Question 1

Which of the following best describes the principle of optimization in microeconomics?

Accepted Answer

Making the best feasible choice given available information and constraints.

Question 2

Suppose a consumer is deciding between two apartments. Apartment A costs $$800 per month and offers amenities worth 900 to $$the consumer. Apartment B costs $$950 per month and offers amenities worth 1$$,000. Using marginal analysis, what is the marginal net benefit of switching from Apartment A to Apartment B?

Accepted Answer

$$ \50$$ $

Question 3

Which of the following is an example of a positive economic statement?

Accepted Answer

Raising taxes on gasoline will reduce gasoline consumption.

Question 4

If the price of a substitute good increases, what is the likely effect on the demand curve for the original good?

Accepted Answer

The demand curve will shift to the right.

Question 5

A market is in equilibrium when:

Accepted Answer

The quantity demanded equals the quantity supplied.

Question 6

Which of the following would cause a movement along the demand curve for pizza, rather than a shift of the curve?

Accepted Answer

A decrease in the price of pizza.

Question 7

If the market price of a good is set below the equilibrium price, what will occur?

Accepted Answer

A shortage will result because quantity demanded exceeds quantity supplied.

Question 8

Which of the following best illustrates the concept of opportunity cost?

Accepted Answer

The value of the next best alternative you give up when making a choice.

Question 9

Suppose the supply curve for oil shifts to the right due to new fracking technology, while the demand curve remains unchanged. What is the likely effect on equilibrium price and quantity?

Accepted Answer

Equilibrium price decreases and equilibrium quantity increases.

Question 10

A consumer's willingness to pay (WTP) for a good is:

Accepted Answer

The maximum amount the consumer is prepared to pay for the good.

Question 11

If the marginal benefit (MB) of consuming an additional unit of a good is $$10 and the marginal cost (MC) is 7$$, what is the marginal net benefit (MNB)?

Accepted Answer

$$ MNB = MB - MC = 10 - 7 = 3 $$

Question 12

Which of the following would NOT shift the supply curve for laptops?

Accepted Answer

A change in consumer preferences for tablets over laptops.

Question 13

In a perfectly competitive market, if a seller charges a price slightly above the market price, what is the likely outcome?

Accepted Answer

The seller will lose almost all customers.

Question 14

Which of the following best explains why the demand curve is downward sloping?

Accepted Answer

As price decreases, consumers are willing to buy more due to diminishing marginal benefit.

Question 15

If both the demand and supply curves for a good shift to the right, what can be said about the new equilibrium quantity?

Accepted Answer

It will definitely increase.

Question 16

A price ceiling set below the equilibrium price will most likely result in:

Accepted Answer

A shortage of the good.

Question 17

Which of the following is a normative economic statement?

Accepted Answer

The government should provide universal basic income.

Question 18

If the price of snowboards increases, what is the likely effect on the demand for snowboarding boots (a complement)?

Accepted Answer

The demand for snowboarding boots will decrease.

Question 19

Which of the following best describes consumer surplus?

Accepted Answer

The difference between what a consumer is willing to pay and what they actually pay.

Question 20

Suppose a hurricane is approaching and the demand for generators surges. What happens to the demand curve and the market price for generators?

Accepted Answer

The demand curve shifts to the right and the market price increases.

Foundations of Microeconomics: Principles, Demand, and Supply

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