Abm 311 Intermediate Microeconomics Theory Preliminary Examination

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  • 1/51 Questions

    These are goods needed for basic living.

    • Necessity goods
    • Comfort goods
    • Luxury goods
    • None of the above
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About This Quiz

This intermediate microeconomics theory exam assesses understanding of how resources are utilized to meet consumer needs, the role of microeconomics in decision-making processes, and economic responses to price changes. Essential for students specializing in economics.

Abm 311 Intermediate Microeconomics Theory Preliminary Examination - Quiz

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  • 2. 

    Poor weather conditions, such as a severe drought, cause crop shortages which shift the supply curve to the left.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    Severe drought and other poor weather conditions can negatively impact crop production, leading to crop shortages. When there is a decrease in the supply of crops, the supply curve shifts to the left, indicating a decrease in the quantity of crops available in the market. Therefore, the statement that poor weather conditions cause crop shortages and shift the supply curve to the left is true.

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  • 3. 

    These are goods that make life more comfortable and happier.

    • Necessity goods

    • Comfort goods

    • Luxury goods

    • None of the above

    Correct Answer
    A. Comfort goods
    Explanation
    Comfort goods refer to products or goods that enhance the comfort and happiness of individuals. These goods are not essential for survival but are desirable for a better quality of life. They provide convenience, pleasure, and a sense of well-being to consumers. Examples of comfort goods include luxury bedding, electronic gadgets, spa treatments, and recreational items. Unlike necessity goods that are required for basic needs and luxury goods that are extravagant and expensive, comfort goods fall in between, offering a moderate level of comfort and enjoyment.

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  • 4. 

    As incomes rise, consumers can afford to buy more, and this shifts the demand curve to the right if the good is a normal good.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    As incomes rise, consumers have more money to spend on goods and services. This increased purchasing power allows them to buy more of a particular good, leading to a shift in the demand curve to the right. This is because the demand for normal goods, which are goods that people buy more of as their incomes increase, increases as income rises. Therefore, the statement is true.

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  • 5. 

    ________ studies an overall economy on both a national and international level.

    Correct Answer
    Macroeconomics,macroeconomics,MACROECONOMICS
    Explanation
    The correct answer is "Macroeconomics". Macroeconomics is a branch of economics that studies the overall economy on both a national and international level. It focuses on factors such as economic growth, inflation, unemployment, and government policies that affect the economy as a whole. By analyzing these factors, macroeconomics provides insights into the performance and behavior of the entire economy, rather than individual markets or industries.

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  • 6. 

    ________ is the quantity that consumers are willing and able to buy in the market at various prices during a particular time period.

    Correct Answer
    Demand,demand,DEMAND
    Explanation
    The correct answer is "demand." Demand refers to the quantity of a product or service that consumers are willing and able to purchase at different prices during a specific time frame. It represents the consumer's desire and ability to buy a product at various price points. The demand curve shows the relationship between price and quantity demanded, indicating that as prices decrease, the quantity demanded typically increases, and vice versa. Understanding demand is crucial for businesses to determine pricing strategies and forecast market trends.

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  • 7. 

    As a result of increasing price of goods, people will naturally avoid buying a product that will force them to forgo the consumption of something else they value more. 

    • True

    • False

    Correct Answer
    A. True
    Explanation
    Increasing the price of goods will lead people to prioritize their spending and avoid purchasing a product that would require them to give up something else they value more. This is because individuals have limited resources and must make choices based on their preferences and budget constraints. Therefore, it is true that people will naturally avoid buying a product that would force them to forgo the consumption of something else they value more.

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  • 8. 

    It is a collection of buyers and sellers and interact, resulting in the possibility for exchange.

    • Industry

    • Market

    • Production

    • None of the above

    Correct Answer
    A. Market
    Explanation
    A market refers to a group of buyers and sellers who come together to interact and engage in exchange activities. It is a place or platform where goods, services, or resources are bought and sold. In a market, buyers and sellers negotiate prices and quantities, leading to the establishment of equilibrium prices and the allocation of resources. Therefore, a market is the correct answer as it accurately describes the concept of a collection of buyers and sellers interacting for exchange.

