Sophia Microeconomics Unit 1 Exam Questions With Complete Solution

Sophia Microeconomics Unit 1 Exam Questions With Complete Solution C1: Microeconomics studies the behavior of__________. - CORRECT ANSWER An economy in its entirety C1: Which of the following is a characteristic of a rational consumer? - CORRECT ANSWER Rational consumers analyze costs and benefits when making decisions. C1: Economists assume that all rational consumers will allocate their resources in order to _________. - CORRECT ANSWER Maximize their utility. C1: Sarah is deciding between two different pairs of running shoes: The Minimalist 7, which cost $99, and the Sprint XT, which are priced at $155. Although both would meet her needs, Sarah knew that she would get more wear and more support out of the higher-priced Sprint XT shoe. If he wanted to buy the shoes today, Sarah had the ability to pay $99 for the Minimalist 7s. However, if she wanted to buy the Sprint XTs, she would need to pick up another shift at her job to earn extra money. Which of the following statements describes marginal cost? - CORRECT ANSWER Sarah must work another night. C1: A firm decides to produce 100,000 baseballs. Which of the following would be its opportunity cost? - CORRECT ANSWER The 50,000 footballs the firm could have produced otherwise. C1: Wage and salary contracts, leases and fixed factory sizing are all examples of _________. - CORRECT ANSWER Short-run production constraints. C1: A firm that produces running shoes is currently manufacturing a line of waterproof shoes at a marginal cost of $50 per pair. During the winter months, they were able to charge a price of $90 per pair. Now that it is summer, the demand has fallen, and they are only able to charge $60 per pair. Assuming the shoes store is a profit-maximizing firm, which of the following is true? - CORRECT ANSWER The firm should continue to produce the shoes since the marginal revenue is still greater than the marginal cost. C2: Which of the following is an example of being labor intensive? - CORRECT ANSWER The wiring for a custom-built house. C2: Due to his recent increase in income, Peter is going to buy a quality pair of winter gloves from a specialty shop rather than a bargain set from a discount shop. The bargain gloves are now considered a(n) _________ good. - CORRECT ANSWER Inferior C2: Which of the following would NOT be an example of ceteris paribus as it relates to the Law of Demand? - CORRECT ANSWER Due to the threat of a hurricane, the demand for generators increases. C2: Which of the following is an example of movement along a demand curve? - CORRECT ANSWER Tomatoes have become more expensive, so consumers are buying fewer tomatoes. C2: Which of the following is the best example of the Law of Supply? - CORRECT ANSWER As the price of scooters increases, firms produce more scooters. C2: A movement along the supply curve for coffee would occur when _________. - CORRECT ANSWER The price of coffee decreases Thompson's Shoe Emporium can produce and ship 200 pairs of rain boots by the end of the week at a cost of $80 per pair. Shoe Locker agreed to the cost and placed an order for the shipment. Although they sold the units to Shoe Locker at $80 per pair, Thompson's Shoe Emporium was willing to produce the shoes at a price as low as $50 per pair. The difference between the amount that Shoe Locker paid for the shoes ($80) and the lowest amount that Thompson's Shoe Emporium would have agreed to receive for the shoes ($50) is known as the _________. - CORRECT ANSWER Producer surplus C2: Each worker at Palona can produce 10 pairs of pants in an hour, while the workers at Lakeshore Clothing produce eight pair of pants in one hour. Which of the following best describes the situation between the two competing companies? - CORRECT ANSWER Absolute advantage M1: Joe paid $5,000 for a used car, but he was willing to pay as much as $10,000. Which economic concept below corresponds to the example above? - CORRECT ANSWER Consumer surplus M2: Andrea cannot spend all of her money on bananas. She has to purchase other groceries and pay her bills. Which economic term corresponds to the idea that Andrea must budget how she spends her limited income? - CORRECT ANSWER Constraint M3: Which choice below is a factor in the process of resource allocation for consumers? - CORRECT ANSWER Time