Quiz: Microeconomics True/False Questions

52 Questions | Total Attempts: 481

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Quiz: Microeconomics True/False Questions

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Questions and Answers
  • 1. 
    A number of years ago, a company that is now out of business disposed of its chemical waste products by spraying them on the ground. It will take the EPA millions of dollars to clean up this site. This situation is an example of an externality. 
    • A. 

      True

    • B. 

      False

  • 2. 
    A market economy is usually an efficient method of organizing economic activity.
    • A. 

      True

    • B. 

      False

  • 3. 
    The statement, "The government should step in to increase farm subsidies in times of drought," is an example of a normative economic statement. 
    • A. 

      True

    • B. 

      False

  • 4. 
    A critical part of economic modeling is to make the correct assumptions for the model. 
    • A. 

      True

    • B. 

      False

  • 5. 
    When considering two goods, two countries will benefit from trading the goods only when one country has an absolute advantage over teh other in the production of both goods. 
    • A. 

      True

    • B. 

      False

  • 6. 
    The reason trade makes everyone better off is that businesses can specialize in the things in which they can best use their resources, then trade for the things they are not so efficient at producing. 
    • A. 

      True

    • B. 

      False

  • 7. 
    For some goods and services, it would be wise for a society to produce at a level inside the production possibilities frontier. 
    • A. 

      True

    • B. 

      False

  • 8. 
    The statement, " A cut in income tax rates spurs growth in the economy." is an example of a positive economic statement. 
    • A. 

      True

    • B. 

      False

  • 9. 
    According to the table above, Country B has an absolute advantage in the production of rifles. 
    • A. 

      True

    • B. 

      False

  • 10. 
    In the table above, the opportunity cost for Country B to produce a rifle would be 18.75 pounds of butter. 
    • A. 

      True

    • B. 

      False

  • 11. 
    According to the table, Country A has a comparative advantage in the production of butter. 
    • A. 

      True

    • B. 

      False

  • 12. 
    The principle of comparative advantage is the basis for most arguments in favor of free trade. 
    • A. 

      True

    • B. 

      False

  • 13. 
    Most economists believe that if inflation goes down, unemployment will go down in the short term. 
    • A. 

      True

    • B. 

      False

  • 14. 
    A government program that provides free medical care to low-income mothers with small children is an example of a government intervention in the market because of equity concerns. 
    • A. 

      True

    • B. 

      False

  • 15. 
    Jessica Campbell is considering two possible jobs after graduation. One pays $35,000 per year, but requires a move to California. The other pays $30,000 per year for a similar job, but is nearby. If Jessica chooses the nearby job, the opportunity cost of the decision would be $30,000. 
    • A. 

      True

    • B. 

      False

  • 16. 
    Because economic policies are based on past economic research, economists seldom disagree about economic policy. 
    • A. 

      True

    • B. 

      False

  • 17. 
    In Bangladesh, the average worker earns about $250 per year. One should expect that Bangladesh would also be an economy with low productivity. 
    • A. 

      True

    • B. 

      False

  • 18. 
    In the long term, a country would not be able to shift its production possibilities curve for particular goods or services without finding new resources, improving its technology, or becoming more efficient in using its resources. 
    • A. 

      True

    • B. 

      False

  • 19. 
    If a producer faces unit elastic demand for his or her product, there are no market incentives to either raise or lower product prices. 
    • A. 

      True

    • B. 

      False

  • 20. 
    Market supply is a horizontal summation of the supply curves for all producers willing and able to supply their product to the market in a given length of time. 
    • A. 

      True

    • B. 

      False

  • 21. 
    Rumors are flying down at the coffee shop that the largest employer in town is about to announce layoffs. This would tend to shift the demand curve for cars at local car dealers to the left. 
    • A. 

      True

    • B. 

      False

  • 22. 
    Pork  and beef are substitute meat products. This relationship means that if the price for beef goes up, demand for pork goes down. 
    • A. 

      True

    • B. 

      False

  • 23. 
    As the time period increases, most products will become more elastic in their price elasticity of demand. 
    • A. 

      True

    • B. 

      False

  • 24. 
    Producers who manufacture products with inelastic demand have market incentives to lower prices. 
    • A. 

      True

    • B. 

      False

  • 25. 
    The Environmental Protection Agency has just put a regulation in place that will increase the cost of production for coal miners. The new regulation impact the market by causing the supply curve for coal to shift to the left. 
    • A. 

      True

    • B. 

      False