ECON 213
Principles of Microeconomics
Comprehensive Midterms Exam (Qns & Ans)
2025
1. Which of the following best describes the concept of
opportunity cost?
- A. The cost of all resources used in production
- B. The value of the best alternative foregone
- C. The monetary cost of a product
- D. The sunk cost of previous investments
ANS: B. The value of the best alternative foregone
©/2025
, Rationale: Opportunity cost refers to the value of the best
alternative foregone when a choice is made. It is the cost of the
next best option that is not chosen.
2. What is the primary characteristic of a perfectly competitive
market?
- A. Few sellers with significant market power
- B. High barriers to entry
- C. Homogeneous products with many buyers and sellers
- D. Price-setting firms
ANS: C. Homogeneous products with many buyers and sellers
Rationale: A perfectly competitive market is characterized by
homogeneous products with many buyers and sellers, no single
entity having market power, and free entry and exit.
Fill-in-the-Blank Questions
3. The law of __________ states that, ceteris paribus, an increase
in the price of a good will result in a decrease in the quantity
demanded.
ANS: demand
©/2025
, Rationale: The law of demand states that, all else being equal,
an increase in the price of a good will result in a decrease in the
quantity demanded, reflecting the inverse relationship between
price and quantity demanded.
4. __________ elasticity of demand measures the responsiveness
of the quantity demanded of one good to a change in the price of
another good.
ANS: Cross-price
Rationale: Cross-price elasticity of demand measures the
responsiveness of the quantity demanded of one good to a change
in the price of another good, indicating how substitutes and
complements affect demand.
True/False Questions
5. True or False: In the short run, at least one factor of
production is fixed.
ANS: True
Rationale: In the short run, at least one factor of production is
fixed, meaning that firms cannot adjust all inputs to production
immediately.
©/2025
, 6. True or False: Marginal cost is the additional cost of
producing one more unit of output.
ANS: True
Rationale: Marginal cost is the additional cost incurred from
producing one more unit of output, helping firms make production
decisions.
Multiple Response Questions
7. Which of the following factors can cause a shift in the demand
curve? (Select all that apply)
- A. Changes in consumer preferences
- B. Changes in income
- C. Changes in production technology
- D. Changes in the prices of related goods
ANSs: A, B, D
Rationale: Factors that can cause a shift in the demand curve
include changes in consumer preferences, income, and the prices
of related goods. Changes in production technology affect the
supply curve, not the demand curve.
©/2025
Principles of Microeconomics
Comprehensive Midterms Exam (Qns & Ans)
2025
1. Which of the following best describes the concept of
opportunity cost?
- A. The cost of all resources used in production
- B. The value of the best alternative foregone
- C. The monetary cost of a product
- D. The sunk cost of previous investments
ANS: B. The value of the best alternative foregone
©/2025
, Rationale: Opportunity cost refers to the value of the best
alternative foregone when a choice is made. It is the cost of the
next best option that is not chosen.
2. What is the primary characteristic of a perfectly competitive
market?
- A. Few sellers with significant market power
- B. High barriers to entry
- C. Homogeneous products with many buyers and sellers
- D. Price-setting firms
ANS: C. Homogeneous products with many buyers and sellers
Rationale: A perfectly competitive market is characterized by
homogeneous products with many buyers and sellers, no single
entity having market power, and free entry and exit.
Fill-in-the-Blank Questions
3. The law of __________ states that, ceteris paribus, an increase
in the price of a good will result in a decrease in the quantity
demanded.
ANS: demand
©/2025
, Rationale: The law of demand states that, all else being equal,
an increase in the price of a good will result in a decrease in the
quantity demanded, reflecting the inverse relationship between
price and quantity demanded.
4. __________ elasticity of demand measures the responsiveness
of the quantity demanded of one good to a change in the price of
another good.
ANS: Cross-price
Rationale: Cross-price elasticity of demand measures the
responsiveness of the quantity demanded of one good to a change
in the price of another good, indicating how substitutes and
complements affect demand.
True/False Questions
5. True or False: In the short run, at least one factor of
production is fixed.
ANS: True
Rationale: In the short run, at least one factor of production is
fixed, meaning that firms cannot adjust all inputs to production
immediately.
©/2025
, 6. True or False: Marginal cost is the additional cost of
producing one more unit of output.
ANS: True
Rationale: Marginal cost is the additional cost incurred from
producing one more unit of output, helping firms make production
decisions.
Multiple Response Questions
7. Which of the following factors can cause a shift in the demand
curve? (Select all that apply)
- A. Changes in consumer preferences
- B. Changes in income
- C. Changes in production technology
- D. Changes in the prices of related goods
ANSs: A, B, D
Rationale: Factors that can cause a shift in the demand curve
include changes in consumer preferences, income, and the prices
of related goods. Changes in production technology affect the
supply curve, not the demand curve.
©/2025
