demanded will increase
none of these
If good A is inferior and its price increases, we would expect...
quantity demanded to increase
demand to decrease
demand to increase
quantity demanded to decrease
An increase in income will lead to an increase in demand for a normal good. True or false?
True
False
If the price of A goes up and the demand for B falls, A and B are...
substitutes
normal
inferior
complements
none of these
If income increases and a person wants less of the good, the good is called...
inferior
normal
substitute
complement
The National Weather Service announces in August that they forecast a very mild winter. Demand for heavy winter coats increases due to what?
Changes in expectations
A change in the price of related good
the law of demand
none of these
Straw hats become fashionable and everyone wants one. The demand curve for straw hats shifts to the right because of what?
An increase in price
Change in the price of a related good
Change in income
Change in tastes and preferences
If new buyers enter a market, we expect the demand curve to...
stay the same
we cannot tell
shift left
shift right
If the demand for A goes down as income falls, the good is...
inferior
substitute
normal
complement
If the price of a good stays the same and the number of unit people want to buy decreases, we call this a change in quantity demanded. True or false?
True
False
If the price of A goes up as the consumer's income goes down, the good is...
normal
substitute
inferior
complement
none of these
The elasticity of demand can be defined as what?
The percentage change in demand given a percentage change in price of a good
The change in demand given a change in the price of the good
The change in the quantity demanded of a good given a change in the price of the good
The percentage change in quantity demanded given a percentage change in the price of the good
When we speak of maximizing social welfare, we mean what?
We want to make total surplus as large as possible
We want to make producer surplus as small as possible
We want to make consumer surplus as large as possible
We want to make producer surplus as large as possible
If we are looking at the elasticity of toothbrushes, the number is measured in units of what?
The percentage change in quantity demanded of toothbrushes per percentage change in the price of toothbrushes
None of these
The percentage change in price given a one unit increase in the demand for toothbrushes
Toothbrushes per dollar
If at a price of $1, demand for a good is 10 units, and the elasticity of demand is elastic, we know the slope is what?
equal to 10
greater than -10
less than -10
none of these
greater than 10
Producer surplus can be described as what?
The amount by which quantity supplied exceeds quantity demanded at the current market price
The difference between the price that the producer receives and their costs of production
The amount by which quantity demanded exceeds quantity supplied at the current market price
The difference between the maximum the consumers are willing to pay for a particular quantity of a good and the cost to the producer to provide the good
If we assume that demand for this good is linear where the slope remains constant at -4, we know that a(n) _________ in price will lead to a(n) _________ in revenue.
decrease, increase
increase, increase
increase, decrease
decrease, decrease
The demand curve for a good that has few if any substitutes in consumption is likely to be what?
very steep
very flat
unit elastic
A binding price ceiling will always reduce consumer surplus. True or false?
False
True
It is possible to increase social welfare from that achieved at the equilibrium price and quantity. True or false?
True, which is a price ceiling
False, as it depends on the nature of the good
True, with a price floor
False
In social welfare, it is always the goal to maximize producer surplus. True or false?
True
False
A government wants to increase ridership on public transportation such as buses by 10%. The elasticity of demand is -0.50. The government must _______ the bus fare by _______.
raise, 20%
lower, 20%
none of these
lower, 10%
raise, 10%
The amount saved by people who buy the good at a price below their value for the good is called what?
Elasticity of supply
Consumer surplus
Elasticity of demand
none of these
Producer surplus
The pumpkin spice latte market begins in equilibrium At the same time that the price of pumpkin spice increases, it is determined that drinking any form of latte causes cancer. What do we expect to happen to the equilibrium quantity of pumpkin spice lattes.
we can't tell
stay the same
decrease
increase
The pumpkin spice latte market begins in equilibrium. At the same time that the price of pumpkin spice increases, it is determined that drinking any form of latte causes cancer. What do we expect to happen to the supply for pumpkin spice lattes?
increase
we can't tell
stay the same
decrease
The running shoes market starts in equilibrium. A machine is designed that can produce more shoes faster than the old machine. What do we expect to happen to the demand for running shoes?
Stay the same
We can't tell
Increase
Decrease
The fast food hamburger market starts in equilibrium. The price of beef increases. What do we expect to happen to the equilibrium price of fast food hamburgers?
