MIDTERM SAMPLE QUESTIONS
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) The branch of economics that examines the functioning of individual industries and the
behavior of individual decision-making units is
A) normative economics.
B) microeconomics.
C) macroeconomics.
D) positive economics.
1)
Refer to the information provided in Table 2.1 below to answer the following questions.
Table 2.1
Krystal
Writing Poems
8
Writing TV Commercials
2
Mark
12
4
2) Refer to Table 2.1. For Krystal, the opportunity cost of writing one TV commercial is
A) 1/4 of a poem.
B) 2 poems.
C) 4 poems.
D) 6 poems.
2)
3) The production possibility frontier is used to illustrate the concept of
A) equilibrium.
B) the laissez-faire economy.
C) opportunity costs.
D) aggregate demand.
3)
Refer to the information provided in Figure 2.1 below to answer the questions that follow.
Figure 2.1
4) Refer to Figure 2.1. The shape of Macroland's production possibility frontier shows
A) constant opportunity costs.
B) random opportunity costs.
C) decreasing opportunity costs.
D) increasing opportunity costs.
1
4)
Refer to the information provided in Figure 2.2 below to answer the questions that follow.
Figure 2.2
5) Refer to Figure 2.2. Microland is currently operating at Point B. You correctly deduce that
A) in Microland, all resources are fully employed and there are no production inefficiencies.
B) Microland has achieved a position of inefficiency.
C) Microland has overcome the problem of scarcity.
D) Microland has recently experienced some type of technological breakthrough.
5)
6) The value of the slope of a society's production possibility frontier is called its
A) marginal rate of transformation.
B) marginal rate of substitution.
C) unemployment rate.
D) inflation rate.
6)
7) The production possibility frontier is a graph that shows
A) all the combinations of goods and services that can be produced if all of society's resources
are used efficiently.
B) all the combinations of goods and services that are consumed over time if all of society's
resources are used efficiently.
C) the rate at which an economy's output will grow over time if all resources are used
efficiently.
D) the amount of goods and services consumed at various average price levels.
7)
Refer to the information provided in Figure 2.4 below to answer the questions that follow.
Figure 2.4
8) According to Figure 2.4, a decrease in unemployment may be represented by the movement
from
A) B to A.
B) C to D.
C) B to D.
D) A to C.
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8)
Refer to the information provided in Figure 2.6 below to answer the questions that follow.
Figure 2.6
9) Refer to Figure 2.6. An improvement in technology may be represented by a
A) movement along ppf1.
B) movement along ppf2.
C) shift from ppf2 to ppf1.
D) shift from ppf1 to ppf2.
9)
Refer to the information provided in Figure 2.4 below to answer the questions that follow.
Figure 2.4
10) Refer to Figure 2.4. The economy moves from Point A to Point D. This could be explained by
A) a change in society's preferences for motorcycles versus hybrid cars.
B) a reduction in unemployment.
C) an increase in economic growth.
D) an improvement in technology.
10)
11) According to Figure 2.4, the point where only hybrid cars are produced is
A) A.
B) B.
C) C.
11)
12) According to Figure 2.4, the point where only motorcycles are produced is
A) A.
B) B.
C) C.
D) D.
12)
D) E.
13) Which of the following will NOT cause a shift in the demand curve for compact discs?
A) a change in wealth
B) a change in the price of compact discs
C) a change in the price of downloadable online music
D) a change in income
3
13)
14) The "law of demand" implies that
A) as prices rise, demand increases.
B) as prices rise, quantity demanded increases.
C) as prices fall, demand increases.
D) as prices fall, quantity demanded increases.
14)
Refer to the information provided in Figure 2.6 below to answer the questions that follow.
Figure 2.6
15) Refer to Figure 2.6. Which of the following is most likely to shift the production possibility
frontier from ppf1 to ppf2?
A) moving resources from capital to consumer goods
B) the purchase of stocks on the New York Stock Exchange
C) a change in consumer tastes
D) an increase in the general educational level of the population
15)
16) Refer to Figure 2.6. If the economy is at ppf1, a change in consumer preferences would be shown
by a
A) shift from ppf2 to ppf1.
B) shift from ppf1 to ppf2.
C) movement along ppf1.
D) movement along ppf2.
16)
4
Refer to the information provided in Figure 3.3 below to answer the questions that follow.
Figure 3.3
17) Refer to Figure 3.3. As your income increased, the demand for X shifted from D1 to D2. Good X
is
A) a luxury good.
B) an income-neutral good.
C) a normal good.
D) an inferior good.
17)
Refer to the information provided in Figure 3.1 below to answer the questions that follow.
