Question 1

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

Accepted Answer

Making the best choice possible with given information, considering all trade-offs.

Question 2

Suppose Sue and Carlos are the only buyers in the gasoline market. At a price of $3 per gallon, what is the total quantity demanded according to the schedules provided?

Accepted Answer

$$300 + 600 = 900$$ gallons per year

Question 3

Which of the following scenarios would cause a rightward shift in the demand curve for electric cars?

Accepted Answer

A new government subsidy increases consumers' income.

Question 4

If the price of peanut butter increases, what is likely to happen to the demand for jelly, assuming they are complements?

Accepted Answer

The demand for jelly will decrease.

Question 5

Using marginal analysis, if the marginal benefit (MB) of consuming one more unit of a good is $$10 and the marginal cost (MC) is 8$$, what should the consumer do?

Accepted Answer

Consume one more unit, since $$MB \u003e MC.$$

Question 6

Refer to the supply schedules. At a price of $50 per barrel, what is the total quantity of oil supplied by Chevron and ExxonMobil?

Accepted Answer

$$1.7$$ billion barrels per year

Question 7

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

Accepted Answer

Because of diminishing marginal benefit: as more of a good is consumed, willingness to pay for additional units declines.

Question 8

If both the demand and supply curves shift to the right, what can you say about the new equilibrium?

Accepted Answer

Equilibrium quantity will increase, but the change in equilibrium price is undetermined without more information.

Question 9

What is the opportunity cost of attending a concert if the ticket costs $$50 and the best alternative use of your time is working at a job that pays 15 $$per hour for 4 hours?

Accepted Answer

$$50 + (4 	imes 15) = 110$$

Question 10

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

Accepted Answer

A change in the market price of oil.

Question 11

If there is a shortage in the oil market, what will happen to the market price and why?

Accepted Answer

The market price will rise, encouraging suppliers to produce more and consumers to buy less until equilibrium is reached.

Question 12

Suppose the price of Coca Cola increases. What is likely to happen to the demand for Pepsi, assuming they are substitutes?

Accepted Answer

The demand for Pepsi will increase.

Question 13

Which of the following is an example of the free rider problem?

Accepted Answer

A person who listens to public radio without donating to support it.

Question 14

If the marginal cost (MC) of producing an additional barrel of oil is $$25 and the marginal benefit (MB) is 20$$, what should the firm do?

Accepted Answer

Produce less oil, since $$MC \u003e MB.$$

Question 15

Which of the following is a normative economic statement?

Accepted Answer

The government should provide free healthcare to all citizens.

Question 16

If the market price of oil is set at $75 per barrel, what is the total quantity supplied according to the supply schedules?

Accepted Answer

$$2.1$$ billion barrels per year

Question 17

Which of the following would NOT cause a shift in the demand curve for a good?

Accepted Answer

A decrease in the price of the good itself.

Question 18

If the supply curve for oil shifts to the left while the demand curve remains unchanged, what will happen to the equilibrium price and quantity?

Accepted Answer

Equilibrium price will rise and equilibrium quantity will fall.

Question 19

Which of the following best describes the law of supply?

Accepted Answer

As the price of a good rises, the quantity supplied rises, holding all else equal.

Question 20

A new technology reduces the cost of producing oil. What is the likely effect on the supply curve and equilibrium price?

Accepted Answer

The supply curve shifts right, leading to a lower equilibrium price.

Principles of Microeconomics: Optimization, Equilibrium, and Market Forces

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