What is the difference between microeconomics and macroeconomics?

1.  What is the difference between microeconomics and macroeconomics?

a. Microeconomics examines the big picture while macroeconomics examines individual units

b. Microeconomics is the study of decision making undertaken by individuals while macroeconomics looks at the    behavior of the economy as a whole.

c. Microeconomics deals with positive analysis while macroeconomics deals with normative analysis.

d. Microeconomics lends itself to empirical analysis while macroeconomics uses the concept of incentives.

 

2.  Suppose a student is trying to decide whether or not to take another economic class. Which of the following is not an aspect of the economic way of thinking that would apply in this decision-making process?

a. Self-interest

b. Rationality

c. Responding to incentives

d. Flipping a coin

 

3.  What kind of relationship is shown in the graph?

a. An inverse relationship

b. A quadratic relationship

c. An exponential relationship

d. A direct relationship

 

4. Marissa is buying vegetables. She can choose between carrots, lettuce, and green beans. She doesn’t like green beans and after some thought she chooses carrots. What is the opportunity cost of this choice?

a. The lettuce and the green beans

b. The lettuce

c. The carrots, the lettuce and the green beans

d. The green beans

 

5. According to the law of increasing additional cost, the opportunity cost of producing

a. cotton is likely to remain constant as a society tries to produce more cotton.

b. cotton is likely to decrease as society tries to produce more cotton.

c. cotton is likely to increase as society tries to produce more lemons.

d. cotton is likely to decrease as  society tries to produce more lemons.

e. cotton is likely to increase as society tries to produce more cotton.

 

6. A country produces oranges and corn.

i. Draw a representative PPC for this country. Label it PPC1.

ii. Suppose that a breakthrough in technology makes all agriculture more productive, draw a new PPC showing the effect of this change. Label it PPC2.

Carefully follow the instructions above, and only draw the required objects.

 

7. Tanya can make 3 loaves of bread or 1 apple pie in one hour. Jonathan can make 2 loaves of bread or 1 apple pie in one hour. Based on this information, which of the following is a true statement?

a. Tanya has comparative advantage in making bread.

b. Tanya has comparative advantage in making pies.

c. Jonathan has an absolute advantage in making bread.

d. Jonathan has a comparative advantage in making bread.

 

8. The existence of scarcity requires

a. that people must make choices and face trade-offs in using their resources.

b. greater scientific advancements occur to eliminate it.

c. that the government allocates resources.

d. having unfulfilled wants during times of economic depression.

 

9.

Money Prices

 

2003

2004

Hospital Room (1 day)

$250

$275

Hotel Suite ( 1 night)

$350

$375

 

Based on the table above, which of the following is true?

a. The money prices of both goods increased, the relative price of hospital rooms increased, and the relative price of hotel suites decreased.

b. The money prices of both goods increased, the relative price of hospital rooms decreased, and the relative price of hotel suites increased.

c. The money prices of both goods increased and the relative prices of both goods decreased.

d. The money prices of both goods increased and the relative prices of both goods incrased.

 

10. 

MARKET PRICE

A

B

C

D

$10

0

0

1

1

$9

0

1

3

3

$8

1

3

6

5

$7

3

4

7

6

$6

7

7

10

11

$5

10

9

12

15

$4

14

11

16

20

The table above indicates the demand schedule for four types of consumers. Suppose there are 8,000 consumers, early divided between the four types of customers (A – D). The quantity demanded at a price of $7 is?

a. 40,000               b. 60,000               c. 58,000               d. 42,000

 

11. The graph on the bottom shows the demand for automobiles.

Suppose that there is a decrease in consumer incomes.

Show the effect on the current demand cure. Label it D2

 

 

 

 

12. Which of the following would cause a decrease in the demand for beef?

a. An increase in consumer incomes (beef is a normal good).

b. A decrease in the number of firms in the market

c. An increase in the price of beef

d. A decrease in the price of fish, a substitute for beef.

 

13. The graph below shows the supply of automobiles.

Suppose that there is a decrease in subsidies.

Show the effect on the current supply cure. Label your new curve S2

 

 

14. Which of the following would cause an increase in the supply of chicken?

a.A decrease in the price of inputs to chicken production

b. An increase in taxes

c. An increase in the number of buyers in the market

d. An increase in the price of chicken

 

15. The following table gives the demand and supply schedules for gizmos.

PRICE

QTY DEMANDED

QTY SUPPLIED

$30

76

160

$25

84

140

$20

92

120

$15

100

100

$10

108

80

a. The equilibrium price in this market is

b. The equilibrium quantity in this market is units

c. If the price in this market was $25, there would be anexcess supplyof  units.

 

16. The law of demand states that

a. as price increases, quantity demanded decreases, all other things equal.

b. if prices, income, and the price of other goods increase, demand will increase.

c. supply creates its own demand.

d. as price increases, quantity demanded increases, all other things equal.

e. if supply increases, demand will increase to meet supply.

 

17-1 Which of the following is an implication of the law of supply.

a. Increases in money prices will lead to an increase in supply while increases in relative prices will lead to a decrease in supply.

b. Individual will purchase fewer units at a higher price and more units at a lower price.

c. Changes in the price of a good leads to a shift in the supply curve.

d. Producers will offer more units at a higher price and fewer units at a lower price.

 

17-2 The law of supply then implies that a __________ the supply curve occurs due to a change in market price

a. Movement along

b. Shift of

 

18. Assume that the cost of aluminum used by soft-drink companies increases. Indicate which of the following statements describing the resulting effects in the market for soft drinks distributed in aluminum cans are TRUE or FALSE.

a. The demand for soft drinks decreases.  TRUE or FALSE

b. The quantity of soft drinks demanded decreases.  TRUE or FALSE

c. The supply of soft drinks decreases.  TRUE or FALSE

d. The quantity of soft drinks supplied decreases.  TRUE or FALSE

 

19. At the market equilibrium price.

a. demand equals supply.

b. quantity demanded equals quantity supplied

c. quantity and price are equal

d. everyone can buy the product.

 

20. Suppose that you are investigating the market for aluminum. The price of steel, a substitute good, has decreased. Which of the following would be best describe the market reaction to this event?

a. The supply of aluminum decreases since the price of steel decreases.

b. The demand for aluminum decreases, creating a shortage and forcing the price of aluminum to increase.

c. The supply of steel increases since steel firms must produce more steel to make up for the price decrease.

d. The demand for aluminum decreases, which creates a surplus of aluminum, causing the price of aluminum to decrease.

 

21. According to the accompanying graph, when the government imposes a price ceiling of $25.

a. the quantity of goods that will be traded is 0.

b. the quantity of goods that will be traded is 200.

c. the quantity of goods that will be traded is 150.

d. the quantity of goods that will be traded is 100.

 

22. Voluntary exchange

a. makes one party better off while making the other party worse off.

b. is not part of the market system

c. relates to price ceilings and price floors.

d. makes both parties to a trade better off.

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