Page 1 of 35
MICROECONOMICS THEORY LECTURE 1 PRACTICE TEST
WITH CORRECT ANSWERS
What is the opportunity cost of eating the home-cooked meal?
A. The value of a five-dollar dinner at Burger Joint.
B. The value of the ingredients that go into the home-cooked
meal, and the value of a five-dollar dinner at Burger Joint.
C. There is no opportunity cost since you did not pay for the gift
card.
D. The time it takes to eat your home-cooked meal, and the value
of the five-dollar dinner at Burger . Joint.
E. The value of the ingredients that go into the home-cooked
meal.
B. The value of the ingredients that go into the home-cooked
meal, and the value of a five-dollar dinner at Burger Joint.
Daniel has decided to open his own bakery using locally sourced
ingredients and supplies. He provides income and jobs to local
suppliers. He also provides his community with a place to buy
delicious baked goods.
This is an example of
A. Market failure
B. A recession
C. The invisible hand
D. A command economy
C. The invisible hand
, Page 2 of 35
The seaport town of New Monopoly has become extremely
popular with shipping companies due to its superior location. The
port has become so congested that ships must wait hours every
day just to dock.
This is an example of:
A. Market failure
B. A recession
C. Marginal analysis
D. A private good
A. Market failure
The mayor of New Monopoly realizes that the congestion at the
port costs the shipping companies and his town money. Which
decision would NOT move him towards a command economy?
A. The mayor decides to only allow the five most profitable
shipping companies to use the port.
B. The mayor orders the port's employees to work extra hours.
C. The mayor decides to let individual firms and consumers find a
solution for the excessive wait time.
C. The mayor decides to let individual firms and consumers find a
solution for the excessive wait time.
There are limited resources to satisfy all of society's wants.
A. Margins
B. Business cycle
C. Scarcity
D. Entrepreneurship
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E. Trade-off
F. Recession
C. Scarcity
Comparing the benefits and costs of engaging in an activity.
A. Margins
B. Scarcity
C. Resources
D. Financial capital
E. Recession
F. Trade-off
F. Trade-off
The five-dollar Burger Joint gift card that your friend gave you
for your birthday expires today. You can either use the gift card
to buy yourself dinner at Burger Joint, or you can stay home and
eat a delicious home-cooked meal.
You and other college students are deciding whether to major in
music or engineering. You learn that there is a shortage of
engineers, making it easy for engineering graduates to find
employment, while there is a glut of musicians for whom finding
a job is difficult. As a result, you and many other college students
decide to major in engineering.
Which economic principle does this illustrate?
A. Markets tend to move towards equilibrium as individuals
respond to incentives.
, Page 4 of 35
B. Individuals do not normally take into account the decisions of
other individuals.
C. Changes in incentives are unlikely to change the decisions
people make.
D. Government intervention can improve efficiency when there is
a market failure.
E. Specialization leads to economic efficiency.
A. Markets tend to move towards equilibrium as individuals
respond to incentives.
A local energy company releases pollutants into the regional
water reservoir.
A. Government intervention will improve society's well-being.
B. Government intervention will not improve society's well-being.
A. Government intervention will improve society's well-being.
The coastal town of Willowby could prevent many shipwrecks by
building a lighthouse. However, no individual resident is willing
to pay for the lighthouse because they could never recoup the
cost from ships that benefit from the lighthouse.
A. Government intervention will improve society's well-being.
B. Government intervention will not improve society's well-being.
A. Government intervention will improve society's well-being.
A manufacturing company in Texas is switching from producing
coats to producing T-shirts in anticipation of warmer weather.
A. Government intervention will improve society's well-being.
B. Government intervention will not improve society's well-being.
MICROECONOMICS THEORY LECTURE 1 PRACTICE TEST
WITH CORRECT ANSWERS
What is the opportunity cost of eating the home-cooked meal?
A. The value of a five-dollar dinner at Burger Joint.
B. The value of the ingredients that go into the home-cooked
meal, and the value of a five-dollar dinner at Burger Joint.
C. There is no opportunity cost since you did not pay for the gift
card.
D. The time it takes to eat your home-cooked meal, and the value
of the five-dollar dinner at Burger . Joint.
E. The value of the ingredients that go into the home-cooked
meal.
B. The value of the ingredients that go into the home-cooked
meal, and the value of a five-dollar dinner at Burger Joint.
Daniel has decided to open his own bakery using locally sourced
ingredients and supplies. He provides income and jobs to local
suppliers. He also provides his community with a place to buy
delicious baked goods.
This is an example of
A. Market failure
B. A recession
C. The invisible hand
D. A command economy
C. The invisible hand
, Page 2 of 35
The seaport town of New Monopoly has become extremely
popular with shipping companies due to its superior location. The
port has become so congested that ships must wait hours every
day just to dock.
This is an example of:
A. Market failure
B. A recession
C. Marginal analysis
D. A private good
A. Market failure
The mayor of New Monopoly realizes that the congestion at the
port costs the shipping companies and his town money. Which
decision would NOT move him towards a command economy?
A. The mayor decides to only allow the five most profitable
shipping companies to use the port.
B. The mayor orders the port's employees to work extra hours.
C. The mayor decides to let individual firms and consumers find a
solution for the excessive wait time.
C. The mayor decides to let individual firms and consumers find a
solution for the excessive wait time.
There are limited resources to satisfy all of society's wants.
A. Margins
B. Business cycle
C. Scarcity
D. Entrepreneurship
, Page 3 of 35
E. Trade-off
F. Recession
C. Scarcity
Comparing the benefits and costs of engaging in an activity.
A. Margins
B. Scarcity
C. Resources
D. Financial capital
E. Recession
F. Trade-off
F. Trade-off
The five-dollar Burger Joint gift card that your friend gave you
for your birthday expires today. You can either use the gift card
to buy yourself dinner at Burger Joint, or you can stay home and
eat a delicious home-cooked meal.
You and other college students are deciding whether to major in
music or engineering. You learn that there is a shortage of
engineers, making it easy for engineering graduates to find
employment, while there is a glut of musicians for whom finding
a job is difficult. As a result, you and many other college students
decide to major in engineering.
Which economic principle does this illustrate?
A. Markets tend to move towards equilibrium as individuals
respond to incentives.
, Page 4 of 35
B. Individuals do not normally take into account the decisions of
other individuals.
C. Changes in incentives are unlikely to change the decisions
people make.
D. Government intervention can improve efficiency when there is
a market failure.
E. Specialization leads to economic efficiency.
A. Markets tend to move towards equilibrium as individuals
respond to incentives.
A local energy company releases pollutants into the regional
water reservoir.
A. Government intervention will improve society's well-being.
B. Government intervention will not improve society's well-being.
A. Government intervention will improve society's well-being.
The coastal town of Willowby could prevent many shipwrecks by
building a lighthouse. However, no individual resident is willing
to pay for the lighthouse because they could never recoup the
cost from ships that benefit from the lighthouse.
A. Government intervention will improve society's well-being.
B. Government intervention will not improve society's well-being.
A. Government intervention will improve society's well-being.
A manufacturing company in Texas is switching from producing
coats to producing T-shirts in anticipation of warmer weather.
A. Government intervention will improve society's well-being.
B. Government intervention will not improve society's well-being.
