Question 1

Comparative statics

Accepted Answer

A)  examines how exogenous variables change as endogenous factors change. 
B)  examines how endogenous variables change as exogenous factors change. 
C)  presents a comparison of two separate markets at a single point in time. 
D)  is often rendered useless because exogenous variables can never be expected to remain constant for long. 
A)  examines how exogenous variables change as endogenous factors change. 
B)  examines how endogenous variables change as exogenous factors change. 
C)  presents a comparison of two separate markets at a single point in time. 
D)  is often rendered useless because exogenous variables can never be expected to remain constant for long. B

Question 2

Identify the truthfulness of the following statements: I. Equilibrium analysis helps economists determine the market-clearing price.
II) Comparative statics help economists analyze how a change in an exogenous variable affects the level of a related endogenous variable in an economic model.

Accepted Answer

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

Question 3

Constrained optimization, equilibrium analysis and comparative statistics are the three essential tools of

Accepted Answer

A)  Macroeconomic analysis 
B)  Microeconomic analysis 
C)  Equilibrium analysis 
D)  Industry analysis 
A)  Macroeconomic analysis 
B)  Microeconomic analysis 
C)  Equilibrium analysis 
D)  Industry analysis B

Question 4

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 5

Every society must answer

Accepted Answer

A)  Which variables are exogenous and which are endogenous? 
B)  Who will receive the goods and services? 
C)  What goods and services will be produced, how much will be produced, who will produce them and who will receive them? 
D)  How centralized should government bureaucracy be? 
A)  Which variables are exogenous and which are endogenous? 
B)  Who will receive the goods and services? 
C)  What goods and services will be produced, how much will be produced, who will produce them and who will receive them? 
D)  How centralized should government bureaucracy be?

Question 6

Which of the following statements represents normative analysis?

Accepted Answer

A)  Eliminating rent controls in New York City will likely lead to greater supply of housing in the future. 
B)  Eliminating the minimum wage will likely lead to lower unemployment. 
C)  Subsidies to farmers to produce corn for ethanol will lead to a (desirable) reduced dependence on foreign oil. 
D)  Raising taxes on gasoline will reduce automobile traffic on our nation's highways. 
A)  Eliminating rent controls in New York City will likely lead to greater supply of housing in the future. 
B)  Eliminating the minimum wage will likely lead to lower unemployment. 
C)  Subsidies to farmers to produce corn for ethanol will lead to a (desirable) reduced dependence on foreign oil. 
D)  Raising taxes on gasoline will reduce automobile traffic on our nation's highways.

Question 7

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.

Question 8

Microeconomics examines

Accepted Answer

A)  the economic behavior of an entire nation. 
B)  the economic behavior of individual economic decision units. 
C)  topics such as national income and inflation. 
D)  monetary policy. 
A)  the economic behavior of an entire nation. 
B)  the economic behavior of individual economic decision units. 
C)  topics such as national income and inflation. 
D)  monetary policy.

Question 9

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 10

An endogenous variable is

Accepted Answer

A)  a variable that an economic agent chooses. 
B)  consumption, investment or government spending. 
C)  a variable determined within the economic system being studied. 
D)  a variable pertaining to the home country economy. 
A)  a variable that an economic agent chooses. 
B)  consumption, investment or government spending. 
C)  a variable determined within the economic system being studied. 
D)  a variable pertaining to the home country economy.

Question 11

The three tools used repeatedly in microeconomic analysis are:

Accepted Answer

A)  unconstrained optimization, comparative equilibrium, equilibrium statics. 
B)  opportunity cost, scarce resources, shifting equilibrium. 
C)  restricted analysis, constrained equilibrium, optimization. 
D)  constrained optimization, equilibrium analysis, comparative statics. 
A)  unconstrained optimization, comparative equilibrium, equilibrium statics. 
B)  opportunity cost, scarce resources, shifting equilibrium. 
C)  restricted analysis, constrained equilibrium, optimization. 
D)  constrained optimization, equilibrium analysis, comparative statics.

Question 12

Suppose the price of X is $15 per unit, the price of Y is $12 per unit, the consumer's income is $100, and the consumer's level of satisfaction is measured by XY + Y. The consumer's constraint is

Accepted Answer

A)  X + Y ≤ 100 
B)  max XY 
C)  15X + 12Y ≤ 100 
D)  Max XY + Y 
A)  X + Y ≤ 100 
B)  max XY 
C)  15X + 12Y ≤ 100 
D)  Max XY + Y

Question 13

Which of the following is not typically found in a constrained optimization problem?

