ECON 1000: INTRODUCTION TO MICROECONOMICSDEPARTMENT OF ECONOMICS

FACULTY OF LIBERAL ARTS AND PROFESSIONAL STUDIESYORK UNIVERSITY

Prof. Sadia M. MalikExam Questions MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. Note: The answers are written in bold text

1)

Which of the following is a microeconomic topic?

1)

CA)

the reasons why the average price level in a country falls B)

the effect of the government budget deficit on inflation C)

the reasons why a consumer buys less honey D)

the reasons why the labour force in a country decreases E)

the cause of increasing unemployment

2)

The fact that human wants cannot be fully satisfied with available resources is called the problem of

3)

AA)

scarcity.

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B)

normative economics. C)

marginal cost. D)

opportunity cost. E)

the big tradeoff.

3)

When a firm decides to produce more hybrid cars and fewer gas guzzlers, it is answering the ________ question.

4)

CA)

"when"

B)

"who"

C)

"what"

D)

"where"

E)

"how"

4)

During the next hour John can choose one of the following three activities: playing basketball, watching television, or reading a book. The opportunity cost of reading a book

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6)

CA)

is the value of playing basketball and the value of watching television. B)

is the value of watching television if John prefers playing basketball to watching television. C)

is the value of playing basketball if John prefers that to watching television. D)

depends on how much the book cost when it was purchased. E)

depends on how much John enjoys the book.

5)

If you take an additional class this term, you can graduate earlier. This is an example of

7)

AA)

marginal benefit. B)

social cost. C)

opportunity cost. D)

the pursuit social interest.

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E)

total cost.

6)

"The rich should face higher income tax rates than the poor." This is an example of

8)

EA)

a negative statement. B)

economic reasoning. C)

neither a normative nor a positive statement. D)

a positive statement. E)

a normative statement.

7)

If Harold can increase production of good X without decreasing production of any other good, then Harold

9)

E A)

is producing on his production possibilities frontier. B)

is producing outside his production possibilities frontier. C)

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must have a linear production possibilities frontier. D)

must prefer good X to any other good. E)

is producing inside his production possibilities frontier.

Use the figure below to answer the following questions.

Figure 2.1.2

8)

Refer to the production possibilities frontier in Figure 2.1.2. At point A, the opportunity cost of producing 3 more units of X

12)

D A)

is 3 units of X. B)

is 10 units of Y. C)

is 30 units of Y. D )

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is 20 units of Y. E)

cannot be determined from the diagram.

9)

Complete the following sentence. As you consume more and more of a good,

16)

B A)

marginal benefit increases or decreases depending on where you are on the production possibilities frontier.

B)

marginal benefit decreases. C)

the price of the good rises. D)

marginal benefit increases. E)

marginal benefit always equals marginal cost.

Use the figure below to answer the following questions.

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Figure 2.2.1

10)

In Figure 2.2.1, the curve labelled A is the ________ curve and the curve labelled B is the ________ curve.

17)

AA)

marginal cost; marginal benefit B)

marginal cost; trade C)

production possibilities; trade D)

marginal benefit; marginal cost E)

marginal benefit; trade

11)

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A technological improvement is represented by

20)

B A)

a movement along the production possibilities frontier. B)

an outward shift of the production possibilities frontier. C)

a point inside the production possibilities frontier. D)

a point outside the production possibilities frontier. E)

a movement from a point inside the production possibilities frontier to a point on the production possibilities frontier.

Use the information below to answer the following questions.

Fact 2.4.1

In an eight-hour day, Andy can produce either 24 loaves of bread or 8 kilograms of butter. In an eight-hour day, Rolfe can produce either 8 loaves of bread or 8 kilograms of butter.

12)

Given Fact 2.4.1, the opportunity cost of producing 1 loaf of bread is

21)

A A)

1/3 kilogram of butter for Andy and 1 kilogram of butter for Rolfe. B)

20 minutes (1/3 hour) for Andy and 1 hour for Rolfe. C)

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8 kilograms of butter for both Andy and Rolfe. D)

3 kilograms of butter for Andy and 1 kilogram of butter for Rolfe. E)

not calculable from the given information.

13)

From Fact 2.4.1, we know that

22)

BA)

Andy has the lower opportunity cost of producing bread, while Andy and Rolfe have equal opportunity costs of producing butter.

B)

Andy has the lower opportunity cost of producing bread, while Rolfe has the lower opportunity cost of producing butter.

C)

Andy has the lower opportunity cost of producing both bread and butter. D)

Andy has the higher opportunity cost of producing both bread and butter. E)

Andy has the lower opportunity cost of producing butter, while Rolfe has the lower opportunity cost of producing bread.

14)

Which one of the following events shifts the demand curve for grape jelly to the right?

24)

BA)

a decrease in the population

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B)

an increase in income if grape jelly is a normal good C)

a decrease in the price of grape jelly D)

an increase in the price of peanut butter, a complement of grape jelly E)

a decrease in the price of strawberry preserves, a substitute for grape jelly

15)

The demand curve slopes downward to the right because

25)

C A)

of the law of supply. B)

an increase in income leads to increased consumption. C)

of the law of demand. D)

of comparative advantage. E)

as income rises, the quantity demanded increases.

16)

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The price of good A rises, and the demand curve for good B shifts leftward. We can conclude that

26)

B A)

B is a normal good. B)

A and B are complements. C)

A and B are complements in production. D)

B is an inferior good. E)

A and B are substitutes.

17)

Consider the market for cell phones. Suppose the price of a cell phone falls. Explain the effect of this event on the quantity of cell phones demanded and on the demand for cell phones.

27)

D A)

The quantity of cell phones demanded is unchanged and the demand for cell phones decreases. B)

The quantity of cell phones demanded is unchanged and the demand for cell phones increases. C)

The quantity of cell phones demanded increases and the demand for cell phones also increases. D)

The quantity of cell phones demanded increases and the demand for cell phones is unchanged.

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E)

The quantity of cell phones demanded decreases and the demand for cell phones is unchanged.

18)

If a 10 percent rise in price leads to an 8 percent decrease in quantity demanded, the price elasticity of demand is

34)

C A)

80.

B)

1.25.

C)

0.8.

D)

0.125.

E)

8.

19)

Suppose that Simon Fraser University decides to raise tuition fees to increase the total revenue it receives from students. This policy works only if the demand for a Simon Fraser University education is

39)

B A)

greater than the demand for a University of Western Ontario education. B)

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inelastic. C)

unit elastic. D)

perfectly elastic. E)

elastic.

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10)

Which of the following would result in a movement along, but not a shift of the supply curve for spinach?

46)

A A)

A rise in the price of spinach B)

Disastrous weather that destroys half of this year's spinach crop C)

An increase in wages of workers in spinach fields D)Great weather that produces a bumper spinach crop this year

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