Question 1

Which of the following represents an example of normative analysis?

Accepted Answer

A)  How will the equilibrium price of coffee be affected by drought? 
B)  How will a government subsidy affect the quantity demanded of public housing? 
C)  What is the best method for allocating tax revenues? 
D)  How will a tax cut affect a typical consumer's disposable income? 
A)  How will the equilibrium price of coffee be affected by drought? 
B)  How will a government subsidy affect the quantity demanded of public housing? 
C)  What is the best method for allocating tax revenues? 
D)  How will a tax cut affect a typical consumer's disposable income? C

Question 2

Suppose that we illustrate demand and supply with quantity on the horizontal axis and price on the vertical axis.Which of the following statements is false?

Accepted Answer

A)  The equilibrium remains unchanged unless an exogenous variable changes. 
B)  The equilibrium is represented as the intersection of supply and demand curves. 
C)  When a shift in demand or supply occurs, a comparative statics analysis compares the old and the new equilibrium points. 
D)  A change in price will cause a shift in the demand curve. 
A)  The equilibrium remains unchanged unless an exogenous variable changes. 
B)  The equilibrium is represented as the intersection of supply and demand curves. 
C)  When a shift in demand or supply occurs, a comparative statics analysis compares the old and the new equilibrium points. 
D)  A change in price will cause a shift in the demand curve. D

Question 3

Which of the following statements is true?

Accepted Answer

A)  Endogenous changes to demand are supply curves cause them to shift. 
B)  Exogenous changes can never affect both the demand and supply curves. 
C)  Exogenous changes can sometimes affect both the demand and supply curves. 
D)  Movement along a demand curve means that only an endogenous factor is changing. 
A)  Endogenous changes to demand are supply curves cause them to shift. 
B)  Exogenous changes can never affect both the demand and supply curves. 
C)  Exogenous changes can sometimes affect both the demand and supply curves. 
D)  Movement along a demand curve means that only an endogenous factor is changing. C

Question 4

What term in microeconomics tells us how a dependent variable changes as a result of adding one unit of an independent variable

Accepted Answer

A)  Equilibrium impact. 
B)  Comparative statics. 
C)  Independent impact. 
D)  Marginal impact. 
A)  Equilibrium impact. 
B)  Comparative statics. 
C)  Independent impact. 
D)  Marginal impact.

Question 5

Identifying the appropriate way to allocate an economy's resources is an example of

Accepted Answer

A)  a constrained optimization problem. 
B)  a comparative statics problem. 
C)  an equilibrium analysis. 
D)  marginal analysis. 
A)  a constrained optimization problem. 
B)  a comparative statics problem. 
C)  an equilibrium analysis. 
D)  marginal analysis.

Question 6

Which of the following is the best example of a consumer's objective function?

Accepted Answer

A)  profits. 
B)  consumption. 
C)  satisfaction 
D)  budget constraint. 
A)  profits. 
B)  consumption. 
C)  satisfaction 
D)  budget constraint.

Question 7

Suppose that we illustrate demand and supply with quantity on the horizontal axis and price on the vertical axis.Let demand be a function of price and income,Qd (P,I).Which of the following statements is true?

Accepted Answer

A)  A change in income will cause a shift in the supply curve. 
B)  A change in income level is represented by a movement along the demand curve. 
C)  Income is not represented on one of the axes, and so is treated as an exogenous variable in the graphical analysis. 
D)  Price and income together must change in order to create a shift in the demand curve. 
A)  A change in income will cause a shift in the supply curve. 
B)  A change in income level is represented by a movement along the demand curve. 
C)  Income is not represented on one of the axes, and so is treated as an exogenous variable in the graphical analysis. 
D)  Price and income together must change in order to create a shift in the demand curve.

Question 8

Suppose that we illustrate demand and supply with quantity on the horizontal axis and price on the vertical axis.Which of the following statements is false?

Accepted Answer

A)  Changes in exogenous variables are represented by shifts in the demand and/or supply curves. 
B)  Changes in endogenous variables are represented by movements along the supply and/or demand curves. 
C)  Price and quantity are the exogenous variables in this representation. 
D)  The equilibrium is represented as the intersection of supply and demand curves. 
A)  Changes in exogenous variables are represented by shifts in the demand and/or supply curves. 
B)  Changes in endogenous variables are represented by movements along the supply and/or demand curves. 
C)  Price and quantity are the exogenous variables in this representation. 
D)  The equilibrium is represented as the intersection of supply and demand curves.