Stay the same
We can't tell
Decrease
Increase
The running shoes market starts in equilibrium. A machine is designed that can produce more shoes faster than the old machine. We expect demand to change because...?
none of these
change in income
change in the price of a complement
there is no change in demand
The U.S. market for toilet paper starts in equilibrium. People in the U.S. hear that there is a shortage of toilet paper in other countries and are concerned that the shortage will come to the U.S. What doe we expect to happen to the equilibrium price of toilet paper in the U.S.?
We can't tell
Increase
Stay the same
Decrease
The fast food hamburger market starts in equilibrium. The price of beef increases. What do we expect to happen to the equilibrium quantity of fast food hamburgers?
Increase
Decrease
Stay the same
we can't tell
The running shoes market starts in equilibrium. A machine is designed that can produce more shoes faster than the old machine. We expect the supply of running shoes to change because of what?
none of these
change in technology
there is no change in supply
change in input prices
The pumpkin spice latte market begins in equilibrium. At the same time that the price of a pumpkin spice latte falls, it is determined that drinking any form of latte causes cancer. What do we expect to happen to the demand for pumpkin spice lattes?
Stay the same
Increase
Decrease
We can't tell
The airline travel market starts in equilibrium. At the same time that travel restrictions are implemented, which make travel less desirable, the price of jet fuel falls due to a world surplus in this market. What do we expect to happen to the supply of airplane travel?
Increase
Decrease
We can't tell
Stay the same
When we have a market price lower than equilibrium, we are said to have what?
No expectation of a price change
Pressure on the price to fall
A shortage of the good in the market
A market that is in equilibrium is efficient because of what?
supply equals demand
none of these
everyone who wants the good and can afford it get the good
all the goods produced are purchased
all of these
When we have a market price higher than equilibrium we are said to have what?
none of these
a shortage of the good
a surplus of the good
pressure for price to rise
no pressure for price to change
Market equilibrium is always efficient because supply equals demand. True or false?
True
False
When we have a market price lower than equilibrium, we are said to have a what?
A shortage of the good in the market
Pressure on the price to fall
A surplus of the good in the market
No expectation of a price change
If a market has a surplus of the good, we expect what?
a decrease in supply and an increase in demand
a decrease in the quantity supplied and an increase in the quantity demanded
an increase in supply and a decrease in demand
Market equilibrium is always fair because supply equals demand. True or false?
True
False
Market equilibrium is always efficient because supply equals demand. True or false?
True
False
We will always consume a good until the marginal utility is zero. True or false?
True
False
When will we consume until marginal utility is zero?
none of these
only when we are constrained by time or money
never, marginal utility never reaches zero
never, as there is always constraint of time or income
Given the information in the lecture, would you be comfortable in saying that because Bundle 1 gives Hal 10 units of utility and Bundle 2 gives Hal 30 units of utility, Hall prefers Bundle 2 three times as much as Bundle 1?
True
False
Assume bananas cost $1 a bunch and pretzels cost $2 a bag. If Pat's marginal utility for the last bunch of bananas is 5 and marginal utility of the last bag of pretzels consumed is 10, we can say that Pat is maximizing utility. True or false?
True
False
If we say an economic agent is ______ we mean that they are focused on utility.
None of these
self-interested
rational
selfish
altruistic
In economics, we prefer ______ measure of utility over ______ measure because ______.
Ordinal, cardinal, our utility functions are imprecise because we make them up
Cardinal, ordinal, our utility functions are carefully crafted to reflect reality
Cardinal, ordinal, our utility functions are imprecise as we make them up
Ordinal, cardinal, our utility functions are carefully crafted to reflect reality
We assume an economic agent to be what?
Rational
Altruistic
Selfish and altruistic
Rational and self-interested
Selfish
If Chris is maximizing utility under the Rational Spending Rule, and the marginal utility of the last unit of Good 1 is 20, the marginal utility of the last unit of Good 2 is 160, and the price of good 1 is 5, what is the price of Good 2?
40
15
60
none of these
What is the long run?
The amount of time it takes to change the amount of capital
The amount of time it takes to change labor
The amount of time it takes to be able to change all inputs
The amount of time over which no inputs can be changed
In economics, what is the motivation of all firms?
