On Microeconomics: Quiz

41 Questions

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Microeconomics Quizzes & Trivia

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Questions and Answers
  • 1. 
    A recurring theme in economics is
    • A. 

      Unlimited resources and unlimited economic wants

    • B. 

      People can increase resources by limiting their economic wants

    • C. 

      People have limited economic wants and limited resources

    • D. 

      People have unlimited economic wants, but limited resources

  • 2. 
    Opportunity cost is best defined as 
    • A. 

      Marginal cost minus marginal benefit

    • B. 

      The time spent on an economic activity

    • C. 

      The value of the best foregone alternative

    • D. 

      The money cost of an economic decision

  • 3. 
    • A. 

      What is the current national rate of unemployment?

    • B. 

      Is the economy experiencing a decline in the rate of inflation

    • C. 

      Will a new type of television set increase the number of buyers

    • D. 

      Is the production of goods and services in the economy greater this year than last year?

  • 4. 
    Macroeconomics focuses on
    • A. 

      The working of the whole economy or large sectors of it

    • B. 

      The pricing decisions of a large company in an economy

    • C. 

      Studies of how competition in an industry affects economic efficiency

    • D. 

      Studies of how a business determines how to make the best use of the factors of production

  • 5. 
    Which is not considered to be an economic resource 
    • A. 

      Land

    • B. 

      Money

    • C. 

      Labor

    • D. 

      Tools and machinery

  • 6. 
    • A. 

      The maximum amount of labor and capital available for production

    • B. 

      Combinations of goods and services among which consumers are indifferent

    • C. 

      Maximum combinations of products available with fixed resources and technology

    • D. 

      The maximum rate of growth of capital and labor in an economy

  • 7. 
    A point inside the production possibilities curve is
    • A. 

      Attainable and the economy is efficient

    • B. 

      Attainable but the economy is inefficient

    • C. 

      Unattainable but the economy is inefficient

    • D. 

      Unattainable and the economy is efficient

  • 8. 
    A point outside the production possibilities curve is
    • A. 

      Attainable but there is not full employment

    • B. 

      Attainable but there is not optimal allocation

    • C. 

      Unattainable because the economy is inefficient

    • D. 

      Unattainable because of limited resources

  • 9. 
    The production possibility curve 
    • A. 

      Is convex to the origin

    • B. 

      Is based on the law of diminishing returns

    • C. 

      Is the boundary between attainable and unattainable outputs

    • D. 

      Reflects the mixed economy found with most economic systems

  • 10. 
    The law of increasing opportunity costs says that
    • A. 

      Cost of production increase and then decrease

    • B. 

      Increase in wages cause increases in the costs of production

    • C. 

      Along a production possibilities curve, increases in the production of one type of good require larger and larger sacrifices of the other type of good

    • D. 

      Along a production possibilities curve, deceases in the production of one type of good require larger and larger sacrifices of the other type of good

  • 11. 
    Capitalism is an economic system that
    • A. 

      Produces more capital goods than consumer goods

    • B. 

      Produces more consumer goods than capital goods

    • C. 

      Gives the government the right to tax individuals and corporations

    • D. 

      Gives private individuals and corporations the right to own productive resources

  • 12. 
    Which would not be a characteristic of a capitalist economy.
    • A. 

      Government ownership of the factors of production

    • B. 

      Competition and unrestricted markets

    • C. 

      Reliance on the market system

    • D. 

      Free enterprise and choice

  • 13. 
    Which is a key feature of the market system
    • A. 

      Price floors and price ceilings in all markets

    • B. 

      Reallocation of all resources from private to public uses

    • C. 

      The right to own private property and control resource use

    • D. 

      Central planning by government to provide goods and services

  • 14. 
    Which is necessary to make a trade in a barter economy
    • A. 

      Money

    • B. 

      Unlimited wants

    • C. 

      A medium of exchange

    • D. 

      A coincidence of wants

  • 15. 
    The idea that the desires of resource suppliers and producers to further their own self-interest will automatically further the public interest is known as
    • A. 

      Consumer sovereignty

    • B. 

      The invisible hand

    • C. 

      Derived demand

    • D. 

      Profit maximization

  • 16. 
    The influential book written by Adam Smith was 
    • A. 

      The Worldly Philosophers

    • B. 

      The Affluent Society

    • C. 

      The Age of Economist

    • D. 

      The Wealth of Nations

  • 17. 
    A market demand schedule for a product indicates that
    • A. 

      As the product's price falls, consumers buy less of the good

    • B. 

      As a product's price rises, consumers buy less of other goods

    • C. 

      There is a direct relationship between price and quantity demanded

    • D. 

      There is an inverse relationship between price and quantity demanded

  • 18. 
    A lower price increases the quantity demanded because 
    • A. 

      The purchasing power of individuals decreases

    • B. 

      The financial assets of individuals decrease

    • C. 

      Individuals buy more of the product and less of a substitute

    • D. 

      Individuals buy less of the product and more of a substitute

  • 19. 
    Which will not, ceteris paribus, cause the demand curve for good A to shift?
    • A. 

      A change in the price of A

    • B. 

      A change in the price of B, a complement

    • C. 

      A change in the price of C, a substitute

    • D. 

      An increase in average income

  • 20. 
    A normal good is one
    • A. 

      Which people like

    • B. 

      Which all normal people like

    • C. 

