Question 1

Which of the following best describes the law of demand?

Accepted Answer

As the price of a good increases, the quantity demanded decreases, ceteris paribus.

Question 2

Suppose the market for coffee is in equilibrium. If a new study reveals health benefits of coffee, which of the following is most likely to occur?

Accepted Answer

The demand curve for coffee shifts right, leading to a higher equilibrium price and quantity.

Question 3

Which equation represents the market equilibrium condition?

Accepted Answer

$ Q_d = Q_s $

Question 4

A firm faces the following cost structure: $ TC = 100 + 5Q $. What is the marginal cost (MC) of producing one more unit?

Accepted Answer

$ MC = 5 $

Question 5

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

Accepted Answer

A person getting vaccinated, reducing disease spread.

Question 6

If a country can produce either 10 units of wheat or 20 units of corn, what is the opportunity cost of producing one unit of wheat?

Accepted Answer

2 units of corn

Question 7

Which of the following best describes a public good?

Accepted Answer

A good that is non-excludable and non-rival in consumption.

Question 8

A monopolist maximizes profit by producing the quantity where:

Accepted Answer

$ MR = MC $

Question 9

Which of the following is NOT a barrier to entry in a monopoly market?

Accepted Answer

Perfect information

Question 10

Suppose a country can produce either 100 cars or 200 computers. If it decides to produce 50 cars, how many computers must it give up? (Assume a linear PPC.)

Accepted Answer

100 computers

Question 11

Which formula correctly calculates producer surplus?

Accepted Answer

$ Producer\ Surplus = Price\ Received - Minimum\ Acceptable\ Price $

Question 12

Which of the following is an example of price discrimination?

Accepted Answer

A movie theater charging different prices for children and adults.

Question 13

If the supply curve shifts to the right, what happens to equilibrium price and quantity, assuming demand remains unchanged?

Accepted Answer

Equilibrium price decreases, equilibrium quantity increases.

Question 14

Which of the following is true about the difference between accounting profit and economic profit?

Accepted Answer

Economic profit includes opportunity costs, accounting profit does not.

Question 15

A competitive firm will enter the market in the long run if:

Accepted Answer

$ P > ATC $

Question 16

Which of the following points on a Production Possibilities Curve (PPC) is considered inefficient?

Accepted Answer

A point inside the PPC

Question 17

Suppose a country has a comparative advantage in producing textiles. This means:

Accepted Answer

It can produce textiles at a lower opportunity cost than other countries.

Question 18

Which of the following is an example of the tragedy of the commons?

Accepted Answer

Fishermen overfishing in a public lake, depleting the fish population.

Question 19

If the demand for a product is perfectly inelastic, what does the demand curve look like?

Accepted Answer

A vertical line

Question 20

Which of the following is NOT a characteristic of a monopoly?

Accepted Answer

Price taker

Principles of Microeconomics: Final Exam Study Guide

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