Question 1

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

Accepted Answer

The value of the next best alternative forgone when making a choice.

Question 2

Suppose the demand for coffee increases due to a rise in consumer income. Which type of good is coffee in this scenario?

Accepted Answer

Normal good

Question 3

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

Accepted Answer

Demand is elastic; consumers are highly responsive to price changes.

Question 4

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

Accepted Answer

A shortage of apartments.

Question 5

Which formula correctly calculates the marginal cost ($MC$) in production?

Accepted Answer

$MC = \frac{\Delta TC}{\Delta Q}$

Question 6

A firm in perfect competition faces a market price of $P = 10$. Its marginal cost curve is $MC = 2Q$. What is the profit-maximizing output?

Accepted Answer

$Q = 5$

Question 7

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

Accepted Answer

Products are differentiated.

Question 8

If a monopolist faces the demand curve $P = 100 - 2Q$ and has a constant marginal cost of $MC = 20$, what is the profit-maximizing quantity?

Accepted Answer

$Q = 20$

Question 9

Which of the following best explains why firms in monopolistic competition can earn zero economic profit in the long run?

Accepted Answer

Free entry and exit lead to increased competition, eroding profits.

Question 10

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

Accepted Answer

Tea and coffee are substitutes.

Question 11

A firm’s total cost function is $TC = 50 + 10Q$. What is the average total cost ($ATC$) when $Q = 5$?

Accepted Answer

$ATC = 15$

Question 12

Which of the following government interventions is most likely to correct a negative externality?

Accepted Answer

Imposing a tax equal to the external cost.

Question 13

If a country can produce either 100 units of wheat or 200 units of corn, what is the opportunity cost of producing one unit of wheat?

Accepted Answer

2 units of corn

Question 14

Which of the following best describes consumer surplus?

Accepted Answer

The difference between what consumers are willing to pay and what they actually pay.

Question 15

A market for gasoline is initially in equilibrium. The government imposes a per-unit tax on gasoline. What is the likely effect on equilibrium quantity and price?

Accepted Answer

Equilibrium quantity decreases; price increases.

Question 16

Which equation represents the budget constraint for a consumer choosing between goods $X$ and $Y$ with prices $P_X$ and $P_Y$, and income $I$?

Accepted Answer

$P_X X + P_Y Y = I$

Question 17

If the marginal utility per dollar spent on apples is greater than that for oranges, what should a rational consumer do?

Accepted Answer

Buy more apples and fewer oranges.

Question 18

Which of the following is a public good?

Accepted Answer

National defense

Question 19

Suppose a firm faces the following total revenue and total cost functions: $TR = 50Q$, $TC = 20Q + 100$. What is the profit-maximizing output if the firm operates in a perfectly competitive market?

Accepted Answer

$Q$ is indeterminate without marginal cost information

Question 20

Which of the following best describes the gains from international trade?

Accepted Answer

Both countries can consume beyond their individual production possibilities frontiers.

Microeconomics Course Syllabus and Study Guide: ECON 201/2 Introduction to Microeconomics

Study Guide - Practice Questions

Study Guide - Flashcards