To balance the views of all stakeholders
To minimize costs
To maximize profits
To maximize revenue
What is economics in the short run?
One year
Six months
None of these
The length of time needed to change capital
If we observe decreasing marginal productivity of labor, what must be true of total output?
It is negative
It is positive
It must stay the same
The marginal productivity of labor is defined as the additional labor needed to produce an additional unit of output. True or false?
True
False
If a firm has labor contracts that are in place for 4 years, and the lease on the building where the business operates is 7 years long. The short run is defined as what?
The length of time is fixed (7 years)
The length of time labor is fixed
Four years
None of these
The marginal productivity of labor is defined as the additional output produced by an additional unit of labor. True or false?
True
False
Accounting profit is always _______ economic profit because economic profit _______.
Greater than, excludes opportunity cost
Greater than, includes opportunity cost
Less than, excludes opportunity cost
Less than, includes opportunity cost
On a graph showing Average Total Cost and Average Variable Cost...
ATC is above AVC by the distance of Average Fixed Costs
none of these
ATC is above AVC by the distance of Fixed Costs
ATC is below AVC by the distance of Fixed Costs
ATC is below AVC by the distance of Average Fixed Costs
The Marginal Cost (MC) curve has a J-shape and a downward sloping part due to increasing marginal productivity of the input variable. True or false?
True
False
For small quantities of production, marginal costs are positive but falling because of what?
The marginal productivity of labor is falling
The marginal productivity of labor is increasing
None of these
The marginal productivity of labor is constant
If the quantity being produced is 10, ATC = 12, and AFC =4, what are the variable costs?
8
80
10
If marginal costs (MC) are above average variable cost (AVC), what must be true of AVCs?
They are decreasing
They stay the same
They are increasing
We can't tell
If demand for Good A is _____, most of the tax revenue for a sales tax on Good A is from _____ surplus.
inelastic, producer
inelastic, consumer
elastic, consumer
elastic, producer
If goods A and B are complements in consumption, their cross-price elasticity would be what?
Negative
Positive
Zero
Demand for salt is very inelastic. True or false?
True, the cost of salt represents a small part of the budget
True, salt has many substitutes
False, the demand for salt is very elastic
None of these
If two goods have a positive cross-price elasticity, we would say the goods are what?
Substitutes
Complements
Unrelated
We would expect the cross-price elasticity between Coca-Cola and Pepsi to be what?
Negative and inelastic
Negative and elastic
Positive and elastic
Positive and inelastic
Chris will only eat corn chips with salsa dip. We would expect the income elasticity for them to be what?
Negative and inelastic
Negative and elastic
Positive and elastic
Positive and inelastic
None of these
If demand is linear and price is on the inelastic portion of the demand curve, the firm can increase revenue by lowering price and selling more units. True or false?
True
False
The Law of Supply is a universal constant. True or false?
True
False
If we expect that input prices will remain constant into the future, we would further expect what?
An increase in supply
A decrease in the quantity supplied
None of these
An increase in the quantity supplied
A decrease in supply
The law of supply implies that if a firm could get $1 Million for a single soft drink, the firm would produce a lot more soft drinks than if they could get $1 for a single soft drink, even if no one is ever likely to pay $1 Million for a soft drink. True or false?
True
False
The definition of supply assumes there is usually a positive relationship between price and quantity supplied. True or false?
True
False
The definition of supply assumes there is always a positive relationship between price and quantity supplied. True or false?
True
False
Which would cause a decrease in supply?
An expectation that input prices will increase in the future
The price in the market price of the good
An increase in technology
none of these
An increase in an input price
If price on an inferior good increase, what will happen?
Demand will increase
Quantity demanded will increase
Demand will fall
Quantity demanded will fall
None of these
If Goods A and B are normal and the price of A increases, what will happen to the demand for Good B?
Decrease
Stay the same
Increase
We cannot tell with this information
If the price of a good stays the same, and the number of units people want to buy decreases, we call this a change in quantity demanded. True or false?
True
False
Assume the market for laptop computers starts in equilibrium. Miami University requires all students to have laptop computers in every class. What do we expect to happen to equilibrium price of laptop computers?