      For which demand increases when price decreases

    • D. 

      For which demand increases when income increases

  • 21. 
    • A. 

      The demand curve has shifted to the left

    • B. 

      The product has become particularly scarce for some reason

    • C. 

      The product price has increased and as a consequence consumers are buying less of the product

    • D. 

      Consumers are now willing and able to purchase more of this product at each possible price

  • 22. 
    The law of supply is illustrated by a supply curve that is
    • A. 

      Vertical

    • B. 

      Horizontal

    • C. 

      Upward sloping

    • D. 

      Downward sloping

  • 23. 
    Which will not cause the supply curve to shift
    • A. 

      A change in resource costs

    • B. 

      A technological change

    • C. 

      A change in the price of the good

    • D. 

      A change in the prices of other goods

  • 24. 
    There is a shortage in a market for a product when
    • A. 

      The increase in supply is greater than the increase in demand

    • B. 

      The increase in demand is greater than the increase in supply

    • C. 

      Quantity demanded is less than quantity supplied

    • D. 

      Quantity demanded is greater than quantity supplied

  • 25. 
    If the market price is above the equilibrium price
    • A. 

      A shortage will occur and producers will produce more and lower prices

    • B. 

      A surplus will occur and producers will produce less and lower prices

    • C. 

      A surplus will result and consumers will bid prices up

    • D. 

      Producers will make extremely high profits

  • 26. 
    A headline reads "storms destroy half of the lettuce crop." this situation would lead to a(n)
    • A. 

      Increase in the price of lettuce and quantity purchased

    • B. 

      Decrease in the price of lettuce and quantity purchased

    • C. 

      Increase in the price of lettuce and decrease in quantity purchased

    • D. 

      Decrease in the price of lettuce and increase in the quantity purchased

  • 27. 
    • A. 

      Affect price in an indeterminate way and decrease the equilibrium quantity

    • B. 

      Increase price and increase the equilibrium quantity

    • C. 

      Affect price in an indeterminate way and increase the equilibrium quantity

    • D. 

      Decrease price and increase the equilibrium quantity

  • 28. 
    What combination of changes in supply and demand would most likely increase the equilibrium price
    • A. 

      When supply increases and demand decreases

    • B. 

      When supply decreases and demand increases

    • C. 

      When supply decreases and demand decreases

    • D. 

      When supply increases and demand increases

  • 29. 
    The richest 20 percent of all households receives about what proportion of total income in the united states
    • A. 

      20 percent

    • B. 

      50 percent

    • C. 

      68 percent

    • D. 

      91 percent

  • 30. 
    A nondurable good is a product that
    • A. 

      Is constructed with flexible materials

    • B. 

      Is used only for personal consumption

    • C. 

      Has an expected life of 3 years or less

    • D. 

      Has an expected life of 3 years or more

  • 31. 
    The type of business that is most common is the
    • A. 

      Partnership

    • B. 

      Corporation

    • C. 

      Conglomerate

    • D. 

      Sole proprietorship

  • 32. 
    Person consumption expenditures constitute about what proportion of total income in the united states
    • A. 

      16 percent

    • B. 

      49 percent

    • C. 

      88 percent

    • D. 

      99 percent

  • 33. 
    The most effective form of business organization for raising money to finance the expansion of its facilities and capabilities is a
    • A. 

      Partnership

    • B. 

      Corporation

    • C. 

      Conglomerate

    • D. 

      Sole proprietorship

  • 34. 
    Which of the following is correct
    • A. 

      A person who purchases a corporate bond is borrowing money from a corporation

    • B. 

      A person who purchases a corporate stock is buying ownership in the corporation

    • C. 

      A person who purchases a corporate bond is guaranteed to earn dividends from the stock

    • D. 

      A person who purchases a corporate stock gets the option to buy other shares at lower prices

  • 35. 
    One principal advantage of the corporations is that owners
    • A. 

      Are not taxed for income received

    • B. 

      Always control the company

    • C. 

      Are sole proprietors

    • D. 

      Have limited liability

  • 36. 
    When the government provides price-support programs for farms or minimum-wage legislation it is primarily implementing these economic policies to
    • A. 

      Maintain competition

    • B. 

      Stabilize the economy

    • C. 

      Redistribute income

    • D. 

      Maintain a legal and social framework

  • 37. 
    Examples of transfer payments are
    • A. 

      Benefits provided by social security and unemployment insurance

    • B. 

      Salaries of the police and other government employees

    • C. 

      Federal government spending for national defense

    • D. 

      Wages, profits, and rents

  • 38. 
    A pure market economy tends to produce too much of goods which
    • A. 

      Involve spillover costs

    • B. 

      Are public goods

    • C. 

      Have high prices

    • D. 

      Are not scarce

  • 39. 
    Supply is constant and demand decreases 
    • A. 

      Price increases

    • B. 

      Price deceases

    • C. 

      Quantity increases

    • D. 

      Quantity decreases

    • E. 

      Unknown

  • 40. 
    Demand increases and supply decreases
    • A. 

      Price increases

    • B. 

      Price deceases

    • C. 

      Quantity increases

    • D. 

      Quantity decreases

    • E. 

      Unknown

  • 41. 
    Supply is constant and demand inccreases
    • A. 

      Price increases

    • B. 

      Price deceases

    • C. 

      Quantity increases

    • D. 

      Quantity decreases

    • E. 

      Unknown