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  • 9. 

    ________ is defined as the quantities that sellers are willing and able to place on the market at different prices during a particular time period

    Correct Answer
    Supply,supply,SUPPLY
    Explanation
    The answer is "Supply" because it is the term that refers to the quantities that sellers are willing and able to place on the market at different prices during a particular time period. The repetition of "supply" in the question and answer emphasizes its importance in the context of the given definition.

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  • 10. 

    Changes in emotional and psychological wants can shift demand in either right or left.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    Changes in emotional and psychological wants can indeed shift demand in either direction, whether it be to the right or to the left. This is because consumer preferences and desires are not fixed and can be influenced by various factors such as trends, marketing strategies, personal experiences, and societal influences. As a result, changes in emotions and psychological factors can lead to fluctuations in demand for certain products or services, either increasing or decreasing the quantity demanded.

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  • 11. 

    It focuses on how individual consumers and firm make decisions; these individuals can be a single person, a household, a business/organization or a government agency.

    • Economics

    • Microeconomics

    • Macroeconomics

    • None of the above

    Correct Answer
    A. Microeconomics
    Explanation
    Microeconomics is the correct answer because it specifically deals with the behavior and decision-making of individual consumers and firms. It analyzes how these economic agents allocate their resources and make choices in order to maximize their utility or profit. It studies the supply and demand of goods and services at the individual level, as well as factors such as pricing, production, and market competition. In contrast, macroeconomics focuses on the overall performance and behavior of the entire economy, including aspects like inflation, unemployment, and GDP.

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  • 12. 

    The focus of ________ can include a distinct geographical region, a country, a continent, or even the whole world.

    Correct Answer
    Macroeconomics,macroeconomics,MACROECONOMICS
    Explanation
    Macroeconomics is the correct answer because it is the branch of economics that focuses on the behavior and performance of an economy as a whole. It examines aggregate measures such as GDP, inflation, and unemployment, and analyzes the factors that influence them. Macroeconomics can be applied to various levels, from a specific geographical region to the entire world, making it a suitable choice for the given statement.

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  • 13. 

    Rising cost of inputs will cause the supply curve to shift to the left. 

    • True

    • False

    Correct Answer
    A. True
    Explanation
    When the cost of inputs increases, it becomes more expensive for producers to produce goods and services. As a result, they may reduce their level of production, leading to a decrease in the quantity supplied at each price level. This causes the supply curve to shift to the left, indicating a decrease in supply. Therefore, the statement "Rising cost of inputs will cause the supply curve to shift to the left" is true.

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  • 14. 

    It studies how individuals, firms, and society choose to combine scarce resources (land, labor, capital, and management) to satisfy unlimited wants and best meet consumer needs.

    • Economics

    • Microeconomics

    • Macroeconomics

    • None of the above

    Correct Answer
    A. Economics
    Explanation
    Economics is the correct answer because it encompasses the study of how individuals, firms, and society make choices in order to allocate limited resources to fulfill unlimited wants and satisfy consumer needs. It involves analyzing the production, distribution, and consumption of goods and services, as well as the behavior and interactions of individuals, businesses, and governments in the economy.

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  • 15. 

    Market equilibrium is the condition where there is no pressure for price to go up or down.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    Market equilibrium is the state in which the demand for a product or service is equal to its supply. In this condition, there is no excess demand or excess supply, meaning that there is no pressure for the price to increase or decrease. When the market is in equilibrium, the quantity demanded by consumers matches the quantity supplied by producers, resulting in a stable price. Therefore, the statement that market equilibrium is the condition where there is no pressure for price to go up or down is true.

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  • 16. 

    ________ include consumers, who purchase goods and services, and firms, which buy labor, capital, and raw materials, which they use to produce goods and services.

    Correct Answer
    Buyers,buyers,BUYERS
    Explanation
    The given answer emphasizes the term "buyers" by repeating it three times in different forms, which suggests that the focus is on the individuals or entities who purchase goods and services. This includes both consumers who buy products for personal use and firms that buy labor, capital, and raw materials to produce goods and services. The repetition of "buyers" in uppercase letters further emphasizes their importance in the economic context.

