ROUND I: MICROECONOMICS 

  1. When an economist says that the demand for a product has increased, this means that:
    1. consumers are now willing to purchase more of this product at each possible price.
    2. the product has become particularly scarce for some reason.
    3. product price has fallen and as a consequence consumers are buying a larger quantity of the product.
    4. the demand curve has shifted to the left.
    5. product price has increased and as a result consumers buy a smaller quantity of the product.
  2. The study of economics is primarily concerned with:
    1. keeping private businesses from losing money.
    2. demonstrating that capitalistic economies are superior to socialistic economies.
    3. choices which are made in seeking to use scarce resources efficiently.
    4. determining the most equitable distribution of society’s output.
    5. the interaction between micro and macro considerations.
  3. An economist for a bicycle company predicts that, other things equal, a rise in consumer incomes will increase the demand for bicycles. This prediction is based upon the assumption that:
    1. there are many goods which are substitutes for bicycles.
    2. there are many goods which are complementary to bicycles.
    3. there are few goods which are substitutes for bicycles.
    4. bicycles are normal goods.
    5. bicycles are inferior goods.
  4. Which of the following factors is always present in consumer decision making?
    1. taxes
    2. high prices
    3. scarcity
    4. changing consumer tastes
    5. cost-of-living adjustments to income
  5. Which of the following statements could be considered a statement of the law of diminishing marginal returns?
    1. A stitch in time saves nine.
    2. You can’t make an omelet without breaking eggs.
    3. Too many cooks spoil the broth.
    4. If you can’t stand the heat, get out of the kitchen.
    5. The earth’s moon is made of blue cheese.
  6. Total profit
    1. is total sales revenue minus total cost.
    2. is the only goal of a firm.
    3. is always defined the same by both economists and accountants.
    4. is maximized when sales are maximized.
    5. is maximized when costs are minimized.
  7. A grocery store sells soup for $1.50 a can, or $2.50 for two cans. To a customer, the marginal cost of buying the second can of soup is _____.
    1. $1
    2. $1.25
    3. $1.50
    4. $2.50
    5. none of the above.
  8. In a market economy, which of the following will most likely result in a prolonged milk shortage?
    1. an increase in demand for milk
    2. a decrease in the profitability of milk producers
    3. imposing a price floor below the equilibrium price of milk
    4. imposing a price ceiling below the equilibrium price of milk
    5. none of the above.
  9. In a free market system, what coordinates the actions of millions of people with their varying abilities and desires?
    1. producers
    2. consumers
    3. prices
    4. the government
    5. technology
  10. We would expect an industry to expand if firms in that industry are:
    1. earning normal profits.
    2. earning economic profits.
    3. realizing an equality of total revenue and total costs.
    4. earning accounting profits.
    5. none of the above.
  11. The MR = MC rule applies:
    1. in the short run, but not in the long run.
    2. in the long run, but not in the short run.
    3. in both the short run and the long run.
    4. only to a purely competitive firm.
    5. only to a monopoly firm.
  12. Car manufacturers offering rebates to purchasers are an example of:
    1. sellers responding to a surplus on the market.
    2. buyers responding to a surplus on the market.
    3. sellers responding to a shortage on the market.
    4. buyers responding to a shortage on the market.
    5. all of the above.
  13. If diminishing marginal returns have already set in for The Perfect Framing Store and the marginal product of the fifth picture framer is 20, then the marginal product of the sixth picture framer must be:
    1. negative.
    2. zero.
    3. less than 20.
    4. greater than 20.
    5. not enough information to tell.
  14. The market for a perfectly competitive industry clears at a price of $3, and the minimum average cost for all firms is $2.50. In the long run, we would expect an increase in
    1. each firm’s output.
    2. the number of firms.
    3. each firm’s profit.
    4. each firm’s average cost.
    5. none of the above.
  15. In the United States professional football players earn much higher incomes than do professional soccer players. This can best be explained by the fact that:
    1. most football players are good soccer players while the reverse is not true.
    2. consumers have a greater demand for football games than they do for soccer games.
    3. football and soccer games are highly substitutable products for most consumers.
    4. the marginal productivity of soccer players exceeds that of football players.

 

Answer Key