Bus 302L Micro Economics UPDATED
ACTUAL Exam Questions and CORRECT
Answers
Because of scarcity, every economic decision involves - CORRECT ANSWER - a trade
off
Ryan spends an hour studying instead of going for a bike ride. Assume studying and bike riding
were Ryan's only options for that hour. The opportunity cost to him of studying is - CORRECT
ANSWER - the enjoyment and exercise he would have received from bike riding
Which of the following is a false statement about absolute and comparative advantage? -
CORRECT ANSWER - It is possible for one country to have the comparative advantage in
all goods
The gains from trade are - CORRECT ANSWER - a result of more efficient resource
allocation
Which of the following would not tend to lower the price of VCRs? - CORRECT
ANSWER - increasing price of pay-per-view movies on cable TV
In a market economy, the allocation of the quantity supplied of any good among demanders is
determined by - CORRECT ANSWER - the market price.
Milk can be used to make yogurt or cheese. Other things equal, if consumers start demanding
more yogurt, - CORRECT ANSWER - less milk will be used in cheese and more will be
used in yogurt.
The price elasticity of demand - CORRECT ANSWER - varies from one point to another
on a typical demand curve
, Which of the following statements is true? - CORRECT ANSWER - The elasticity of
demand will be larger if there are good substitutes available.
A firm's total cost is $10,000. Its variable cost is $5,500. What is the firm's fixed cost? -
CORRECT ANSWER - $4,500
Which of the following is a correct definition of marginal cost (MC)? - CORRECT
ANSWER - It is the added cost that results from producing one more unit of a good.
A firm will shut down if - CORRECT ANSWER - P < AVC at all levels of output
A negative externality exists when - CORRECT ANSWER - Jack buys a good from Bill,
and this makes Todd worse off
Hannah runs a manicuring shop. Currently, her shop provides 50 manicures per day, and the
shop's daily total cost (TC) is $600. If Hannah decides to provide 25 more manicures per day, the
total cost will rise by $75 per day. If Hannah does decide to increase production by this much,
what will the shop's daily average total cost (ATC) be? - CORRECT ANSWER - $9.00
If Ross decides to ride his bike this afternoon, he will miss his favorite television show, and he
won't have time to study for his economics test. If Ross doesn't ride his bike, he'll choose to
watch the television show instead. (He cannot both watch television and study for the test.)
Ross's opportunity cost of riding the bike is - CORRECT ANSWER - the value of
watching the television show plus the value of studying for the test
The opportunity cost of purchasing an item is - CORRECT ANSWER - the next best thing
you could have done with the time and money spent.
Most residents of Los Angeles think sushi and sashimi are very similar foods. What effect will an
increase in the price of sushi have on the demand curve for sashimi in Los Angeles? - CORRECT
ANSWER - the sashimi demand curve will shift to the right
ACTUAL Exam Questions and CORRECT
Answers
Because of scarcity, every economic decision involves - CORRECT ANSWER - a trade
off
Ryan spends an hour studying instead of going for a bike ride. Assume studying and bike riding
were Ryan's only options for that hour. The opportunity cost to him of studying is - CORRECT
ANSWER - the enjoyment and exercise he would have received from bike riding
Which of the following is a false statement about absolute and comparative advantage? -
CORRECT ANSWER - It is possible for one country to have the comparative advantage in
all goods
The gains from trade are - CORRECT ANSWER - a result of more efficient resource
allocation
Which of the following would not tend to lower the price of VCRs? - CORRECT
ANSWER - increasing price of pay-per-view movies on cable TV
In a market economy, the allocation of the quantity supplied of any good among demanders is
determined by - CORRECT ANSWER - the market price.
Milk can be used to make yogurt or cheese. Other things equal, if consumers start demanding
more yogurt, - CORRECT ANSWER - less milk will be used in cheese and more will be
used in yogurt.
The price elasticity of demand - CORRECT ANSWER - varies from one point to another
on a typical demand curve
, Which of the following statements is true? - CORRECT ANSWER - The elasticity of
demand will be larger if there are good substitutes available.
A firm's total cost is $10,000. Its variable cost is $5,500. What is the firm's fixed cost? -
CORRECT ANSWER - $4,500
Which of the following is a correct definition of marginal cost (MC)? - CORRECT
ANSWER - It is the added cost that results from producing one more unit of a good.
A firm will shut down if - CORRECT ANSWER - P < AVC at all levels of output
A negative externality exists when - CORRECT ANSWER - Jack buys a good from Bill,
and this makes Todd worse off
Hannah runs a manicuring shop. Currently, her shop provides 50 manicures per day, and the
shop's daily total cost (TC) is $600. If Hannah decides to provide 25 more manicures per day, the
total cost will rise by $75 per day. If Hannah does decide to increase production by this much,
what will the shop's daily average total cost (ATC) be? - CORRECT ANSWER - $9.00
If Ross decides to ride his bike this afternoon, he will miss his favorite television show, and he
won't have time to study for his economics test. If Ross doesn't ride his bike, he'll choose to
watch the television show instead. (He cannot both watch television and study for the test.)
Ross's opportunity cost of riding the bike is - CORRECT ANSWER - the value of
watching the television show plus the value of studying for the test
The opportunity cost of purchasing an item is - CORRECT ANSWER - the next best thing
you could have done with the time and money spent.
Most residents of Los Angeles think sushi and sashimi are very similar foods. What effect will an
increase in the price of sushi have on the demand curve for sashimi in Los Angeles? - CORRECT
ANSWER - the sashimi demand curve will shift to the right
