ECON 300 EXAM 1 QUESTIONS AND
ANSWERS 100% CORRECT GRADED A+ 2026
In most microeconomic models, a decision maker
A. maximizes an objective subject to a constraint.
B. faces no constraints.
C. has no clearly defined objective.
D. Both B and C. -Correct Answer ✔-A
Economic models are most useful in
A. predicting changes in one variable due to a change in one or more other variables.
B. generating untestable hypotheses.
C. predicting the direction of the stock market.
D. explaining the future with the past. -Correct Answer ✔-A
A market
A. always takes place at a physical location.
B. has no influence on prices.
C. always involves the personal exchange of goods for money.
D. allows interactions between consumers and firms. -Correct Answer ✔-D
Billy developed an economic model to describe the behavior of a stock market index.
His model predicts that the index increases on Mondays and declines on the other days
of the week. What can be said about Billy's model?
A. The model's predictions are not ambiguous and cannot be tested.
B. The model's predictions are not ambiguous and can be tested.
C. The model's predictions are ambiguous and cannot be tested.
D. The model's predictions are ambiguous and can be tested. -Correct Answer ✔-B
Most microeconomic models assume that decision makers wish to
A. make others as well off as possible.
B. act selfishly.
C. make themselves as well off as possible.
D. None of the above. -Correct Answer ✔-C
Economic models are only useful in analyzing government policy.
A. False, economic models are not even useful in analyzing government policy.
B. False, economic models can be used to predict individual and firm behavior.
C. True, individuals are irrational and therefore economic models are useless.
,D. True, economists only model those questions for which they are hired. -Correct
Answer ✔-B
Which of the following is an example of a normative statement?
A. A higher price for a good causes people to want to buy less of that good.
B. A lower price for a good causes people to want to buy more of that good.
C. If you consume this good, you will be better off.
D. To make the good available to more people, a lower price should be set. -Correct
Answer ✔-D
Which of the following is a fundamental topic addressed by microeconomics?
A. determining how many new iPhones the Apple company should produce
B. the impact of interest rates on savings in the economy
C. the level of inflation in the country
D. whether to extend unemployment insurance -Correct Answer ✔-A
What links the decisions of consumers and firms in a market?
A. the government
B. microeconomics
C. coordination officials
D. prices -Correct Answer ✔-D
Individuals use microeconomic models to determine
A. whether or not to go to college given current student loan interest rates.
B. their optimal amount of leisure.
C. their optimal consumption of beer given an increase in inflation.
D. All of the above. -Correct Answer ✔-D
Economic models are most often tested
A. using data from the distant past.
B. using logic alone.
C. using computer simulations.
D. using data from the real world. -Correct Answer ✔-D
Microeconomics studies the allocation of
A. models.
B. decision makers.
C. unlimited resources.
D. scarce resources. -Correct Answer ✔-D
, The purpose of making assumptions in economic model building is to
A. force the model to yield the correct answer.
B. simplify the model while keeping important details.
C. minimize the amount of work an economist must do.
D. express the relationship mathematically. -Correct Answer ✔-B
A country produces cars and books. All of its resources are currently being employed in
the production of these two goods. If this country increases the production of cars, what
will happen with the quantity produced of books?
A. The quantity of books produced will slightly increase.
B. The quantity of books produced will substantially increase .
C. The quantity of books produced will not change.
D. The quantity of books produced will decrease. -Correct Answer ✔-D
Which of the following is an example of a normative statement?
A. If you consume this good, you will get sick.
B. Since this good is bad for you, you should not consume it.
C. This good has bad health effects.
D. People usually get sick after consuming this good. -Correct Answer ✔-B
According to the Law of Demand, the demand curve for a good will:
A. shift rightward when the price of the good increases.
B. shift leftward when the price of the good increases.
C. slope downward.
D. slope upward. -Correct Answer ✔-C
An increase in the price of a good will lead to:
A. a leftward shift of the demand curve for that good.
B. a movement up along the demand curve for that good.
C. a rightward shift of the demand curve for that good.
D. a movement down along the demand curve for that good. -Correct Answer ✔-B
An increase in consumer's income will lead to:
A. a movement upward along the demand curve for a normal good.
B. a rightward shift of the supply curve for a normal good.
C. no change of the demand curve for a normal good.
D. a rightward shift of the demand curve for a normal good. -Correct Answer ✔-D
Suppose there are 100 identical firms in the rag industry, and each firm is willing to
supply 10 rags at any price. The market supply curve will be a(n)
