From Marco Qb

Multiple Choice

General

1) Adam smith is considered to be the founder of what branch of economics? a) Microeconomics b) Behavioral Economics c) Labor Economics d) Macroeconomics

Answer: ASource: Economics by Paul A. Samuelson and William Nordhaus 19th ed, p5

2) The title ‘Father of Macroeconomics’ is attributed to which economist? a) John Neville Keynes b) David Ricardo c) John Maynard Keynes d) Adam Smith

Answer: CSource: Economics by Paul A. Samuelson and William Nordhaus 19th ed, p5

3) The major 19th century British economist who proposed the Theory of Comparative Advantage:

Answer: David Ricardo

Micro

1) When the price of a good increases, the demand for its complement good ________a) Increasesb) Decreasesc) Stays the samed) Can’t say

Answer: BSource: Economics by Paul A. Samuelson and William Nordhaus 19th ed, p92

2) When the price of a good increases, the demand for its substitute good ________a) Increasesb) Decreasesc) Stays the samed) Can’t say


3) The slope of an indifference curve is called the ________a) Marginal rate of Substitutionb) Marginal rate of Technical Substitutionc) Marginal rate of Transformationd) Marginal rate of Consumption


4) An activity which can be considered as a positive externality is _______a) A steel mill polluting a riverb) A loud open rock concert situated in a quiet neighbourhoodc) Technological research yielding innovative products and methodsd) Smokers in a public waiting shed


5) A public good is a good which is:I. Rival III. Excludable

II. Non-rival IV. Non-excludable

a) I onlyb) III onlyc) I and III onlyd) II and IV only

Answer: DSource: Economics by Paul A. Samuelson and William Nordhaus 19th ed, p37

6) The slope of the demand curve is usually:a) Upward Slopingb) Downward Slopingc) Horizontald) Vertical


7) The Slope of the supply curve is usually:a) Upward Slopingb) Downward Slopingc) Horizontald) Vertical


8) The measure of how much the quantity demanded of a good changes when its price changes is called the ________.a) Cross price elasticity of demandb) Own price elasticity of demandc) Income Elasticity of demandd) None of the above


9) When a 1 percent change in price calls forth less than a 1 percent change in quantity demanded the good is said to have __________ demand.a) Unit-elasticb) Price-elasticc) Price-inelasticd) None of the above


10) When no one can be made better off without having to make someone else worse off, it is said that there is ________.a) Equilibriumb) Utopiac) Perfect Marketd) Pareto Efficiency


11) The cost incurred from altering inputs is:a) Average costb) Fixed costc) Total costd) Variable cost


12) Which among the four is not considered an axiom of consumer preference?a) Transitiveb) Reflexivec) Additived) Complete

Answer: CSource: Intermediate Microeconomics by Hal Varian 8th ed, p35

13) The optimal consumption position is where the indifference curve is _______ the budget line. a) Tangent b) Intersectingc) Perpendicular d) Lying on

Answer: ASource: Intermediate Microeconomics by Hal Varian 8th ed, p74

14) When demand for a good goes up by a greater proportion to income, we say that it is a:a) Luxury Goodb) Necessary Goodc) Inferior Goodd) Normal Good

Answer: ASource: Intermediate Microeconomics by Hal Varian 8th ed, p101

Quantity Q

Fixed Costs

FC

Variable Costs VC

Total Costs

TC

Marginal CostMC

Average CostAC

Average Fixed CostAFC

Average Variable

CostAVC

0 15 0 15 - ∞ ∞ -1 15 10 25 10 25 15 102 15 19 34 9 17 7.5 (q19)3 15 27 42 8 (q16) 5 94 15 (q18) (q17) 7 12.25 3.75 8.55 15 44 59 10 11.8 3 8.86 15 61 76 (q15) 12.67 (q20) 10.17

