Principles of Microeconomics Exam
with correct answers 2025 (graded
A)
Which of the following best states the law of
comparative advantage? - CORRECT ANSWER-Differences in relative costs of
production are the key to determining patterns of trade.
Which of the following is true about accounting and economic profits? -
CORRECT ANSWER-A firm that earns an economic profit necessarily earns an
accounting profit
Assume that an economy produces two goods, consumer goods and military
goods. If it were possible to increase the output of both military goods and
consumption goods, which of the following statements about the economy would
be true? - CORRECT ANSWER-The economy is inefficient and is producing
inside the production possibilities curve.
Which of the following would necessarily cause a decrease in the price of a
product? - CORRECT ANSWER-A decrease in the price of a substitute product
and an improvement in production technology
, An effective price floor will most likely result in - CORRECT ANSWER-surpluses
of products if the price floor is above the equilibrium price
Jenna spends all of her weekly income on food and entertainment. If the marginal
utility of the last dollar Jenna spends on food is greater than the marginal utility of
the last dollar she spends on entertainment, what should Jenna do to maximize
utility? - CORRECT ANSWER-She should purchase more food and less
entertainment
Assume that a consumer finds that her total expenditure on compact discs stays
the same after the price of compact discs declines. Which of the following is true
for this consumer over the price range? - CORRECT ANSWER-The consumer's
demand for compact discs is unit price elastic
An improvement in production technology for a certain good leads to -
CORRECT ANSWER-an increase in the supply of the good
If the demand for a product is price elastic, which of the following is true? -
CORRECT ANSWER-A decrease in the product price will increase the firm's total
revenue.
If an increase in the price of good X causes a decrease in the demand for good Y,
good Y is - CORRECT ANSWER-a complement to good X
COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED
with correct answers 2025 (graded
A)
Which of the following best states the law of
comparative advantage? - CORRECT ANSWER-Differences in relative costs of
production are the key to determining patterns of trade.
Which of the following is true about accounting and economic profits? -
CORRECT ANSWER-A firm that earns an economic profit necessarily earns an
accounting profit
Assume that an economy produces two goods, consumer goods and military
goods. If it were possible to increase the output of both military goods and
consumption goods, which of the following statements about the economy would
be true? - CORRECT ANSWER-The economy is inefficient and is producing
inside the production possibilities curve.
Which of the following would necessarily cause a decrease in the price of a
product? - CORRECT ANSWER-A decrease in the price of a substitute product
and an improvement in production technology
, An effective price floor will most likely result in - CORRECT ANSWER-surpluses
of products if the price floor is above the equilibrium price
Jenna spends all of her weekly income on food and entertainment. If the marginal
utility of the last dollar Jenna spends on food is greater than the marginal utility of
the last dollar she spends on entertainment, what should Jenna do to maximize
utility? - CORRECT ANSWER-She should purchase more food and less
entertainment
Assume that a consumer finds that her total expenditure on compact discs stays
the same after the price of compact discs declines. Which of the following is true
for this consumer over the price range? - CORRECT ANSWER-The consumer's
demand for compact discs is unit price elastic
An improvement in production technology for a certain good leads to -
CORRECT ANSWER-an increase in the supply of the good
If the demand for a product is price elastic, which of the following is true? -
CORRECT ANSWER-A decrease in the product price will increase the firm's total
revenue.
If an increase in the price of good X causes a decrease in the demand for good Y,
good Y is - CORRECT ANSWER-a complement to good X
COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED
