Question 1

Suppose a bakery can produce 100 loaves of bread at a total cost of $$200, and 101 loaves at a total cost of 202. $$What is the marginal cost of the 101st loaf?

Accepted Answer

$2

Question 2

Which of the following best describes the focus of microeconomics?

Accepted Answer

The study of individual and business decision-making.

Question 3

A new sales tax is imposed on smartphones. What is the likely effect on the equilibrium price and quantity in the smartphone market?

Accepted Answer

Equilibrium price increases and equilibrium quantity decreases.

Question 4

If a point lies outside the production possibilities curve (PPC), what does it signify?

Accepted Answer

The production level is unattainable with current resources.

Question 5

A sudden increase in the cost of raw materials for wheat production is likely to have what effect on the supply curve in a perfectly competitive market?

Accepted Answer

Shift the supply curve to the left.

Question 6

If two countries specialize based on comparative advantage and trade, what happens to their consumption possibilities?

Accepted Answer

Their consumption possibilities expand beyond their individual PPFs.

Question 7

If moving from 2 to 3 units of good A results in a decrease from 10 to 7 units of good B, what is the marginal opportunity cost of the third unit of good A?

Accepted Answer

3 units of good B

Question 8

How does a technological advance in the pizza industry affect the PPF for pizza and robots?

Accepted Answer

The PPF shifts outward only for pizza, while the maximum production of robots remains unchanged.

Question 9

A company builds a wind farm on a previously unused piece of land. Which factor of production does this scenario primarily illustrate?

Accepted Answer

Entrepreneurship

Question 10

What is the primary assumption of the Production Possibilities Frontier (PPF)?

Accepted Answer

Resources and technology are fixed.

Question 11

Which of the following is an assumption made when constructing a PPF?

Accepted Answer

Resources and technology are fixed.

Question 12

Given the following supply and demand schedule, what is the equilibrium price and quantity?

Price: $$5, Quantity Demanded: 50, Quantity Supplied: 30
Price: 6$$, Quantity Demanded: 40, Quantity Supplied: 40
Price: $7, Quantity Demanded: 30, Quantity Supplied: 50

Accepted Answer

Equilibrium price is $6 and equilibrium quantity is 40

Question 13

What does a rightward shift in the supply curve indicate?

Accepted Answer

An increase in supply

Question 14

According to the law of demand, what happens to the quantity demanded of a good when its price increases?

Accepted Answer

The quantity demanded decreases.

Question 15

According to the principle of ceteris paribus, what happens to the quantity demanded when the price of a good increases?

Accepted Answer

The quantity demanded decreases.

Question 16

Why does willingness to sell vary among different suppliers?

Accepted Answer

Because each supplier has different costs and personal valuations of their goods.

Question 17

Under what condition is total surplus maximized in a market?

Accepted Answer

When the market is in equilibrium.

Question 18

Suppose the opportunity cost of producing one car is 5 computers in Country X and 10 computers in Country Y. Which country has the comparative advantage in producing cars?

Accepted Answer

Country X

Question 19

If the government sets a price floor above the equilibrium price in the wheat market, what is the likely result?

Accepted Answer

A surplus of wheat

Question 20

If a new technology reduces the cost of producing electric cars, what is the expected effect on the market for electric cars, ceteris paribus?

Accepted Answer

The supply curve shifts to the right, leading to a lower equilibrium price and higher equilibrium quantity.

Microeconomics Exam 1 Study Guidance: Marginal Analysis, PPF, Supply & Demand

Study Guide - Practice Questions

Study Guide - Flashcards