Figure 3.1
18) Refer to Figure 3.1. Which of the following would be most likely to cause the demand for Dr.
Pepper to shift from D0 to D1?
A) a decrease in income, assuming that Dr. Pepper is a normal good
B) a reduction in the price of sugar used to make Dr. Pepper
C) an increase in the price of 7-UP, assuming 7-UP is a substitute for Dr. Pepper
D) a decrease in the price of Dr. Pepper
5
18)
Refer to the information provided in Table 3.1 below to answer the questions that follow.
Price per Pizza
$3
6
9
12
15
Table 3.1
Quantity Demanded
(Pizzas per Month)
1,200
1,000
800
600
400
Quantity Supplied
(Pizzas per Month)
600
700
800
900
1,000
19) Refer to Table 3.1. If the price per pizza is $6, there is an excess
A) demand of 600 pizzas.
B) demand of 300 pizzas.
C) supply of 700 pizzas.
D) supply of 1,000 pizzas.
19)
Refer to the information provided in Figure 3.7 below to answer the following questions.
Figure 3.7
20) Refer to Figure 3.7. Assume the market is initially at Point B and that pizza is a normal good. A
decrease in income would cause the market to move from Point B on demand curve D2 to
A) Point A on demand curve D2.
B) Point C on demand curve D2.
C) demand curve D3.
D) demand curve D1.
20)
21) Suppose the demand for books goes down when the price of video games goes down. We can
say that these two goods are
A) substitutes.
B) perfect substitutes.
C) unrelated goods.
D) complements.
21)
6
Refer to the information provided in Figure 3.17 below to answer the questions that follow.
Figure 3.17
22) Refer to Figure 3.17. At a price of $30, there is an excess
A) demand of 750 sunglasses.
B) demand of 450 sunglasses.
C) demand of 300 sunglasses.
D) supply of 300 sunglasses.
22)
23) Equilibrium is the condition that exists
A) when the demand curve intersects the price axis.
B) whenever there is no government intervention in the market.
C) when quantity demanded equals quantity supplied.
D) when the demand curve intersects the quantity axis.
23)
Refer to the information provided in Figure 3.17 below to answer the questions that follow.
Figure 3.17
24) Refer to Figure 3.17. At a price of $90, there is an excess
A) supply of 600 sunglasses.
B) demand of 150 sunglasses.
C) supply of 450 sunglasses.
D) demand of 600 sunglasses.
7
24)
Refer to the information provided in Table 3.1 below to answer the questions that follow.
Price per Pizza
$3
6
9
12
15
Table 3.1
Quantity Demanded
(Pizzas per Month)
1,200
1,000
800
600
400
Quantity Supplied
(Pizzas per Month)
600
700
800
900
1,000
25) Refer to Table 3.1. This market will be in equilibrium if the price per pizza is
A) $6.
B) $9.
C) $12.
25)
D) $15.
Refer to the information provided in Figure 3.14 below to answer the following questions.
Figure 3.14
26) Refer to Figure 3.14. An increase in supply is represented by the movement from
A) Point B to Point C along supply curve S 2.
B) Point B to Point A along supply curve S 2.
C) S 2 to S 3.
D) S 2 to S 1.
26)
27) If resources are combined efficiently in production, then the society
A) is producing at a point outside the production possibility frontier.
B) is experiencing economic growth.
C) is producing at the most-desirable point on the production possibility frontier.
D) is producing at a point on the production possibility frontier but not necessarily at the
most-desirable point.
27)
28) If the price of chili increases, there will be ________ of chili cheese fries.
A) an increase in the quantity supplied
B) a decrease in the quantity supplied
C) an increase in the supply
D) a decrease in the supply
28)
29) If the demand for sardines increases as income decreases, sardines are a(n)
A) complementary good.
B) substitute good.
C) normal good.
D) inferior good.
29)
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30) The price of hard drives used in the manufacturing of laptop computers has risen. This will lead
to ________ laptop computers.
A) a decrease in the supply of
B) an increase in the supply of
C) an increase in the quantity supplied of
D) a decrease in the quantity supplied of
30)
Refer to the information provided in Table 2.1 below to answer the following questions.
Table 2.1
Krystal
Writing Poems
8
Writing TV Commercials
2
Mark
12
4
31) Refer to Table 2.1. Which of the following statements is true?
A) Krystal has a comparative advantage in both writing TV commercials and writing poems.
B) Krystal has a comparative advantage in writing TV commercials, and Mark has a
comparative advantage in writing poems.
C) Mark has a comparative advantage in writing TV commercials, and Krystal has a
comparative advantage in writing poems.
D) Mark has a comparative advantage in both writing TV commercials and writing poems.