Question 9

Currently,100,000 units of a good are traded on the market.The government imposes a tax on producers that raises the unit cost of production of the good.This will:

Accepted Answer

A)  shift the supply curve to the left. 
B)  shift the supply curve to the right. 
C)  shift the demand curve to the left. 
D)  increase the quantity traded. 
A)  shift the supply curve to the left. 
B)  shift the supply curve to the right. 
C)  shift the demand curve to the left. 
D)  increase the quantity traded.

Question 10

Identify the truthfulness of the following statements: I.Marginal analysis can explain why you would always choose to eat Chinese food rather than pizza.
II.Marginal analysis can explain the incremental impact of an increase in total cost when one more unit of output is produced.

Accepted Answer

A)  Both I and II are true. 
B)  Both I and II are false. 
C)  I is true; II is false. 
D)  I is false; II is true. 
A)  Both I and II are true. 
B)  Both I and II are false. 
C)  I is true; II is false. 
D)  I is false; II is true.

Question 11

Suppose the equilibrium price in a market is $5,and the government imposes a $4.50 price ceiling.This will

Accepted Answer

A)  Create excess demand. 
B)  Create excess supply. 
C)  Shift the supply curve to the left. 
D)  Have no effect. 
A)  Create excess demand. 
B)  Create excess supply. 
C)  Shift the supply curve to the left. 
D)  Have no effect.

Question 12

Movements along a demand curve caused by a change in price probably means that:

Accepted Answer

A)  There has been and endogenous shift in the demand curve. 
B)  There has been an exogenous shift in the demand curve. 
C)  There has been a shift in an exogenous factor that affects supply. 
D)  The supply curve is not shifting. 
A)  There has been and endogenous shift in the demand curve. 
B)  There has been an exogenous shift in the demand curve. 
C)  There has been a shift in an exogenous factor that affects supply. 
D)  The supply curve is not shifting.

Question 13

Which of the following statements has neither positive nor normative aspects to it?

Accepted Answer

A)  On hot days, people drink more water. 
B)  Hot weather leads to greater numbers of heat exhaustion cases. 
C)  Providing free space heaters to poor people can reduce certain types of respiratory illness. 
D)  Hot weather is desirable. 
A)  On hot days, people drink more water. 
B)  Hot weather leads to greater numbers of heat exhaustion cases. 
C)  Providing free space heaters to poor people can reduce certain types of respiratory illness. 
D)  Hot weather is desirable.

Question 14

Another term for equilibrium would be

Accepted Answer

A)  a point of infinite supply. 
B)  a point of insatiable wants. 
C)  a point of stability. 
D)  a point of scarcity. 
A)  a point of infinite supply. 
B)  a point of insatiable wants. 
C)  a point of stability. 
D)  a point of scarcity.

Question 15

Which of the following is an example of a constraint?

Accepted Answer

A)  L+W 
B)  Max LW 
C)    
D)  L + W ≥ 5 
A)  L+W 
B)  Max LW 
C)    
D)  L + W ≥ 5

Question 16

If we were to build a model measuring the supply of corn,which of the following could be an example of an exogenous variable in the model?

Accepted Answer

A)  The price of corn. 
B)  The quantity supplied of corn. 
C)  The quantity of rain. 
D)  The demand for corn. 
A)  The price of corn. 
B)  The quantity supplied of corn. 
C)  The quantity of rain. 
D)  The demand for corn.

Question 17

Economics is often described as

Accepted Answer

A)  The science of choice 
B)  The science of constrained choice 
C)  The science of supply and demand 
D)  The science of market forces 
A)  The science of choice 
B)  The science of constrained choice 
C)  The science of supply and demand 
D)  The science of market forces

Question 18

Currently,100,000 units of a good are traded on a market.The government imposes a limit of a maximum of 50,000 units that may be traded on the market.This will:

Accepted Answer

A)  create excess supply. 
B)  create excess demand. 
C)  raise price 
D)  have no effect on the market. 
A)  create excess supply. 
B)  create excess demand. 
C)  raise price 
D)  have no effect on the market.

Question 19

Constrained optimization occurs when:

Accepted Answer

A)  An individual makes choices that are influenced by his/her parents and family. 
B)  An individual makes choices that best suit his/her preferences. 
C)  Firms choose the best products to meet their client's needs. 
D)  An individual is forced to choose between competing alternatives subject to some limitation such as budgetary considerations. 
A)  An individual makes choices that are influenced by his/her parents and family. 
B)  An individual makes choices that best suit his/her preferences. 
C)  Firms choose the best products to meet their client's needs. 
D)  An individual is forced to choose between competing alternatives subject to some limitation such as budgetary considerations.

Question 20

Suppose the equilibrium price in a market is $5,and the government imposes a $4.50 price floor on the market.This will

Accepted Answer

A)  create excess supply. 
B)  create excess demand. 
C)  shift the demand curve to the right. 
D)  have no effect on the market. 
A)  create excess supply. 
B)  create excess demand. 
C)  shift the demand curve to the right. 
D)  have no effect on the market.

