2002
Great Plains Economics Challenge
Exam 1: Microeconomics
1.
Probably the most important factor affecting material well-being is
a.
available resources.
b.
unemployment rates.
c.
number of workers.
d.
growth in productivity.
e.
business competition.
2.
Which of the following is not a public good?
a.
a flood control dam
b.
national defense
c.
driver’s training
d.
a lighthouse
e.
a tornado warning siren
3.
Which of the following are capital as defined by economists?
a.
stocks and bonds
b.
water and air
c.
gold and silver
d.
computers and wrenches
e.
cabins and boats
4.
The law of demand essentially says that:
a.
the price of a good is the most important determinant of its demand.
b.
as a person’s income rises, so does his/her demand for goods.
c.
as the price of a good falls, people tend to buy more of the good.
d.
the amount of a good purchased each year depends mainly on the size of
the population.
e.
the quantity of a good demanded and its price tend to move in the same
direction.
5.
Car manufacturers offering rebates to purchasers is an example of:
a.
sellers responding to a surplus on the market.
b.
buyers responding to a surplus on the market.
c.
sellers responding to a shortage on the market.
d.
buyers responding to a shortage on the market.
e.
non-price competition between sellers.
6.
Hutch Technology makes computer monitors, which sell for $500 each. What
is the opportunity cost of ten monitors?
a.
$5000.
b.
The other goods which could be produced with the resources that produced
the ten monitors.
c.
The profits that Hutch earns when it sells the ten monitors.
d.
The profits that Hutch loses if it does not produce the monitors.
e.
All of the above.
7.
Economic growth, roughly speaking, means that
a.
the average citizen gets larger and larger quantities of goods and
services.
b.
the economy becomes less able to meet the average citizen’s economic
wants.
c.
the average citizen gets less and less quantities of goods and services.
d.
the economy has a larger production possibilities frontier, but there is
less to meet the average citizen’s economic wants.
e.
All of the above.
8.
During the American Revolution, the Pennsylvania legislature enacted
price controls on essential commodities. The result of this legislation was
a.
a large increase in the availability of those items, ending shortages.
b.
a severe shortage of those essential commodities.
c.
an increase in the price of those items, thus alleviating shortages.
d.
new efforts to increase production of those commodities.
e.
minor inconvenience as persons adjusted to the new law.
9.
Assume the demand schedule for cookies is downward sloping. If the price
of cookies falls from $1.50 to $1.25 per dozen,
a.
the demand for cookies will fall.
b.
the demand for cookies will rise.
c.
a larger quantity of cookies will be demanded.
d.
a smaller quantity of cookies will be demanded.
e.
a larger quantity of cookies will be supplied.
10.
The U.S. government banned cigarette advertising on radio and television
after January 1971. You would expect to find that after the ban took effect,
a.
the price of magazine ads for all goods fell.
b.
the price of magazine ads for only cigarettes fell.
c.
the price of magazine ads for all goods rose.
d.
the price of magazine ads for only cigarettes rose.
e.
none of the above.
11.
If a purely competitive firm decided to withhold its entire output from
the market
a.
the price of the firm’s product would rise significantly.
b.
the price of the firm’s product would fall significantly.
c.
the price of the firm’s product would be essentially unchanged.
d.
other firms could be counted on to follow the same course of action and
drive up price.
e.
the price of the firm’s product would fall, but not significantly.
12.
Which of the following is not an example of price
discrimination?
a.
a theater charging children less than adults to see the latest Disney
movie
b.
a college charging higher tuition for out-of-state students
c.
a utility charging less for electricity used during off-peak hours when
its costs are lower
d.
a doctor charging patients for her services according to their income
e.
an airline charging different fares for seats in the same section of the
same flight
13.
What provides the best assurance that firms in an industry will
produce efficiently and earn no economic profits in the long run?
a.
having many firms in the industry selling different products
b.
government regulation of the industry
c.
the existence of a few large firms experiencing economies of scale
d.
an absence of major barriers to entry in the industry
e.
limited competition among existing firms in the industry
14.
Which of the following represents a long-run adjustment?
a.
a supermarket hires two additional checkout people
b.
a steel manufacturer cuts back on its purchases of taconite pellets
c.
a food processor sells the building and equipment of one of its branch
plants
d.
the demand for tea falls in response to a fall in the price of coffee
e.
a farmer uses an extra dose of fertilizer on his crop
15.
A good with standard-looking supply and demand curves has an equilibrium price
of $10. If the government imposes a tax of $2 on each unit
sold, what will it cost consumers to buy this good once equilibrium has been
re-established?
a.
more than $12
b.
$12
c.
more than $10, but less than $12
d.
$10
e.
less than $10