31)
Refer to the information provided in Figure 2.1 below to answer the questions that follow.
Figure 2.1
32) Refer to Figure 2.1. Macroland is currently operating at Point A. The best explanation for this is
that
A) the economy operates as an efficient market.
B) the economy's resources are being used inefficiently.
C) the economy has very poor technology.
D) the economy has very few resources.
32)
33) Studying how Joshua allocates his time between school and video games is an example of
A) microeconomics.
B) descriptive economics.
C) macroeconomics.
D) industrial organization.
33)
34) Inflation and unemployment
A) are a focus of macroeconomics.
C) are a focus of microeconomics.
34)
B) are a focus of positive economics.
D) are the focus of normative economics.
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35) Periods of less than full employment correspond to
A) points on the ppf.
C) either points inside or outside the ppf.
35)
B) points outside the ppf.
D) points underneath the ppf.
36) If someone has a comparative advantage in growing pineapples,
A) they can grow pineapples at a lower opportunity cost than other pineapple growers.
B) they can grow more pineapples using the same resources than other pineapple growers.
C) they also have an absolute advantage in growing pineapples.
D) pineapples are the only product they can grow.
36)
37) The process by which resources are transformed into useful forms is
A) allocation.
B) consumption.
C) capitalization.
37)
D) production.
38) Which of the following would an economist classify as capital?
A) a guitar used by a musician
B) a corporate bond
C) a post office employee
D) a $50 bill
38)
39) When two people trade,
A) both of them expect to be made worse off by the exchange.
B) they know one of them will get the better of the other.
C) they both expect to be made better off by the exchange.
D) they are trying to help out each other.
39)
40) Suppose you are deciding whether to spend your tax rebate check on a new iPod player or a new
digital camera. You are dealing with the concept of
A) the fallacy of composition.
B) opportunity costs.
C) equity.
D) comparative advantage.
40)
41) The concept of opportunity cost is based on the principle of
A) scarcity.
B) need.
C) profit.
41)
D) consumption.
42) Capital, as economists use the term,
A) refers to the process by which resources are transformed into useful forms.
B) is the money the firm spends to hire resources.
C) is money the firm raises from selling stock.
D) refers to things that have already been produced that are in turn used to produce other
goods and services.
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42)
Figure 2-7
Figure 2-7 shows the production possibilities frontiers for Pakistan and Indonesia. Each country produces two goods,
cotton and cashews.
43) Refer to Figure 2-7. What is the opportunity cost of producing 1 bolt of cotton in Pakistan?
A) 3/8 of a pound of cashews
B) 5/8 of a pound of cashews
C) 1 3/5 pounds of cashews
D) 150 pounds of cashews
43)
44) Refer to Figure 2-7. What is the opportunity cost of producing 1 bolt of cotton in Indonesia?
A) 3/8 of a pound of cashews
B) 5/8 of a pound of cashews
C) 2 2/3 pounds of cashews
D) 120 pounds of cashews
44)
45) Refer to Figure 2-7. What is the opportunity cost of producing 1 pound of cashews in Pakistan?
A) 3/8 of a bolt of cotton
B) 5/8 of a bolt of cotton
C) 1 3/5 bolts of cotton
D) 240 bolts of cotton
45)
46) Refer to Figure 2-7. What is the opportunity cost of producing 1 pound of cashews in Indonesia?
A) 3/8 of a bolt of cotton
B) 5/8 of a bolt of cotton
C) 2 2/3 bolts of cotton
D) 320 bolts of cotton
46)
47) Refer to Figure 2-7. Which country has a comparative advantage in the production of cotton?
A) They have equal productive abilities.
B) Pakistan
C) Indonesia
D) neither country
47)
48) Refer to Figure 2-7. Which country has a comparative advantage in the production of cashews?
A) Pakistan
B) Indonesia
C) They have equal productive abilities.
D) neither country
48)
49) Refer to Figure 2-7. If the two countries have the same amount of resources and the same
technological knowledge, which country has an absolute advantage in the production of cotton?
A) They have the same advantage.
B) Pakistan
C) Indonesia
D) cannot be determined
49)
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Answer Key
Testname: MIDTERM_SAMPLE_QTIONS
1) B
2) C
3) C
4) D
5) A
6) A
7) A
8) B
9) D
10) A
11) A
12) D
13) B
14) D
15) D
16) C
17) D
18) A
19) B
20) D
21) A
22) B
23) C
24) C
25) B
26) C
27) D
28) D
29) D
30) A
31) C
32) B
33) A
34) A
35) D
36) A
37) D
38) A
39) C
40) B
41) A
42) D
43) B
44) A
45) C
46) C
47) C
48) A
49) C
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