ANSWERS 100% CORRECT GRADED A+ 2026
In most microeconomic models, a decision maker
A. maximizes an objective subject to a constraint.
B. faces no constraints.
C. has no clearly defined objective.
D. Both B and C. -Correct Answer ✔-A
Economic models are most useful in
A. predicting changes in one variable due to a change in one or more other variables.
B. generating untestable hypotheses.
C. predicting the direction of the stock market.
D. explaining the future with the past. -Correct Answer ✔-A
A market
A. always takes place at a physical location.
B. has no influence on prices.
C. always involves the personal exchange of goods for money.
D. allows interactions between consumers and firms. -Correct Answer ✔-D
Billy developed an economic model to describe the behavior of a stock market index.
His model predicts that the index increases on Mondays and declines on the other days
of the week. What can be said about Billy's model?
A. The model's predictions are not ambiguous and cannot be tested.
B. The model's predictions are not ambiguous and can be tested.
C. The model's predictions are ambiguous and cannot be tested.
D. The model's predictions are ambiguous and can be tested. -Correct Answer ✔-B
Most microeconomic models assume that decision makers wish to
A. make others as well off as possible.
B. act selfishly.
C. make themselves as well off as possible.
D. None of the above. -Correct Answer ✔-C
Economic models are only useful in analyzing government policy.
A. False, economic models are not even useful in analyzing government policy.
B. False, economic models can be used to predict individual and firm behavior.
C. True, individuals are irrational and therefore economic models are useless.
,D. True, economists only model those questions for which they are hired. -Correct
Answer ✔-B
Which of the following is an example of a normative statement?
A. A higher price for a good causes people to want to buy less of that good.
B. A lower price for a good causes people to want to buy more of that good.
C. If you consume this good, you will be better off.
D. To make the good available to more people, a lower price should be set. -Correct
Answer ✔-D
Which of the following is a fundamental topic addressed by microeconomics?
A. determining how many new iPhones the Apple company should produce
B. the impact of interest rates on savings in the economy
C. the level of inflation in the country
D. whether to extend unemployment insurance -Correct Answer ✔-A
What links the decisions of consumers and firms in a market?
A. the government
B. microeconomics
C. coordination officials
D. prices -Correct Answer ✔-D
Individuals use microeconomic models to determine
A. whether or not to go to college given current student loan interest rates.
B. their optimal amount of leisure.
C. their optimal consumption of beer given an increase in inflation.
D. All of the above. -Correct Answer ✔-D
Economic models are most often tested
A. using data from the distant past.
B. using logic alone.
C. using computer simulations.
D. using data from the real world. -Correct Answer ✔-D
Microeconomics studies the allocation of
A. models.
B. decision makers.
C. unlimited resources.
D. scarce resources. -Correct Answer ✔-D
, The purpose of making assumptions in economic model building is to
A. force the model to yield the correct answer.
B. simplify the model while keeping important details.
C. minimize the amount of work an economist must do.
D. express the relationship mathematically. -Correct Answer ✔-B
A country produces cars and books. All of its resources are currently being employed in
the production of these two goods. If this country increases the production of cars, what
will happen with the quantity produced of books?
A. The quantity of books produced will slightly increase.
B. The quantity of books produced will substantially increase .
C. The quantity of books produced will not change.
D. The quantity of books produced will decrease. -Correct Answer ✔-D
Which of the following is an example of a normative statement?
A. If you consume this good, you will get sick.
B. Since this good is bad for you, you should not consume it.
C. This good has bad health effects.
D. People usually get sick after consuming this good. -Correct Answer ✔-B
According to the Law of Demand, the demand curve for a good will:
A. shift rightward when the price of the good increases.
B. shift leftward when the price of the good increases.
C. slope downward.
D. slope upward. -Correct Answer ✔-C
An increase in the price of a good will lead to:
A. a leftward shift of the demand curve for that good.
B. a movement up along the demand curve for that good.
C. a rightward shift of the demand curve for that good.
D. a movement down along the demand curve for that good. -Correct Answer ✔-B
An increase in consumer's income will lead to:
A. a movement upward along the demand curve for a normal good.
B. a rightward shift of the supply curve for a normal good.
C. no change of the demand curve for a normal good.
D. a rightward shift of the demand curve for a normal good. -Correct Answer ✔-D
Suppose there are 100 identical firms in the rag industry, and each firm is willing to
supply 10 rags at any price. The market supply curve will be a(n)
