Question 1

Which of the following best describes the primary goal of microeconomics as taught in Econ 102?

Accepted Answer

To understand how individual consumers and firms make decisions and interact in markets.

Question 2

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

Accepted Answer

A shortage of rental housing as demand exceeds supply.

Question 3

If the price elasticity of demand for a product is $$\varepsilon = -2$$, what does this imply about consumer responsiveness?

Accepted Answer

A 1% increase in price leads to a 2% decrease in quantity demanded; demand is elastic.

Question 4

A firm faces the following demand curve: $$Q = 100 - 2P. If $$the firm sets the price at $$P = 30$$, what is the quantity demanded?

Accepted Answer

$$Q = 60$$

Question 5

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

Accepted Answer

A factory pollutes a river, harming nearby residents.

Question 6

If a monopolist can perfectly price discriminate, what happens to consumer surplus?

Accepted Answer

Consumer surplus is eliminated; the monopolist captures all surplus.

Question 7

Suppose a firm in an oligopoly faces the following payoff matrix. If both firms choose to advertise, each earns $$\100$. If neither advertises, each earns $$\$$200. If $$one advertises and the other does not, the advertiser earns $$\300$ and the other earns $$\$$50. $$What is the Nash equilibrium?

Accepted Answer

Both firms choose to advertise.

Question 8

Which formula correctly represents the calculation of total revenue ($$TR) $$for a firm?

Accepted Answer

$$TR = P 	imes Q$$

Question 9

A tax is imposed on sellers of a good. Which of the following best describes the effect on the supply curve?

Accepted Answer

The supply curve shifts to the left.

Question 10

If the government wants to maximize tax revenue from a product, it should impose the tax on which type of demand?

Accepted Answer

Products with highly inelastic demand.

Question 11

Suppose the market for gasoline is subject to a per-unit tax of $$\1$. If demand is inelastic and supply is elastic, who bears most of the tax burden?

Accepted Answer

Consumers bear most of the tax burden.

Question 12

Which of the following best describes price discrimination?

Accepted Answer

Charging different prices to different customers based on their willingness to pay.

Question 13

A consumer faces a budget constraint given by $$P_x X + P_y Y = I. If$$ $$P_x = 2$$, $$P_y = 4$$, and $$I = 20$$, what is the maximum quantity of $$Y$$ the consumer can buy if they buy no $$X$$?

Accepted Answer

$$Y = 5$$

Question 14

Which of the following is a real-world example of a positive externality?

Accepted Answer

Vaccination reduces the spread of disease in a community.

Question 15

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

Accepted Answer

Increase output.

Question 16

Suppose a consumer’s utility function is $$U = X 	imes Y. If $$the consumer has $$X = 2$$ and $$Y = 5$$, what is their utility?

Accepted Answer

$$U = 10$$

Question 17

Which of the following statements about income distribution is most accurate according to microeconomic theory?

Accepted Answer

Income distribution can be unequal due to differences in productivity, skills, and market power.

Question 18

A behavioral economics study finds that consumers often choose a default option even when better alternatives exist. This is an example of:

Accepted Answer

Status quo bias.

Question 19

Suppose a firm faces the following cost function: $$TC = 50 + 10Q. $$What is the marginal cost ($$MC) of $$producing one more unit?

Accepted Answer

$$MC = 10$$

Econ 102: Introductory Microeconomic Analysis – Syllabus and Course Structure Study Notes

Study Guide - Practice Questions

Study Guide - Flashcards