Question 1

Which of the following best defines 'equity' in economics?

Accepted Answer

The fair distribution of economic benefits.

Question 2

A student-athlete can earn $$600,000 playing minor league baseball, 100$$,000 playing European football, or $0 by returning to college. What is the opportunity cost of returning to college?

Accepted Answer

$600,000

Question 3

Which country today has a centrally planned economy?

Accepted Answer

North Korea

Question 4

How are economic resources allocated in a market economy?

Accepted Answer

By the decisions of households and firms interacting in markets

Question 5

Which of the following is a macroeconomic issue?

Accepted Answer

The level of total investment by firms in new machinery and equipment

Question 6

If GDP was $$11,150$$ billion in 2010 and increased to $$11,397$$ billion in 2011, what is the growth rate of the U.S. economy in 2011? (Round to one decimal place.)

Accepted Answer

$$2.2\%$$

Question 7

Suppose the price of Yeti water bottles increases, but the demand for textbooks remains unchanged. What is the relationship between these goods?

Accepted Answer

Unrelated

Question 8

Given the demand equation $$P = 3 - 0.005Q$$, what is the slope of the demand curve?

Accepted Answer

$$-0.005$$

Question 9

If the price of Burger King's Whopper declines, what happens to the demand for McDonald's Big Mac hamburgers?

Accepted Answer

Movement along the demand curve for McDonald's Big Mac hamburgers.

Question 10

Which of the following could cause a shift in the demand curve for UGG boots to the right?

Accepted Answer

A decrease in the price of a complementary good.

Question 11

If the price of memberships at local golf courses increases and memberships and Ping golf clubs are complements, what happens to the demand for Ping golf clubs?

Accepted Answer

The demand for Ping golf clubs decreases.

Question 12

The law of demand states that:

Accepted Answer

The quantity demanded of a product is inversely related to its price.

Question 13

An increase in the price of a product causes a decrease in quantity demanded because of the income and substitution effects. More specifically:

Accepted Answer

The substitution effect is the decrease in quantity demanded because the product is more expensive relative to other goods and the income effect is the decrease in quantity demanded owing to the fact that the product is more expensive relative to other goods.

Question 14

Suppose the demand for oranges increases while the supply of oranges decreases. What will happen to the equilibrium price and quantity?

Accepted Answer

Equilibrium price will increase, but the change in equilibrium quantity is uncertain.

Question 15

If the demand curve for apples is given by $$P = 100 - Q$$, what is the slope of the demand curve?

Accepted Answer

$$-1$$

Question 16

Which of the following is an example of a movement along the supply curve?

Accepted Answer

A decrease in the price of the good.

Question 17

If the supply of immigrant labor decreases due to new laws, what is the likely effect on the market for construction labor?

Accepted Answer

The supply curve shifts to the left, raising wages.

Question 18

If the price of Jiffy peanut butter increases, what happens to the demand for Smucker’s Strawberry jam, assuming they are complementary goods?

Accepted Answer

The demand for Smucker’s Strawberry jam decreases.

Question 19

If the equilibrium price in a market is above the current market price, what will likely happen?

Accepted Answer

There will be a shortage, and price will rise.

Question 20

If the demand for corn falls, what is the likely effect on the market for soybeans, assuming farmers can switch between growing corn and soybeans?

Accepted Answer

The soybean supply curve shifts to the right.

Microeconomics Study Guide: Demand, Supply, and Market Analysis

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