Increase
Decrease
Stay the same
We cannot tell
Assume the market for laptop computers starts at market equilibrium. Miami University requires all students to have a laptop. What do we expect to happen to the supply of laptop computers?
Decrease
Increase
Stay the same
We cannot tell
Assume the market for laptop computers starts in equilibrium. Miami University requires all students to have laptop computers in every class. What do we expect to happen to the demand for tablets?
Increase
Decrease
We cannot tell
Stay the same
Assume the market for laptop computers starts in equilibrium. There is a shortage of computer chips which forces up the price of computer chips. What do we expect to happen to the demand of laptops?
Decrease
Increase
Stay the same
We cannot tell
Assume the market for laptop computers starts in equilibrium. There is a shortage of computer chips which forces up the price of computer chips. What do we expect to happen to the equilibrium quantity of laptops?
Decrease
Increase
Stay the same
We cannot tell
Assume the market for laptop computers starts in equilibrium. There is a shortage of computer chips which forces up the price of computer chips. What do we expect to happen to the equilibrium price of laptops?
Increase
Decrease
We cannot tell
Stay the same
Assume the market for laptop computers starts in equilibrium. At the same time that Miami University requires all students to have laptop computers in every class, there is a shortage of computer chips which forces up the price of computer chips. What do we expect to happen to the equilibrium quantity of laptop computers?
Stay the same
Increase
Decrease
We cannot tell
The negative slope of the demand curve is caused in part by decreasing marginal utility. True or false?
True
False
If Bundle 1 has a utility of 30, and Bundle 2 has a utility of 60, and we use a _________ measure of utility, we can only say Bundle 2 has more utility than Bundle 1.
Plain
Ordinal
Cardinal
None of these
We define _________ as doing only those things that we believe that will not make us worse off.
Rationality
Self-interest
Altruism
Selfishness
If Bundle 1 has utility of 30, and Bundle 2 has a utility of 60, and we use a ________ measure of utility, we can say the Bundle 2 has twice as much utility as Bundle 1.
Plain
Ordinal
Cardinal
None of these
___________ means that you gain utility by doing things for other.
Rationality
Self-interest
Altruism
Selfishness
It is possible to be concerned about and want to help others while still being self-interested. True or false?
True
False
If the next worker we hire adds mor to production than the worker we hired before, we can say what?
Marginal productivity of labor is increasing
Marginal productivity of labor is decreasing
Total output is decreasing
Output is maximized
The marginal productivity of labor is defined as the amount of output produced by a particular level of input. True or false?
True
False
Assume the marginal productivity of labor is falling. If output changed from 10 to 15 when the firm hired Pat, what do we know about the total output when they hire next?
must equal 20
must be less than 20
must be greater than 20
A firm earning positive accounting profit will operate. True or false?
True
False
Uncertain
Assume the market for oranges is perfectly competitive and starts in long-run equilibrium. It is a constant cost industry. As people receive their stimulus checks from the government, what do we expect to happen to long run price and quantity produced for an orange grower?
Price and quantity produced will stay the same
Price and quantity produced will both increase
Price and quantity produced will both decrease
We cannot tell
Which assumption is key in perfect competition as we move from short run to long run equilibrium?
Perfect factor mobility
Perfect information
Many buyers
Many sellers
Long run equilibrium in perfect competition assumes that profit for every firm is what?
Positive
Negative
Zero
In a constant cost industry, a fall in demand will lead input prices to ________ as firms _______ the market.
Increase, exit
Decrease, exit
Increase, enter
Decrease, enter
None of these
In an increasing cost industry, a fall in demand will lead input prices to ______ as firms ______ the market.
Increase, exit
Decrease, exit
Increase, enter
Decrease, enter
None of these
Even in perfect competition, it is possible to increase social welfare by enforcing a lower market price. True or false?
True
False
All monopolies in the U.S. are illegal or closely regulate by the government. True or false?
True
False
If a firm is operating with diseconomies of scale in order to reduce per-unit costs, they should what?
Increase production
Decrease production
Keep production the same
We cannot tell with this information
A natural monopoly often exists because of large and "lumpy" investment capital. True or false?
True
False
A firm with increasing return to scales can expect output to ______ if it doubles in its inputs.
Exactly double
More than double
Less than double
None of these
