First Review Sheet to Micro Final
Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.
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____
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3. Henry decides to spend two hours playing golf rather than working at his job which pays $8 per
hour. Henry's tradeoff is
a. the $16 he could have earned working for two hours.
b. nothing, because he enjoys playing golf more than working.
c. the increase in skill he obtains from playing golf for those two hours.
d. nothing, because he spent $16 for green fees to play golf.
15. In the markets for factors of production,
a. households provide firms with labor, land, and capital.
b. households provide firms with savings for investment.
c. firms provide households with goods and services.
d. the government provides firms with inputs for the production process.
16. When constructing a production possibilities frontier, all of the following are assumptions
EXCEPT
a. the economy produces only 2 goods.
b. all the economy's factors of production are being used.
c. the economy has a fixed level of technology.
d. the economy may increase its available factors of production.
20. A relatively steep demand curve means that
a. quantity demand will adjust slightly to a price change.
b. quantity demand will adjust greatly to a price change.
c. quantity demand will not adjust to a price change.
d. the change in quantity demand will exactly equal a change in price.
The table shows individual demand schedules for a market.
Table 4-1
Price of the Good
$0.00
0.50
1.00
1.50
2.00
2.50
Aaron
Angela
Austin
Alyssa
20
18
14
12
6
0
16
12
10
8
6
4
10
6
2
0
0
0
8
6
5
4
2
0
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23. Refer to Table 4-1. When the price of the good is $1.00, the quantity demanded in this market
would be
a. 42 units.
b. 31 units.
c. 24 units.
d. 14 units.
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26. An increase in the price of a good would
a. increase the supply.
b. increase the amount purchased by buyers.
c. give producers an incentive to produce more.
d. decrease the supply.
Figure 4-9
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27. Refer to Figure 4-9. If the price is $10, there would be a
a. shortage of 200 and price would rise.
b. surplus of 200 and price would fall.
c. shortage of 600 and price would rise.
d. surplus of 600 and price would fall.
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29. If the demand for a product decreases, we would expect equilibrium price
a. to increase and equilibrium quantity to decrease.
b. to decrease and equilibrium quantity to increase.
c. and equilibrium quantity to both increase.
d. and equilibrium quantity to both decrease.
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39. Orange juice and apple juice are substitutes. Bad weather that sharply reduced the orange harvest
would
a. increase consumer surplus in the market for orange juice but decrease producer
surplus in the market for apple juice.
b. increase consumer surplus in the market for orange juice and increase producer
surplus in the market for apple juice.
c. decrease consumer surplus in the market for orange juice but increase producer
surplus in the market for apple juice.
d. decrease consumer surplus in the market for orange juice and decrease producer
surplus in the market for apple juice.
True/False
Indicate whether the sentence or statement is true or false.
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62. An economic model can accurately explain how the economy is organized because it is designed to
include every feature of the real world.
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66. In a simple circular-flow diagram, the two types of markets in which households and firms interact
are the markets for goods and services and the markets for factors of production.
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68. In a circular-flow diagram, one loop shows the flow of real goods, services and factors of
production, and the other loop shows the corresponding flow of dollars.
Figure 2-11
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69. Refer to Figure 2-11. The opportunity cost of more doghouses increases as more doghouses are
produced.
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70. Economic growth causes a production possibilities frontier to shift outward.
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75. Consumer surplus is the amount a buyer actually has to pay for a good minus the amount the buyer
is willing to pay for it.
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78. The area above the demand curve and below the price measures the consumer surplus in a market.
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82. The area below the price and above the supply curve measures the producer surplus in a market.
Extension to Micro Final
Answer Section
MULTIPLE CHOICE
3.
ANS:
A
the $16 he could have earned working for two hours.
DIF: 2
REF: SECTION: 1.1
15. ANS: A
households provide firms with labor, land, and capital.
OBJ: TYPE: M
DIF: 2
REF: SECTION: 2.1
16. ANS: D
the economy may increase its available factors of production.
OBJ: TYPE: M
DIF: 2
REF: SECTION: 2.1
20. ANS: A
quantity demand will adjust slightly to a price change.
OBJ: TYPE: M
DIF: 3
23. ANS: B
31 units.
REF: SECTION: 2.4
OBJ: TYPE: M
DIF: 2
REF: SECTION: 4.2
26. ANS: C
give producers an incentive to produce more.
OBJ: TYPE: M
DIF: 2
REF: SECTION: 4.3
27. ANS: C
shortage of 600 and price would rise.
OBJ: TYPE: M
DIF: 3
REF: SECTION: 4.4
29. ANS: D
and equilibrium quantity to both decrease.
OBJ: TYPE: M
DIF: 2
REF: SECTION: 4.4
OBJ: TYPE: M
39. ANS: C
decrease consumer surplus in the market for orange juice but increase producer surplus in the
market for apple juice.
DIF: 3
62. ANS: F
REF: SECTION: 7.3
REF: SECTION: 2.1
OBJ: TYPE: M
OBJ: TYPE: T
66.
68.
69.
70.
75.
78.
82.
ANS:
ANS:
ANS:
ANS:
ANS:
ANS:
ANS:
T
T
T
T
F
F
T
REF:
REF:
REF:
REF:
REF:
REF:
REF:
SECTION: 2.1
SECTION: 2.1
SECTION: 2.1
SECTION: 2.1
SECTION: 7.1
SECTION: 7.1
SECTION: 7.2
OBJ:
OBJ:
OBJ:
OBJ:
OBJ:
OBJ:
OBJ:
TYPE: T
TYPE: T
TYPE: T
TYPE: T
TYPE: T
TYPE: T
TYPE: T