Principles of Microeconomics CLEP.Final Test 2026\2027.
In a market economy, economic activity is guided by
prices.
Comparative advantage is based on
opportunity costs.
Which of the following would NOT be a determinant of demand?
The prices of the inputs used to produce the good
Suppose you like banana cream pie made with vanilla pudding. Although all
other factors are constant, you notice that the price of bananas has gone
up. How would your demand for vanilla pudding be affected by the price of
bananas?
My demand would decrease.
If a decrease in income increases the demand for a good, then the good is
an inferior good.
What will occur in the rice market if buyers are expecting higher prices in
the near future?
The demand for rice will increase.
Suppose you make gold jewelry. If the price of gold falls, we would expect
you to
produce more jewelry than before at each possible price.
Suppose that the incomes of buyers in a particular market for a normal
good declines while a reduction in input prices occurs. What would we
expect to occur in this market?
equilibrium price would decrease, impact on amount of goods sold would be
ambiguous.
Less demand paired with a larger supply would necessarily result in
,Principles of Microeconomics CLEP.Final Test 2026\2027.
a lower equilibrium price.
The legal maximum price at which a good can be sold is a
price ceiling.
Rent control is
example of price ceiling.
The rate at which a consumer is willing to exchange one good for another,
and at which a constant level of satisfaction is maintained, is called the
marginal rate of substitution.
The amount of a good an individual has
affects the rate at which the consumer is willing to trade.
Utility measures
the satisfaction a consumer receives from consuming a bundle of goods.
The combination of two goods a consumer chooses depends on
the consumer's budget constraint and preferences.
When the price of a commodity rises, we can expect
marginal utility of the last unit purchased to rise.
A bottle of wine costs $8, and a quiche costs $5. At Robert's present levels
of consumption, he spends all of his income and receives marginal utility of
$10 from the last bottle of wine and marginal utility of $4 from the last
quiche. To maximize his total utility, Robert should
buy more wine and less quiche.
If the marginal utility to Juan of sleeping an extra hour (from 8 a.m. to 9
a.m.) is negative,
Juan should get up at 8 a.m.
Tom is buying a quantity of wheat at which the marginal utility (in dollars)
exceeds price. He should
increase wheat consumption, thus lowering MU to the level at which MU = P.
, Principles of Microeconomics CLEP.Final Test 2026\2027.
Chocolate chip ice cream would tend to have very elastic demand because
other flavors of ice cream are almost perfect substitutes.
Profit is defined as
total revenue minus total cost.
XYZ Corporation produced 300 units of output but sold only 275 of the units
it produced. The average cost of production for each unit of output
produced was $100. Each of the 275 units sold were sold for a price of $95.
The total revenue of the XYZ Corporation is
$26,125. Total revenue is 275 units times $95, which equals $26,125.
An important implicit cost incurred by almost all businesses is the
opportunity cost of financial capital that has been invested in the business.
Which of the following costs does NOT vary with the amount of a firm's
output?
Total fixed costs
If a firm produces nothing, which of the following costs will be zero?
Variable cost
One assumption that distinguishes short-run cost analysis from long-run
cost analysis for a profit-maximizing firm is that in the short run,
the size of the factory is fixed.
When marginal cost exceeds average total cost,
average total cost is rising.
In the long run,
all inputs are considered to be variable.
Economies of scale occur when
long-run average total costs fall as output increases.
Tony is a wheat farmer but also spends part of his day teaching guitar
lessons. Due to the popularity of his local country western band, Farmer
In a market economy, economic activity is guided by
prices.
Comparative advantage is based on
opportunity costs.
Which of the following would NOT be a determinant of demand?
The prices of the inputs used to produce the good
Suppose you like banana cream pie made with vanilla pudding. Although all
other factors are constant, you notice that the price of bananas has gone
up. How would your demand for vanilla pudding be affected by the price of
bananas?
My demand would decrease.
If a decrease in income increases the demand for a good, then the good is
an inferior good.
What will occur in the rice market if buyers are expecting higher prices in
the near future?
The demand for rice will increase.
Suppose you make gold jewelry. If the price of gold falls, we would expect
you to
produce more jewelry than before at each possible price.
Suppose that the incomes of buyers in a particular market for a normal
good declines while a reduction in input prices occurs. What would we
expect to occur in this market?
equilibrium price would decrease, impact on amount of goods sold would be
ambiguous.
Less demand paired with a larger supply would necessarily result in
,Principles of Microeconomics CLEP.Final Test 2026\2027.
a lower equilibrium price.
The legal maximum price at which a good can be sold is a
price ceiling.
Rent control is
example of price ceiling.
The rate at which a consumer is willing to exchange one good for another,
and at which a constant level of satisfaction is maintained, is called the
marginal rate of substitution.
The amount of a good an individual has
affects the rate at which the consumer is willing to trade.
Utility measures
the satisfaction a consumer receives from consuming a bundle of goods.
The combination of two goods a consumer chooses depends on
the consumer's budget constraint and preferences.
When the price of a commodity rises, we can expect
marginal utility of the last unit purchased to rise.
A bottle of wine costs $8, and a quiche costs $5. At Robert's present levels
of consumption, he spends all of his income and receives marginal utility of
$10 from the last bottle of wine and marginal utility of $4 from the last
quiche. To maximize his total utility, Robert should
buy more wine and less quiche.
If the marginal utility to Juan of sleeping an extra hour (from 8 a.m. to 9
a.m.) is negative,
Juan should get up at 8 a.m.
Tom is buying a quantity of wheat at which the marginal utility (in dollars)
exceeds price. He should
increase wheat consumption, thus lowering MU to the level at which MU = P.
, Principles of Microeconomics CLEP.Final Test 2026\2027.
Chocolate chip ice cream would tend to have very elastic demand because
other flavors of ice cream are almost perfect substitutes.
Profit is defined as
total revenue minus total cost.
XYZ Corporation produced 300 units of output but sold only 275 of the units
it produced. The average cost of production for each unit of output
produced was $100. Each of the 275 units sold were sold for a price of $95.
The total revenue of the XYZ Corporation is
$26,125. Total revenue is 275 units times $95, which equals $26,125.
An important implicit cost incurred by almost all businesses is the
opportunity cost of financial capital that has been invested in the business.
Which of the following costs does NOT vary with the amount of a firm's
output?
Total fixed costs
If a firm produces nothing, which of the following costs will be zero?
Variable cost
One assumption that distinguishes short-run cost analysis from long-run
cost analysis for a profit-maximizing firm is that in the short run,
the size of the factory is fixed.
When marginal cost exceeds average total cost,
average total cost is rising.
In the long run,
all inputs are considered to be variable.
Economies of scale occur when
long-run average total costs fall as output increases.
Tony is a wheat farmer but also spends part of his day teaching guitar
lessons. Due to the popularity of his local country western band, Farmer
