Microeconomics Practice Exam 1 Questions

Microeconomics Practice Exam 1 Questions and answers well elaborated guaranteed success. Economics is the social science that studies how individuals, institutions, and societies make choices under conditions of scarcity - correct answerstrue Macroeconomic analysis is concerned with the economic activity of specific firms or markets - correct answersfalse The economic perspective views individuals as making purposeful choices based on the marginal analysis of costs and benefits of decisions - correct answerstrue Because of scarcity, "there is no such thing as a free lunch." - correct answerstrue Microeconomics deal mostly with: a. the causes and consequences of inflation b. individual product markets and participants in these markets c. finding policies to reduce the unemployment below 6% d. ways the government can redistribute income in a more equitable way e. all of the above - correct answersB) individual product markets and participants in these markets When we say that 2 things are directly or positively related (like the price of a good and the quantity supplied) it means: a. the two things are desirable or beneficial b. when one thing changes the other remains the same c. the two things move or change in the same direction d. the two things move or change in opposite directions - correct answersC) the two things move or change in the same direction Which of the following is an example of a capital good: a. a Dupont chemical plant b. a power drill c. a bakery delivery truck d. all of the above are capital goods e. none of the above: capital refers only to money or stock or bonds - correct answersD) all of the above are capital goods Arriving late to our economics class will automatically lower your course grade by one letter grade. As a result of this policy, the class is seldom interrupted by latecomers. This best illustrates which one of the principles of economics: a. voluntary exchange makes everyone better off b. incentives influence our behavior and choices c. decision making at the margin d. markets are an efficient way to allocate resources - correct answersB) incentives influence our behavior and choices Which of the following is most closely related to the economic principle that sometimes government intervention is necessary to improve market outcomes: a. limiting the increase in the price of gas caused by the disruptive effects of hurricanes in the Gulf of Mexico b. making people who do not now have health insurance purchase such policies c. controlling the emission of green house gases and climate change caused by these gases d. reducing the high cost of rent in cities and towns with a large university - correct answersC) controlling the emission of green house gases and climate change caused by these gases Because resources are not equally efficient toward the production of every good, the PPC: a. depicts limited outcome combinations b. slopes downward c. is bowed outward d. all of the above - correct answersC) is bowed outward (law of increasing opportunity cost: as an economy devotes more of its resources to one product, it uses less efficient means to produce. The curve is flatter at the end points and more curved in the middle.) Which of the following is true concerning the construction of a society's PPC? a. it assumes the price of the two goods are equal b. it assumes resources are scarce c. it assumes people prefer one of the goods more than the other d. all of the above - correct answersB) it assumes resources are scarce (limited output possibilities) The pursuit of economic self-interest (utility maximization) is the same thing as selfishness or greediness - correct answersfalse Suppose Henrietta Hen received $20 for her birthday. If she bought a case of beer with the money, the beer would be at a zero opportunity cost to her because the money was a gift and she didn't have to do anything to earn it - correct answersfalse Money is a device for facilitating the exchange of goods and services - correct answerstrue