Question 1

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

Accepted Answer

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

Question 2

Suppose a country moves from a command economy to a market economy. Which of the following is most likely to occur?

Accepted Answer

Resource allocation will be determined by supply and demand.

Question 3

If the price of a substitute good increases, what is the expected effect on the demand for the original good?

Accepted Answer

Demand for the original good will increase.

Question 4

Which of the following is a positive statement?

Accepted Answer

Higher taxes will reduce consumer spending.

Question 5

A perfectly competitive market is characterized by which of the following?

Accepted Answer

There are many buyers and sellers, and no single agent can affect the price.

Question 6

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

Question 7

Which of the following would cause a rightward shift in the supply curve for smartphones?

Accepted Answer

A technological advancement in smartphone production.

Question 8

If a price ceiling is set below the equilibrium price, what is the most likely outcome?

Accepted Answer

A shortage will occur.

Question 9

Consumer surplus is defined as:

Accepted Answer

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

Question 10

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

$-20\%$

Question 11

Which of the following is most likely to have inelastic demand?

Accepted Answer

Insulin for diabetics.

Question 12

Deadweight loss from a price floor occurs because:

Accepted Answer

Some mutually beneficial trades do not occur.

Question 13

If the cross-price elasticity of demand between two goods is positive, the goods are:

Accepted Answer

Substitutes.

Question 14

Which of the following would NOT shift the demand curve for coffee?

Accepted Answer

A change in the price of coffee.

Question 15

Suppose a binding price ceiling is imposed on rental apartments. Which of the following is a likely consequence?

Accepted Answer

A shortage of rental apartments.

Question 16

If the supply curve is perfectly inelastic, what happens to equilibrium quantity when demand increases?

Accepted Answer

Equilibrium quantity remains unchanged.

Question 17

Which of the following best explains why the demand curve slopes downward?

Accepted Answer

As price decreases, consumers are willing to buy more.

Question 18

Suppose the government imposes a price floor above the equilibrium price for wheat. What is the likely result?

Accepted Answer

A surplus of wheat.

Question 19

Which of the following is true about producer surplus?

Accepted Answer

It is the difference between the price received and the minimum price producers are willing to accept.

Question 20

If the price elasticity of supply is $1.5$, and the price increases by $20\%$, what is the expected percentage change in quantity supplied?

Accepted Answer

$30\%$

Microeconomics Exam Study Guide: Key Concepts and Applications

Study Guide - Practice Questions

Study Guide - Flashcards