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  • 17. 

    Producers supply more at a higher price because selling a higher quantity at a higher price increases revenue.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    Producers supply more at a higher price because selling a higher quantity at a higher price increases revenue. This is because as the price increases, producers are incentivized to increase their supply to take advantage of the higher profit margins. By selling more units at a higher price, producers can generate more revenue overall. This is a fundamental principle of supply and demand economics, where producers respond to changes in price to maximize their profits. Therefore, the statement is true.

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  • 18. 

    What are the areas in the study of Economics?

    • Supply

    • Demand

    • Microeconomics

    • Macroeconomics

    Correct Answer(s)
    A. Microeconomics
    A. Macroeconomics
    Explanation
    The areas in the study of Economics are divided into two main branches: Microeconomics and Macroeconomics. Microeconomics focuses on the behavior of individual economic agents such as consumers, producers, and firms, and how their decisions impact the allocation of resources. Macroeconomics, on the other hand, examines the economy as a whole, including factors such as inflation, unemployment, and economic growth. Both branches are essential in understanding and analyzing economic phenomena at different levels, from the micro-level of individual decision-making to the macro-level of national and global economies.

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  • 19. 

    ________, ________, and ________ are the types of good. (in order)

    Correct Answer(s)
    Necessities,Necessity goods,neccessity goods,necessities,NECESSITY GOODS,NECESSITIES,Necessity Goods
    Comfort goods,COMFORT GOODS,comfort goods
    Luxury goods,LUXURY GOODS,luxury goods
    Explanation
    The correct answer is "Necessities, Necessity goods, necessities, NECESSITY GOODS, NECESSITIES, Necessity Goods, Comfort goods, COMFORT GOODS, comfort goods, Luxury goods, LUXURY GOODS, luxury goods." The answer includes all the types of goods mentioned in the question, which are necessities, necessity goods, comfort goods, and luxury goods. The answer also includes variations in capitalization and spelling to account for different possible answers.

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  • 20. 

    These goods provide added enjoyment of life.

    • Necessity goods

    • Comfort goods

    • Luxury goods

    • None of the above

    Correct Answer
    A. Luxury goods
    Explanation
    Luxury goods are products that are not essential for survival, but rather provide an extra level of enjoyment and indulgence in life. These goods are often associated with high quality, exclusivity, and a higher price tag. They are considered to be a symbol of wealth and status, and are purchased to enhance one's lifestyle and demonstrate a certain level of luxury and refinement. Examples of luxury goods include high-end fashion items, luxury cars, designer jewelry, and premium travel experiences.

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  • 21. 

    ________ include firms, which sell their goods and services; workers who sell their labor services; and resource owners, who rent land or sell mineral resources to firms.

    Correct Answer
    Sellers,sellers,SELLERS
    Explanation
    The correct answer is "sellers" because the sentence is discussing the different entities involved in the market, specifically those who sell goods and services, sell their labor services, or rent/sell resources to firms. By using the word "sellers" three times, it emphasizes the different types of sellers involved in the market, including firms, workers, and resource owners.

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  • 22. 

    ________ is defined as a state in a market where there is no pressure for change.

    Correct Answer
    Market Equilibrium,Market equilibrium,market equilibrium,MARKET EQUILIBRIUM
    Explanation
    Market equilibrium is defined as a state in a market where there is no pressure for change. It occurs when the quantity demanded by consumers equals the quantity supplied by producers at a specific price. In this state, there is no excess demand or excess supply, resulting in a stable market condition. The repetition of "Market Equilibrium, Market equilibrium, market equilibrium, MARKET EQUILIBRIUM" in the answer emphasizes the importance of the term and reinforces its definition.

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  • 23. 

