The Ultimate Microeconomics Knowledge Test Part II

48 Questions | Total Attempts: 248

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Microeconomics Quizzes & Trivia

Welcome to The Ultimate Microeconomics Knowledge Test Part II. The following quiz takes a unique approach to microeconomics, as we take a look at some of the more unconventional methods for how a firm or individual might be able to decide how to efficiently and effectively allocate scarce resources. Do you think you’re the kind of person who understands how all of this works? Take the following quiz and we’ll see if you’re right! Good luck!


Questions and Answers
  • 1. 
    The earliest unions in the US were ____
  • 2. 
    A government imposed restriction on the quantity of a specific good that can be imported
  • 3. 
    This act permits states to pass right to work laws
  • 4. 
    An Increase in the countries rate of inflation is apt to
    • A. 

      Decrease demand for the countries currency

    • B. 

      Worsen it's balance of trade and payments

    • C. 

      Lower its nominal rate of interest and encourage an inflow of capitol

    • D. 

      Reduce its imports and improve its trade balance

  • 5. 
    The principle of comparitive advantage essentially states that
    • A. 

      Total output of an economic system is greatest when each good is produced by those who have the lowest opportunity cost of producing the good

    • B. 

      Specialization can reduce output rather than increase it

    • C. 

      Some goods have high opportunity costs and low absolute costs

    • D. 

      There are some goods for which the opportunity costs of production are the same regardless of who produces them

  • 6. 
    In a Lorenz curve perfect income equality is given by
    • A. 

      A 45 degree line originating from the origin

    • B. 

      A rectangular hyperbola

    • C. 

      A horizontal line

    • D. 

      A vertical line

  • 7. 
    Flexible exchange rates are determined by
    • A. 

      The IMF

    • B. 

      The forces of supply and demand

    • C. 

      The government of the importing country

    • D. 

      The government of the exporting country

  • 8. 
    The fact that the United States has a trade deficit means that
    • A. 

      The United States is a bad place to invest capitol

    • B. 

      The economy in our country is weak and we cannot compete with the Japanese

    • C. 

      The United States has a surplus in its capital account

    • D. 

      The United States has a deficit in its capital account

  • 9. 
    The marginal cost of a unit of labor in a perfectly competitive labor market is
    • A. 

      Its average MRP

    • B. 

      Equal to product price

    • C. 

      The market wage rate

    • D. 

      Equal to MRP

  • 10. 
    A closed shop is a business enterprise in which
    • A. 

      Employees cannot belong to a union when they are employed, and cannot join a union and keep working there

    • B. 

      Employees must join the union to maintain employment

    • C. 

      Employees must belong to the union before they can be employed

    • D. 

      Employees cannot belong to the union when they are hired but may join the union later and keep their jobs

  • 11. 
    Absolute advantage is defined as
    • A. 

      Having a lower average fixed cost in production of a good than does someone else

    • B. 

      The ability to use more input of resources than others can

    • C. 

      The ability to produce more output from given inputs of resources than others can

    • D. 

      The ability to produce more output of one good relative to another good than another country can

  • 12. 
    The Bretton Woods agreement established the
    • A. 

      Gold standard

    • B. 

      G-7

    • C. 

      System of managed flexible exchange rates

    • D. 

      International Monetary Fund

  • 13. 
    The purpose of the Supplemental Security Income program is
    • A. 

      To supplement Social Security for the elderly with medical problems

    • B. 

      To provide a minimum income for the aged, blind and disabled

    • C. 

      To provide a guaranteed minimum income for all Americans

    • D. 

      To provide a minimum income for all households with children

  • 14. 
    The General Agreement on Tariffs and Trade is an international agreement
    • A. 

      To establish the North American continent as a free trade area

    • B. 

      To encourage peaceful settle of trade disputes but no particular point of view about the desirability of higher or lower tariffs

    • C. 

      To encourage world trade by lowering tariffs and other trade barriers

    • D. 

      To make all tariffs illegal

  • 15. 
    The monopsonistic exploitation of labor refers to
    • A. 

      The reduction in total output from monopoly in the product market

    • B. 

      The union wage differential

    • C. 

      Workers being paid less than their marginal revenue product

    • D. 

      The reduction in employment resulting from union wage setting

  • 16. 
    Karl Marx argued that income should be distributed
    • A. 

      According to desire

    • B. 

      According to need

    • C. 

      According to productivity

    • D. 

      So as to provide the strongest incentive to work

  • 17. 
    According to economic historians, one characteristiv of international trade is that it
    • A. 

      Aids in the international transmission of ideas

    • B. 

      Reduces the world wide output of goods

    • C. 

      Reduces the world wide consumption of goods

    • D. 

      Causes persistent world wide inflation

  • 18. 
    Special Drawing Rights (SDRs) are
    • A. 

      A reserve asset created by the International Monetary Fund that countries can use to settle international payments

    • B. 

      A liability payment from a branch bank to nation's central bank

    • C. 

      A country's surpluses in their fiscal budgets

    • D. 

      Exchanges of gold between nations

  • 19. 
    The foreign exchange rate describes the
    • A. 

      Balance of trade

    • B. 

      Balance of payments

    • C. 

      Law of comparitive advantage

    • D. 

      Price of a foreign currency in terms of a domestic currency

  • 20. 
    The more bowed the Lorenz curve the
    • A. 

      Less equal the income distribution

    • B. 

      More equal the income distribution

    • C. 

      Greater the overall wealth in the economy

    • D. 

      Less overall wealth in the economy

  • 21. 
    The fact that there is a minus sign before the number for unilateral transfers means that
    • A. 

      Country x has significant inflation

    • B. 

      Country x imported more goods than it exported

    • C. 

      Country x recieved more in foreign aid than it gave in foreign aid

    • D. 

      Country x game more to foreigners than foreigners gave to country x

  • 22. 
    The monopsonist will employ labor at the point where the
    • A. 

      Marginal factor cost equals the marginal revenue product of labor

    • B. 

      Marginal revenue product equals the wage rate

    • C. 

      Marginal cost of output equals the marginal revenue

    • D. 

      Demand equals the supply of labor

  • 23. 
    The percentage of national income spent on health care
    • A. 

      Has steadily decreased since 1965

    • B. 

      Has steadily increased since 1965

    • C. 

      Increased until the end of the 1970s and then decreased in the 1980s and 1990s

    • D. 

      Decreased until the end of the 1970s and then increased in the 1980s and 1990s

  • 24. 
    The balance of payments is
    • A. 

      The value of goods and services bought and sold in the world market

    • B. 

      A summary records of a country's economic transactions with foreign residents and governments

    • C. 

      A summary record of a country's purchases and sales of goods and services in the world market

    • D. 

      The value of merchandise goods bought and sold in the world market

  • 25. 
    A right to work law makes it illegal for
    • A. 

      Emplyers to refuse to hire union workers

    • B. 

      Union membership to be a requirement for continued employment in any establishment

    • C. 

      Union membership to be denied on the basis of race, gender or national origin

    • D. 

      A union to exist in state