Which of the following represents an example of normative analysis?

Suppose that we illustrate demand and supply with quantity on the horizontal axis and price on the vertical axis.Which of the following statements is false?

Which of the following statements is true?

What term in microeconomics tells us how a dependent variable changes as a result of adding one unit of an independent variable

Identifying the appropriate way to allocate an economy's resources is an example of

Which of the following is the best example of a consumer's objective function?

Suppose that we illustrate demand and supply with quantity on the horizontal axis and price on the vertical axis.Let demand be a function of price and income,Q^d (P,I).Which of the following statements is true?

Suppose that we illustrate demand and supply with quantity on the horizontal axis and price on the vertical axis.Which of the following statements is false?

Currently,100,000 units of a good are traded on the market.The government imposes a tax on producers that raises the unit cost of production of the good.This will:

Identify the truthfulness of the following statements: I.Marginal analysis can explain why you would always choose to eat Chinese food rather than pizza. II.Marginal analysis can explain the incremental impact of an increase in total cost when one more unit of output is produced.

Suppose the equilibrium price in a market is $5,and the government imposes a $4.50 price ceiling.This will

Movements along a demand curve caused by a change in price probably means that:

Which of the following statements has neither positive nor normative aspects to it?

Another term for equilibrium would be

Which of the following is an example of a constraint?

If we were to build a model measuring the supply of corn,which of the following could be an example of an exogenous variable in the model?

Economics is often described as

Currently,100,000 units of a good are traded on a market.The government imposes a limit of a maximum of 50,000 units that may be traded on the market.This will:

Constrained optimization occurs when:

Suppose the equilibrium price in a market is $5,and the government imposes a $4.50 price floor on the market.This will

Demand and Supply Analysis

Consumer Preferences and the Concept of Utility

Consumer Choice

The Theory of Demand

Inputs and Production Functions

Costs and Cost Minimization

Cost Curves

Perfectly Competitive Markets

Competitive Markets

Monopoly and Monopsony

Capturing Surplus

Market Structure and Competition

Game Theory and Strategic Behavior

Risk and Information

General Equilibrium Theory

Externalities and Public Goods

Filters

Exam 1: Analyzing Economic Problems

Which of the following represents an example of normative analysis?

Suppose that we illustrate demand and supply with quantity on the horizontal axis and price on the vertical axis.Which of the following statements is false?

Which of the following statements is true?

What term in microeconomics tells us how a dependent variable changes as a result of adding one unit of an independent variable

Identifying the appropriate way to allocate an economy's resources is an example of

Which of the following is the best example of a consumer's objective function?

Suppose that we illustrate demand and supply with quantity on the horizontal axis and price on the vertical axis.Let demand be a function of price and income,Qd (P,I).Which of the following statements is true?

Suppose that we illustrate demand and supply with quantity on the horizontal axis and price on the vertical axis.Which of the following statements is false?

Currently,100,000 units of a good are traded on the market.The government imposes a tax on producers that raises the unit cost of production of the good.This will:

Identify the truthfulness of the following statements: I.Marginal analysis can explain why you would always choose to eat Chinese food rather than pizza. II.Marginal analysis can explain the incremental impact of an increase in total cost when one more unit of output is produced.

Suppose the equilibrium price in a market is $5,and the government imposes a $4.50 price ceiling.This will

Movements along a demand curve caused by a change in price probably means that:

Which of the following statements has neither positive nor normative aspects to it?

Another term for equilibrium would be

Which of the following is an example of a constraint?

If we were to build a model measuring the supply of corn,which of the following could be an example of an exogenous variable in the model?

Economics is often described as

Currently,100,000 units of a good are traded on a market.The government imposes a limit of a maximum of 50,000 units that may be traded on the market.This will:

Constrained optimization occurs when:

Suppose the equilibrium price in a market is $5,and the government imposes a $4.50 price floor on the market.This will

Demand and Supply Analysis

Consumer Preferences and the Concept of Utility

Consumer Choice

The Theory of Demand

Inputs and Production Functions

Costs and Cost Minimization

Cost Curves

Perfectly Competitive Markets

Competitive Markets

Monopoly and Monopsony

Capturing Surplus

Market Structure and Competition

Game Theory and Strategic Behavior

Risk and Information

General Equilibrium Theory

Externalities and Public Goods

Filters

Suppose that we illustrate demand and supply with quantity on the horizontal axis and price on the vertical axis.Let demand be a function of price and income,Q^d (P,I).Which of the following statements is true?