Topic: Sample Multiple Choices (25) for Examination 1 (MICRO)(SPRING 2015)Note: Out of this list five (5) questions will be included in the actual test.MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.1) In moving along a stable demand curve which of the following is not held constant?A) The price of the product for which the demand curve is relevant.B) Price expectations.C) The prices of complementary goods.D) Consumer incomes.2) Refer to Table 2 for the market of a normal good. Suppose the government sets a legal and enforceable price of $1.50per unit this controlled price must be a price _____ and the effective market quantity (Q) is ____ units respectively.A) ceiling; 4B) ceiling; 6C) floor; 4D) floor; 123) Refer to Table 2 for the market of a normal good. At the market price of $4.50 there is a ______ of ______ unit(s) respectively.A) shortage; 12B) shortage; 14C) surplus; 12D) surplus; 24) Refer to Table 2 for the market of a normal good. The market quantity demanded function is:A) QD(P) = -15.50 – 2PB) QD(P) = 15 – 3PDC) Q (P) = 15.50 – 3PD) QD(P) = -4 – 3P5) Refer to Table 2X. The consumer will buy _______ unit(s) and the producer will sell _______ unit(s). Total economicsurplus in a free and competitive market is ________ respectively.A) 1; 2; $5.00B) 2; 1; $8.00C) 2; 1; $6.00D) 1; 1; $4.001 6) Refer to Exhibit 2-4. In moving the production points (along the PPC) from C to B the opportunity costs are ______units of _________ goods respectively.A) 15; capitalB) 15; consumptionC) 30; capitalD) 30; consumption7) According to the data in Exhibit 2-4 a total output of 15 units of consumer goods and 140 units of capital goods would:A) be unobtainable in this economy.B) be an efficient way of using the economy’s scarce resources.C) result in the maximum use of the economy’s labor force.D) result in a less than maximum rate of growth for this economy.8) Suppose that the country of Utopia produces only steel and coffee. In 1998 Utopia produced 900 tons of steel and 500pounds of coffee while in 1999 it produced 1 000 tons of steel and 550 pounds of coffee. Assume that no technologicalchanges occurred in the production of either good and the resource endowment of Utopia did not change. Which of thefollowing is true?a) Utopia’s opportunity cost of producing additional steel is 50 pounds of coffeeb) Utopia’s production must have been technically inefficient in 1998.c) Utopia’s opportunity cost of producing additional steel is 1/2 pound of coffee per ton of steeld) Utopia’s opportunity cost of producing additional coffee is 100 tons of steel9) A dramatic price increase in gasoline will have what effect on the equilibrium in the automobile market?A) Price will increase and quantity will increase.B) Price will decrease and quantity will increase.C) Price will increase and quantity will decrease.D) Price will decrease and quantity will decrease.10) Which of the following statements is true about the total utility provided by a good?a.Total utility can never be negative.b.Total utility is maximized when marginal utility is maximized.c.Total utility continues to increase as more of the good is consumed.d.Total utility is maximized when per-dollar utils for Goods X and Y are equaled with a zero saving.11) The condition of scarcity:a.cannot be avoided.c.prevails in poor economies.b.d.prevails in rich economies.All of these.12) If the price of a product rises consumers buy less of the good because the:a.MU/P of the good falls below the MU/P of other goods.b.MU/P of the good rises above the MU/P of other goods.c.marginal utility of the good diminishes.d.total utility of the good diminishes.13) Mr. Cash spent about 30 minutes everyday to get to work by driving his car. The one-way commute cost him $8.00 intotal including parking -while his wages per hour were $15.00. Alternatively he took the city’s subway that cost him$2.00 for an hour commute to downtown –when the weather got so severe and became dangerous for driving. He notedthat the opportunity costs of driving were ______ and taking the public transportation were __________ respectively.A) $8.00; $2.00B) $15.00; $2.00C) $11.50; $15.00D) $15.50; $17.002 14) Refer to Figure 1 where Good X is personal automobiles. Market X was initially in equilibrium at E3. Higher costs oflabor input in producing Good X caused domestic production of X shifted from S2 to S1. Without imports this change isstated as a(n):a.decrease in supply and a decrease in quantity demanded.b.decrease in supply and a decrease in demand.c.decrease in quantity supplied and a decrease in demand.d.None of the above.15) Refer to Figure 1 where Good X is personal automobiles. Market X was initially in equilibrium at E1. When takehome paychecks become fatter the new market equilibrium is at Point _____ in the X Market.A) E2B) E3C) E4D) None of the above.16) Refer to Figure 1 where Good X is personal automobiles. Market X was initially in equilibrium at E4. Higher costs ofcar insurance will result in a new equilibrium at Point _____ in the X Market.A) E1B) E2C) E3D) E417) Given that X and Y are complementary goods. Which one of the following deductive logical (or cause and effect)statements is true?A) A rise in the price of good Y (or PY) caused an outward shift of the demand of good Y (or).B) A rise in the price of good X (or PX) caused an outward shift of the demand of good Y (orC) A drop in the price of good Y (or PY) caused an outward shift of the demand of good X (or).).D) A drop in the price of good Y (or PY) caused an leftward shift of the demand of good Y (or).3 18) Consider the market represented by Exhibit 12K.1. If the price of the good is currently P2 per unit there will be a______ and the market price will eventually move _______ toward the equilibrium price (P*) respectively.A) surplus; upwardB) surplus; downwardC) shortage; upwardD) shortage; downward19) Consider the market represented by Exhibit 12K.1. At the market price of P1 there is a ________ of a quantity of________ unit(s) respectively.A) shortage; 6B) surplus; 6C) shortage; 4D) surplus; 420) Which of the following is true of the production possibilities curve?a. It assumes a fixed level of technology.b.c. It assumes resources are fixed.d.It assumes resources are fully employed.All of these are correct.21) As shown in Exhibit 6B assume that the price of both goods is $1 per unit. To maximize total utility without a budget you should consume:a.neither X nor Y.b.more of X and less of Y.c.less of X and more of Y.d.more of both X and Y.4 22) As shown in Exhibit 6B assume that the price of good X is $2 per unit and the price of good Y is $1 per unit and yourbudget is $11. If you consume 3 units of good X and 4 units of good Y and maximize utility you should consume:a.neither X nor Y.b.more of X.c.more of Y.d.more of both X and Y.23) Refer to the above table for individual market quantity demanded of pizzas for 3 college students. At the market priceof $6 the market quantity demanded is:A) 42B) 35C) 21D) none of the above24) Given that X and Y are substitutes. Which one of the following deductive logical (or cause and effect) statements istrue?A) A rise in the price of good Y (or PY) caused an outward shift of the demand of good X (or).B) A rise in the price of good X (or PX) caused an inward shift of the demand of good Y (or).C) A drop in the price of good Y (or PY) caused an outward shift of the demand of good Y (or).D) A drop in the price of good X (or PX) caused a downward movement (= slide = adjustment) along the marketdemanded curve for good Y (or).25) In Exhibit 2 movement between which of the following points represents an increase in economic efficiency?A) A4 to A1.B) A1 to A6.C) A4 to A2.D) A3 to A5.5
