Q: 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 per year according to the schedules provided?

$$\text{Sue: 300 gallons} + \text{Carlos: 600 gallons} = 900$$ gallons

Q: Which of the following is the correct formula for marginal cost?

$$MC = \frac{\Delta \text{Costs}}{\Delta \text{Alternative}}$$

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 per year according to the schedules provided?

Accepted Answer

$$	ext{Sue: 300 gallons} + 	ext{Carlos: 600 gallons} = 900$$ gallons

Question 3

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

Accepted Answer

Each student should just take one so that everyone gets a piece.

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

What is the opportunity cost of attending a concert if the ticket costs $$50 and the best alternative use of your time is working at a job that pays 20 $$per hour for 3 hours?

Accepted Answer

$$50 + (3 	imes 20) = 110$

Question 6

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

Accepted Answer

A decrease in the price of gasoline.

Question 7

Using marginal analysis, if the marginal benefit of consuming one more unit is $$10 and the marginal cost is 8$$, what should the economic agent do?

Accepted Answer

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

Question 8

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

Accepted Answer

$$1.7$$ billion barrels

Question 9

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

Accepted Answer

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

Question 10

If the market price is set above the competitive equilibrium price, what will occur?

Accepted Answer

Excess supply (surplus) will result.

Question 11

Suppose a new technology reduces the cost of oil extraction. What is the likely effect on the supply curve for oil?

Accepted Answer

The supply curve will shift to the right.

Question 12

Which of the following is the correct formula for marginal cost?

Accepted Answer

$$MC = \frac{\Delta 	ext{Costs}}{\Delta 	ext{Alternative}}$$

Question 13

If income increases and the demand for a good decreases, what type of good is it?

Accepted Answer

Inferior good

Question 14

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

Accepted Answer

An increase in consumer income, assuming electric cars are normal goods.

Question 15

At the competitive equilibrium, which of the following is true?

Accepted Answer

Quantity supplied equals quantity demanded.

Question 16

If 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 17

Which of the following best describes the free rider problem?

Accepted Answer

Individuals enjoy the benefits of a situation without incurring the costs.

Question 18

If the price of an input used to produce oil increases, what happens to the supply curve for oil?

Accepted Answer

The supply curve shifts to the left.

Question 19

Which of the following is NOT a reason for a shift in the demand curve?

Accepted Answer

A change in the product's own price.

Question 20

If the marginal benefit of the 4th unit is $$20 and the marginal cost is 25$$, what should the agent do according to the principle of optimization at the margin?

Accepted Answer

Not consume the 4th unit, since $$MB \u003c MC.$$

Microeconomics Study Guide: Principles, Optimization, and Market Equilibrium

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