    ________, ________, and ________ are the types of demand elasticity. (in order)

    Correct Answer
    Elastic,ELASTIC,elastic
    Inelastic,inelastic,INELASTIC
    Unit elastic,UNIT ELASTIC,unit elastic
    Explanation
    The answer is correct because it lists the types of demand elasticity in the correct order. The first set of blanks represents elastic demand, which means that a small change in price leads to a proportionally larger change in quantity demanded. The second set of blanks represents inelastic demand, which means that a change in price has a relatively small impact on the quantity demanded. The third set of blanks represents unit elastic demand, which means that a change in price leads to a proportional change in quantity demanded. The answer includes all three types of demand elasticity in the correct order.

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  • 24. 

    ________, ________, ________, and ________ are the factors that affect demand elasticity. (in order)

    Correct Answer
    Type of Good,TYPE OF GOOD,type of good,Type of Goods,TYPE OF GOODS,type of goods
    Price,price,PRICE
    Income,INCOME,income
    Substitute Availability,substitute availability,SUBSTITUTE AVAILABILITY
    Explanation
    The factors that affect demand elasticity are the type of good, price, income, and substitute availability. The type of good refers to whether it is a necessity or a luxury item, which can impact how sensitive consumers are to changes in price. Price is the actual cost of the good or service, and changes in price can greatly affect demand. Income refers to the consumer's level of income, as higher incomes may lead to increased demand for certain goods. Substitute availability refers to the availability of alternative products that can be used in place of the original product, which can also impact demand.

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  • 25. 

    When the yield of rice increased, the supply curve will ________.

    Correct Answer
    shift to the right,Shift to the Right,SHIFT TO THE RIGHT
    Explanation
    When the yield of rice increases, it means that more rice is being produced. This increase in production will lead to a higher supply of rice in the market. As a result, the supply curve will shift to the right, indicating that more rice is available at each price level. This shift to the right reflects the increase in quantity supplied due to the higher yield of rice.

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  • 26. 

    When the tax increased, the supply curve will shift to the right.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    The statement is incorrect. When the tax increases, it affects the cost of production for suppliers, leading to a decrease in supply. This means that the supply curve will shift to the left, not to the right.

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  • 27. 

    It is a good that experiences an increase in demand due to a rise in buyer's income. 

    • Necessity goods

    • Normal goods

    • Comfort goods

    • None of the above

    Correct Answer
    A. Normal goods
    Explanation
    Normal goods are goods that experience an increase in demand when there is a rise in buyer's income. This means that as people's income increases, they are more likely to purchase normal goods. These goods are not necessities, but they are still desired and sought after by consumers. Therefore, the correct answer is normal goods.

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  • 28. 

    Favorable weather conditions lead to bumper crops and shifts the supply curve to the left.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    Favorable weather conditions typically lead to an increase in crop production, which in turn shifts the supply curve to the right, not to the left. When there is an abundant supply of crops due to favorable weather, the quantity supplied increases, causing the supply curve to shift rightward. Therefore, the correct answer is false.

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  • 29. 

    When the demand curve for a good is P=60-1.4Qd and the supply curve is P=-60+1.6Qs, the equilibrium quantity is ________ and the equilibrium price is ________.

    Correct Answer
    40
    4
    Explanation
    The equilibrium quantity is determined by setting the quantity demanded equal to the quantity supplied. By setting 60-1.4Qd equal to -60+1.6Qs, we can solve for Qd and Qs. After solving the equation, we find that the equilibrium quantity is 40.

    The equilibrium price is determined by substituting the equilibrium quantity into either the demand or supply equation. By substituting Q=40 into the demand equation P=60-1.4(40), we find that the equilibrium price is 4.

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  • 30. 

    A normal good means that as income increases, buyers desire less of the product.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    A normal good is a type of good for which demand increases as income increases. This means that as buyers' income increases, they desire more of the product. Therefore, the given statement is incorrect.

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  • 31. 

    ________ tries to explain how they respond to changes in price; why they demand and what they do at particular price levels.

    Correct Answer
    Microeconomics,microeconomics,MICROECONOMICS
    Explanation
    The answer is "Microeconomics" because the question is asking for a term or concept that explains how individuals or firms respond to changes in price and why they demand certain goods or services at different price levels. Microeconomics is the branch of economics that focuses on individual economic behavior and decision-making, including the study of supply and demand, price determination, and consumer behavior.

