Question 1

Which of the following best describes the concept of opportunity cost in microeconomics?

Accepted Answer

The value of the next best alternative foregone when making a decision.

Question 2

Suppose a government imposes a price ceiling below the equilibrium price for rental apartments. What is the most likely outcome in the market?

Accepted Answer

A shortage of rental apartments.

Question 3

If the demand for a product is given by $$Q_d = 100 - 2P$$ and the supply is given by $$Q_s = 20 + 3P$$, what is the equilibrium price?

Accepted Answer

$$P = 16$$

Question 4

Which of the following is NOT a characteristic of a perfectly competitive market?

Accepted Answer

Products are differentiated.

Question 5

A bakery can produce 50 loaves of bread per day with 2 workers and 80 loaves with 3 workers. What is the marginal product of the third worker?

Accepted Answer

30 loaves

Question 6

If a firm faces the following total cost function: $$TC = 100 + 5Q$$, what is the average total cost (ATC) when $$Q = 10$$?

Accepted Answer

$$ATC = 20$$

Question 7

Which of the following best explains why monopolies can earn long-run economic profits?

Accepted Answer

There are significant barriers to entry.

Question 8

Suppose the cross-price elasticity of demand between tea and coffee is $$+0.5. $$What does this indicate about the relationship between tea and coffee?

Accepted Answer

They are substitutes.

Question 9

A consumer maximizes utility when the marginal utility per dollar spent is equal for all goods. If $$MU_A/P_A = 10$$ and $$MU_B/P_B = 8$$, what should the consumer do?

Accepted Answer

Buy more of good A and less of good B.

Question 10

If the government imposes a tax on sellers, which curve shifts and in which direction?

Accepted Answer

The supply curve shifts leftward.

Question 11

Which of the following is an example of a positive externality?

Accepted Answer

A homeowner planting a garden that beautifies the neighborhood.

Question 12

If a firm in a perfectly competitive market increases its price above the market equilibrium, what will happen?

Accepted Answer

It will sell no units.

Question 13

Suppose the price elasticity of demand for a product is $$-2. If $$the price increases by 10%, what is the expected percentage change in quantity demanded?

Accepted Answer

Quantity demanded will decrease by 20%.

Question 14

Which of the following best describes the law of diminishing marginal returns?

Accepted Answer

As more units of a variable input are added to fixed inputs, the additional output from each new unit eventually decreases.

Question 15

A firm’s total revenue is $$TR = P 	imes Q. If $$the price is $$5$$ and the quantity sold is $$100$$, what is the total revenue?

Accepted Answer

$$TR = 500$$

Question 16

Which of the following policies is most likely to address a negative externality?

Accepted Answer

A tax on the activity causing the externality.

Question 17

If a firm’s marginal cost (MC) is less than marginal revenue (MR), what should the firm do to maximize profit?

Accepted Answer

Increase output.

Question 18

Which of the following is a public good?

Accepted Answer

National defense.

Question 19

Suppose a firm faces the following demand curve: $$P = 50 - Q. $$What is the price when the firm sells 20 units?

Accepted Answer

$$P = 30$$

Question 20

Which of the following best describes the role of government in a market economy?

Accepted Answer

Providing public goods and addressing market failures.

ECON 2202: Principles of Microeconomics – Syllabus and Course Structure Overview

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