BUS 302L Micro Economics Exam Questions with Correct Answers Graded A+
Because of scarcity, every economic decision involves - Answers 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 - Answers the enjoyment
and exercise he would have received from bike riding
Which of the following is a false statement about absolute and comparative advantage? - Answers It is
possible for one country to have the comparative advantage in all goods
The gains from trade are - Answers a result of more efficient resource allocation
Which of the following would not tend to lower the price of VCRs? - Answers 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 - Answers the market price.
Milk can be used to make yogurt or cheese. Other things equal, if consumers start demanding more
yogurt, - Answers less milk will be used in cheese and more will be used in yogurt.
The price elasticity of demand - Answers varies from one point to another on a typical demand curve
Which of the following statements is true? - Answers 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? - Answers $4,500
Which of the following is a correct definition of marginal cost (MC)? - Answers It is the added cost that
results from producing one more unit of a good.
A firm will shut down if - Answers P < AVC at all levels of output
A negative externality exists when - Answers 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? - Answers $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 - Answers the value of watching the television show plus the value of studying
for the test
, The opportunity cost of purchasing an item is - Answers 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? - Answers the sashimi
demand curve will shift to the right
Economists can be college professors or business analysts. If there is an increase in businesses' need for
economic analysis - Answers All of the above
In a market economy, - Answers resources move to higher valued uses in response to changes in price.
At a price of $4.50/pound, people buy 55 pounds of chocolate cream candy. At a price of $5.50/pound,
people buy 45 pounds of chocolate cream candy. What is the arc elasticity of demand for chocolate
cream candy in this price - Answers 1.0
At a price of $9.50/pound, people buy 45 pounds of lamb. At a price of $10.50/pound, people buy 35
pounds of lamb. What is the arc elasticity of demand for lamb in this price range? - Answers 2.5
Average fixed cost - Answers declines as output increases.
Which of the following statements is true? - Answers MC = ▲TC/ ▲Q
A perfectly competitive firm maximizes its profits using what rule? - Answers P = MC
Refer to the figure above. Twelve units of this product are sold at $10 each. Producer surplus is equal to
areas - Answers E+F
It is common knowledge that many U.S. national parks have become overused. One possible solution to
this problem is to - Answers increase entrance fees
Who among the following is most likely to favor an appreciation of the U.S. dollar? - Answers an
American professor on a tour of Italian museums
If the price elasticity of demand for CSUN sweatshirts is 1.5, then - Answers an increase in price will
cause total consumer expenditures on CSUN sweatshirts to fall
Economic profit is equal to - Answers total revenue minus the opportunity cost of producing goods and
services.
Your friend is thinking of opening a video store. She estimates it would cost $500,000 a year to rent the
store and buy video stock. She is planning to quit her $50,000 a year job as an accountant to run the
store. Her opportunity cost of opening the store is - Answers $550,000
Comparative advantage is based on - Answers opportunity costs
Because of scarcity, every economic decision involves - Answers 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 - Answers the enjoyment
and exercise he would have received from bike riding
Which of the following is a false statement about absolute and comparative advantage? - Answers It is
possible for one country to have the comparative advantage in all goods
The gains from trade are - Answers a result of more efficient resource allocation
Which of the following would not tend to lower the price of VCRs? - Answers 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 - Answers the market price.
Milk can be used to make yogurt or cheese. Other things equal, if consumers start demanding more
yogurt, - Answers less milk will be used in cheese and more will be used in yogurt.
The price elasticity of demand - Answers varies from one point to another on a typical demand curve
Which of the following statements is true? - Answers 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? - Answers $4,500
Which of the following is a correct definition of marginal cost (MC)? - Answers It is the added cost that
results from producing one more unit of a good.
A firm will shut down if - Answers P < AVC at all levels of output
A negative externality exists when - Answers 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? - Answers $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 - Answers the value of watching the television show plus the value of studying
for the test
, The opportunity cost of purchasing an item is - Answers 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? - Answers the sashimi
demand curve will shift to the right
Economists can be college professors or business analysts. If there is an increase in businesses' need for
economic analysis - Answers All of the above
In a market economy, - Answers resources move to higher valued uses in response to changes in price.
At a price of $4.50/pound, people buy 55 pounds of chocolate cream candy. At a price of $5.50/pound,
people buy 45 pounds of chocolate cream candy. What is the arc elasticity of demand for chocolate
cream candy in this price - Answers 1.0
At a price of $9.50/pound, people buy 45 pounds of lamb. At a price of $10.50/pound, people buy 35
pounds of lamb. What is the arc elasticity of demand for lamb in this price range? - Answers 2.5
Average fixed cost - Answers declines as output increases.
Which of the following statements is true? - Answers MC = ▲TC/ ▲Q
A perfectly competitive firm maximizes its profits using what rule? - Answers P = MC
Refer to the figure above. Twelve units of this product are sold at $10 each. Producer surplus is equal to
areas - Answers E+F
It is common knowledge that many U.S. national parks have become overused. One possible solution to
this problem is to - Answers increase entrance fees
Who among the following is most likely to favor an appreciation of the U.S. dollar? - Answers an
American professor on a tour of Italian museums
If the price elasticity of demand for CSUN sweatshirts is 1.5, then - Answers an increase in price will
cause total consumer expenditures on CSUN sweatshirts to fall
Economic profit is equal to - Answers total revenue minus the opportunity cost of producing goods and
services.
Your friend is thinking of opening a video store. She estimates it would cost $500,000 a year to rent the
store and buy video stock. She is planning to quit her $50,000 a year job as an accountant to run the
store. Her opportunity cost of opening the store is - Answers $550,000
Comparative advantage is based on - Answers opportunity costs