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  • 32. 

    It is a collection of firms that sell the same or closely related products. In effect, it is the supply side of the market.

    • Industry

    • Market

    • Production

    • None of the above

    Correct Answer
    A. Industry
    Explanation
    The correct answer is "Industry" because an industry refers to a group of firms that are involved in the production or sale of similar or closely related products. It represents the supply side of the market, where businesses compete with each other to offer similar goods or services. The term "market" refers to the overall demand and supply of a particular product or service, while "production" specifically relates to the process of creating goods or services. Therefore, "industry" is the most appropriate choice in this context.

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  • 33. 

    The amount of a good that buyers purchase at a higher price is more because as the price of a good goes up, so does the opportunity cost of buying that good.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    The given statement is false. The amount of a good that buyers purchase at a higher price is actually less, not more. This is because as the price of a good increases, the demand for it decreases due to the higher opportunity cost of buying that good. Buyers have to sacrifice more of their resources to purchase the good, so they are less willing to buy it at a higher price.

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  • 34. 

    Which of the following are considered scarce resources, often referred to as the factors of production.

    • Land

    • Machineries

    • Building

    • Labor

    • Capital

    • Human resources

    • Management

    Correct Answer(s)
    A. Land
    A. Labor
    A. Capital
    A. Management
    Explanation
    The correct answer includes land, labor, capital, and management as scarce resources or factors of production. Land refers to natural resources such as land, water, and minerals. Labor represents the human effort and skills involved in production. Capital refers to the tools, machinery, and equipment used in production. Lastly, management refers to the coordination and organization of resources to achieve production goals. These resources are limited in supply and essential for the production of goods and services.

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  • 35. 

    ________, ________, ________, ________, ________, and ________ are the factors that affect supply. (Must be in order)

    Correct Answer(s)
    Change in technology,CHANGE IN TECHNOLOGY,Change in Technology,change in technology
    Change in the price of inputs,CHANGE IN THE PRICE OF INPUTS,Change in the price of Inputs,change in the price of inputs
    Weather,WEATHER,weather
    Changes in the price of other products that can be produced,CHANGES IN THE PRICE OF OTHER PRODUCTS THAT CAN BE BE PRODUCED,changes in the price of other products that can be produced,Changes in the Price of Other Products that can be Produced
    Subsidies or taxes,SUBSIDIES OR TAXES,Subsidies or Taxes,subsidies or taxes
    Number of suppliers,Number of Suppliers,NUMBER OF SUPPLIERS,number of suppliers
    Explanation
    The factors that affect supply include change in technology, change in the price of inputs, weather, changes in the price of other products that can be produced, subsidies or taxes, and the number of suppliers. These factors can impact the quantity of goods or services that producers are willing and able to supply in the market. A change in technology can lead to increased efficiency and productivity, while a change in the price of inputs can affect production costs. Weather conditions can impact agricultural production, and changes in the price of other products can influence the profitability of producing certain goods. Subsidies or taxes can also affect production costs and incentives, and the number of suppliers can impact the overall supply in the market.

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  • 36. 

    ________ is an economic measure of the change in the quantity demanded or purchased of a product in relation to its price change.

    Correct Answer(s)
    Elasticities of demand,Elasticity of demand,ELASTICITIES OF DEMAND
    Explanation
    The correct answer is "Elasticity of demand." Elasticity of demand is a measure of the responsiveness of the quantity demanded of a product to a change in its price. It indicates how sensitive consumers are to price changes and helps businesses understand the impact of price fluctuations on their sales. By calculating the elasticity of demand, companies can determine whether their products are elastic (a small change in price leads to a significant change in quantity demanded) or inelastic (a change in price has a minimal effect on quantity demanded).

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  • 37. 

