MICROECONOMICS - TEST ONE Essays - Market, Consumer Theory

MICROECONOMICS - TEST ONE NAME __________________________________ Forty-four multiple choice questions, each worth 2 points; and two short-answer questions, each worth 6 points. For each question, circle the best answer. 1.The study of economics is primarily concerned with: A)keeping private businesses from losing money. B)keeping economics professors from starving to death. C)choices that are made in seeking to use scarce resources efficiently. D)determining the most equitable (fair) distribution of the government's money. 2.Even though the Orlando Sentinel is inexpensive, people rarely buy more than one of them each day. This fact: A)is an example of irrational behavior. B)implies that reading should be taught through phonics rather than the whole language method. C)contradicts the economic perspective. D)implies that, for most people, the marginal benefit of reading a second newspaper is less than the marginal cost. 3.The basic purpose of the "other things equal" (ceteris paribus) assumption is to: A)allow one to reason about the relationship between price and quantity of X without the intrusion of a change in the price of Z. B)allow one to focus upon micro variables by ignoring macro variables. C)allow one to focus upon macro variables by ignoring micro variables. D)allow one to reason about the relationship between revenues and expenses of a business. 4.Which of the following is a microeconomic statement? A)The real U.S. output increased by 2.5 percent last year. B)Unemployment was 6.8 percent of the U.S. labor force last year. C)The price of personal computers declined last year. D)The general price level (inflation) increased by 4 percent last year. 5.The problems of aggregate (at the national level) inflation and unemployment are: A)major topics of macroeconomics. B)not relevant to the U.S. economy. C)major topics of microeconomics. D)peculiar to socialistic economies. 6."If you leave a football game at the end of the third quarter, you will avoid traffic and get home more quickly. Therefore, everyone should leave the game early." This illustrates the: A)"sore loser syndrome" (loser doesn't want to see the end of the game when his team is losing.) B)adverse selection problem. C)fallacy of division. D)fallacy of composition. 7.If we say that two variables are inversely related, this means that: A)the two graph as an upsloping line. B)an increase in one variable is associated with a decrease in the other. C)an increase in one variable is associated with an increase in the other. D)the resulting relationship can be portrayed by a straight line parallel to the horizontal axis. Use the following to answer question 8: 8.Answer on the basis of the relationships shown in the above four figures. The amount of Y is inversely related to the amount of X in: A)2 only. B) both 1 and 3.C) 3 only.D) 1 only. 9.The fundamental problem of economics is: A)to establish a democratic political framework for the smooth operation of the government. B)the establishment of prices that reflect the relative scarcities of products and resources. C)dealing with the scarcity of productive resources relative to an unlimited number of economic wants. D)What do I do to get out of poverty? 10.Which of the following is real capital (as we define it in economics)? A)a pair of stockings B) a construction craneC) a savings accountD) a share of IBM stock 11.Economics can best be defined as the study of: A)how to profitably invest one's income in stocks and bonds. B)how to use scarce productive resources efficiently. C)how government policies affect businesses and labor. D)managing business enterprises for profit. 12.A production possibilities curve shows: A)that resources are unlimited. B)that people prefer one of the goods more than the other. C)the maximum amounts of two goods that can be produced assuming the full and efficient use of available resources. D)combinations of labor only necessary to produce specific levels of output. 13.Opportunity cost is best defined as: A)the monetary price of any productive resource. B)the amount of labor that must be used to produce one unit of any product. C)the ratio of the prices of imported goods to the prices of exported goods. D)the amount of one product that must be given up to produce one more unit of another product. 14."Allocative efficiency" refers to: A)the use of the least-cost method of production. B)the production of the product-mix most wanted by society. C)the full employment of all available resources. D)production at some point inside