15) The marginal cost for the 6th unit of output is ______a) 10b) 13c) 15d) 17

Answer: D

16) The average cost for the 3rd unit of output is ______a) 12b) 13.5c) 14d) 12.8

Answer: C

17) The total cost for the 4th unit of output is ______a) 49b) 52c) 47d) 50

Answer: A

18) The variable cost for the 4th unit of output is ______a) 36b) 34c) 31d) 33

Answer: B

19) The average variable cost for the 2nd unit of output is ______a) 8.5b) 8

c) 10d) 9.5

Answer: D

20) The average fixed cost for the 6th unit of output is _______a) 3b) 2c) 2.5d) 3.5

Answer: C

Identification

Microeconomics

1) There exists a definite relationship between the market price of a good and the quantity demanded of that good. What is this relationship called?

Answer: Demand Schedule/CurveSource: Economics by Paul A. Samuelson and William Nordhaus 19th ed, p46

2) The market state in which quantity demanded is equal to quantity supplied is called the ________.

Answer: Market EquilibriumSource: Economics by Paul A. Samuelson and William Nordhaus 19th ed, p54

3) What is the satisfaction gained by consuming a particular good or service?

Answer: UtilitySource: Economics by Paul A. Samuelson and William Nordhaus 19th ed, p84

4) A single seller with complete control over an entire industry is called a ________

Answer: Monopolist/MonopolySource: Economics by Paul A. Samuelson and William Nordhaus 19th ed, p171

5) A person’s maximum willingness to pay can also be called his ________.

Answer: Reservation PriceSource: Intermediate Microeconomics by Hal Varian 8th ed, p4

6) This is a type of good which has a negative income elasticity.

Answer: Inferior GoodSource: Intermediate Microeconomics by Hal Varian 8th ed, p285

7) There exists such a good that as its price decreases quantity demanded of the good also decreases. What is this good called?

Answer: Giffen GoodSource: Intermediate Microeconomics by Hal Varian 8th ed, p105

8) The lost value to consumers and producers which are not captured by the levied tax is the ____________.

Answer: deadweight loss/ excess burdenSource: Intermediate Microeconomics by Hal Varian 8th ed, p306

9) A _________ is a person who receives the benefit of a good but does not pay for it.

Answer: Free-riderSource: Economics Principles by Gregory Mankiw, p248

10) This cost of an item is what we have to give up in order to acquire that item.

Answer: Opportunity CostSource: Economics Principles by Gregory Mankiw, p24

True or False

Microeconomics

1) Suppose that a spell of bad weather raises the price of wheat, a key ingredient of bread. This shifts the supply curve of bread to the right.

Answer: FalseSource: Economics by Paul A. Samuelson and William Nordhaus 19th ed, p55

2) If supply is inelastic relative to demand then most of the burden of tax will be carried by the consumers.


3) With every additional unit of a particular good you consume, your marginal utility from each additional unit of the good decreases.

Answer: TrueSource: Economics by Paul A. Samuelson and William Nordhaus 19th ed, p85

4) Addictive Substances, such as illegal drugs, are price-elastic.


5) Consumer surplus measures the extra value that consumers receive above what they pay for a commodity

Answer: TrueSource: Economics by Paul A. Samuelson and William Nordhaus 19th ed, p97

6) A perfectly discriminating monopolist achieves an outcome that is Pareto inefficient.


7) Without government intervention, positive externalities leads the market to produce less than the socially optimal amount of a particular good.

Answer: TrueSource: Economics Principles by Gregory Mankiw, p228

8) All kinds of taxes are distortionary and move the allocation of resources away from the socially optimum.

Answer: FalseSource: Economics Principles by Gregory Mankiw, p231

9) Trade can make everyone better off.

Answer: TrueSource: Economics Principles by Gregory Mankiw, p26

10) A producer with an absolute advantage over another producer will gain nothing from trading.

Answer: FalseSource: Economics Principles by Gregory Mankiw, p75

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From Marco Qb