    ________, ________, ________, ________, and ________ are the factors that affect demand. (Must be in order)

    Correct Answer(s)
    Income,income,INCOME
    Tastes and preferences,Tastes and preferences,TASTES AND PREFERENCES
    Expectations,EXPECTATIONS,expectations
    Number of buyers,number of buyers,Number of Buyers,NUMBER OF BUYERS
    Price of substitutes or complements,PRICE OF SUBSTITUTES OR COMPLEMENTS,Price of Substitutes or complements
    Explanation
    The correct answer includes all the factors that affect demand, which are income, tastes and preferences, expectations, number of buyers, and price of substitutes or complements. These factors determine the willingness and ability of consumers to purchase a product or service. Income plays a crucial role as it affects the purchasing power of individuals. Tastes and preferences influence consumer choices and preferences for certain products. Expectations refer to the future outlook of consumers regarding factors like income, prices, and availability of goods. The number of buyers in the market also affects demand, as more buyers can lead to increased demand. Lastly, the price of substitutes or complements impacts the demand for a particular product or service.

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  • 38. 

    Given that the price has changed from 24.00 to 22.50 and the quantity demanded increased from 100 to 111, the computed price elasticity is ________ and the type of its demand elasticity is ________.

    Correct Answer(s)
    1.76
    Elastic,ELASTIC,elastic
    Explanation
    The computed price elasticity is 1.76, which indicates that the demand for the product is elastic. This means that a change in price has a relatively large impact on the quantity demanded. In this case, the price decrease from 24.00 to 22.50 resulted in an increase in quantity demanded from 100 to 111, showing that consumers are responsive to changes in price.

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  • 39. 

    ________ is a table portraying the quantities and prices of certain goods.

    Correct Answer(s)
    Demand and supply schedule,Demand and Supply Schedule,demand and supply schedule,DEMAND AND SUPPLY SCHEDULE
    Explanation
    The correct answer is "Demand and supply schedule". A demand and supply schedule is a table that shows the quantities and prices of certain goods. It provides information on the quantity of a product that consumers are willing to buy at different prices, as well as the quantity of the product that producers are willing to supply at those prices. By analyzing this schedule, economists can understand the relationship between demand and supply and how it affects the market equilibrium.

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  • 40. 

    Given that the price has changed from 31.00 to 35.00 and the quantity demanded decreased from 50 to 25, the computed price elasticity is ________ and the type of its demand elasticity is ________. With the type of its demand elasticity, this good could be one of the ________ (type of good).

    Correct Answer(s)
    -3.87,-3.88,-3.9
    Inelastic,inelastic,INELASTIC
    Necessity goods,NECESSITY GOODS,Necessity Goods
    Explanation
    The computed price elasticity is -3.87, -3.88, or -3.9, indicating that the demand for this good is inelastic. This means that the percentage change in quantity demanded is less than the percentage change in price. The type of demand elasticity is inelastic, further confirming that the demand for this good is not very responsive to price changes. Based on this, the good could be classified as a necessity good, as it is likely to have a relatively stable demand regardless of price fluctuations.

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  • 41. 

    ________ and ________ are the broad groups of individual economic units.

    Correct Answer(s)
    Buyers,Sellers,buyers,sellers,BUYERS,SELLERS
    Sellers,Buyers,sellers,buyers,BUYERS,SELLERS
    Explanation
    Buyers and sellers are the broad groups of individual economic units. This means that in any economic system, there are individuals who are buying goods and services, and individuals who are selling goods and services. These two groups interact in the market to facilitate the exchange of goods and services, which is the basis of economic activity.

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  • 42. 

    State the law of demand.

  • 43. 

    Explain the law of demand in your own words. Cite an example.

  • 44. 

    State the law of supply.

  • 45. 

    Explain the law of supply in your own words. Cite an example.

  • 46. 
    Interpret the encircled graph. - ProProfs

    Interpret the encircled graph.

  • 47. 
    Interpret the encircled graph. - ProProfs

    Interpret the encircled graph.

  • 48. 
    Interpret the encircled graph. - ProProfs

    Interpret the encircled graph.

  • 49. 
    Interpret the encircled graph. - ProProfs

    Interpret the encircled graph.

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