Accepted Answer

A)  Resource constraint 
B)  Endogenous variable 
C)  Comparative statics analysis 
D)  Objective function 
A)  Resource constraint 
B)  Endogenous variable 
C)  Comparative statics analysis 
D)  Objective function

Question 14

The analytical tools underlying nearly all microeconomic studies are:

Accepted Answer

A)  Unconstrained optimization and comparative statics. 
B)  Comparative statics and game theory. 
C)  Opportunity cost and equilibrium analysis. 
D)  Constrained optimization, equilibrium analysis, and comparative statics. 
A)  Unconstrained optimization and comparative statics. 
B)  Comparative statics and game theory. 
C)  Opportunity cost and equilibrium analysis. 
D)  Constrained optimization, equilibrium analysis, and comparative statics.

Question 15

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 16

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.

Question 17

Suppose the equilibrium rent for apartments in New York City is $2000 per month. If the city authorities declared effective tomorrow that rents would not be allowed to exceed $1800 per month, what do you think would happen to the relationship between supply and demand for rental apartments in New York City?

Accepted Answer

A)  The supply of rental apartments would go up and rents would fall below $1800 per month. 
B)  There would be very little new construction of apartments in New York City and shortages would develop. 
C)  People would move out of New York City because of the new restrictions. 
D)  The demand for apartments would fall short of available supply. 
A)  The supply of rental apartments would go up and rents would fall below $1800 per month. 
B)  There would be very little new construction of apartments in New York City and shortages would develop. 
C)  People would move out of New York City because of the new restrictions. 
D)  The demand for apartments would fall short of available supply.

Question 18

Which of the following statements about normative analysis is correct?

Accepted Answer

A)  Normative analysis, because it is based on opinion, rarely employs any positive analysis when prescribing a solution to a given problem. 
B)  Normative analysis typically cannot be trusted because it is only someone's opinion. 
C)  Normative analysis ignores exogenous variables when making predictions. 
D)  Normative analysis typically focuses on issues of social welfare. 
A)  Normative analysis, because it is based on opinion, rarely employs any positive analysis when prescribing a solution to a given problem. 
B)  Normative analysis typically cannot be trusted because it is only someone's opinion. 
C)  Normative analysis ignores exogenous variables when making predictions. 
D)  Normative analysis typically focuses on issues of social welfare.

Question 19

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 20

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?

Comparative statics

Identify the truthfulness of the following statements: I. Equilibrium analysis helps economists determine the market-clearing price. II) Comparative statics help economists analyze how a change in an exogenous variable affects the level of a related endogenous variable in an economic model.

Constrained optimization, equilibrium analysis and comparative statistics are the three essential tools of

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?

Every society must answer

Which of the following statements represents normative analysis?

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

Microeconomics examines

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?

An endogenous variable is

The three tools used repeatedly in microeconomic analysis are:

Suppose the price of X is $15 per unit, the price of Y is $12 per unit, the consumer's income is $100, and the consumer's level of satisfaction is measured by XY + Y. The consumer's constraint is

Which of the following is not typically found in a constrained optimization problem?

The analytical tools underlying nearly all microeconomic studies are:

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 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 about normative analysis is correct?

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:

Which of the following represents an example of normative analysis?

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: Applications

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

Comparative statics

Identify the truthfulness of the following statements: I. Equilibrium analysis helps economists determine the market-clearing price. II) Comparative statics help economists analyze how a change in an exogenous variable affects the level of a related endogenous variable in an economic model.

Constrained optimization, equilibrium analysis and comparative statistics are the three essential tools of

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?

Every society must answer

Which of the following statements represents normative analysis?

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

Microeconomics examines

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?

An endogenous variable is

The three tools used repeatedly in microeconomic analysis are:

Suppose the price of X is $15 per unit, the price of Y is $12 per unit, the consumer's income is $100, and the consumer's level of satisfaction is measured by XY + Y. The consumer's constraint is

Which of the following is not typically found in a constrained optimization problem?

The analytical tools underlying nearly all microeconomic studies are:

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 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 about normative analysis is correct?

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:

Which of the following represents an example of normative analysis?

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: Applications

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