Microassignment # 1

INTRODUCTION TO MICROECONOMICS-ECON 102 (Home assignment #1)
ANSWER ALL 25 MULTIPLE CHOICE QUESTIONS

1. Decision making "at the margin" means making a choice based on __________ of a decision.
a. the total benefits
b. the total costs
c. comparing the total benefits and costs
d. comparing the additional benefits and
costs
2. The branch of economics that studies the decisions of individuals and firms is called
a. macroeconomics.
b. microeconomics.
c. microeconomics and macroeconomics.
d. positive economics.
e. normative economics.
3. Amy's opportunity cost of going to the movies is

a. the price of the ticket.
b. zero, if she has a free pass to the movie.
c. the price of the ticket plus the value to Amy of what she would have chosen to do with her time
had she not chosen to go to the movies.
d. both b and c
NOTE: PRODUCTION POSSIBILITIES FRONTIER (PPF) IS PRODUCTION POSSIBILITIES CURVE (PPC)

4. Points that lie inside (or below) the production possibilities frontier (PPF) are
a. unattainable.
b. attainable and productive efficient.
c. attainable but productive inefficient.
d. attainable and neither productive efficient nor productive

inefficient.
5. A PPF can
a. shift outward but not inward.
b. shift inward but not outward.
c. shift inward or outward.
d. shift neither inward nor outward.

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6. Through war, many of the factories in country 1 are destroyed and many of its people are killed. As a
result, the country's
a. production possibilities frontier (PPF) after the war has probably shifted to the right compared to
its PPF prior to the war.
b. PPF after the war has probably shifted to the left compared to its PPF prior to the war.
c. PPF after the war is probably the same PPF as before the war.
d. ability to produce goods and services has increased.
e. b and d
7. Country X has a high unemployment rate. It follows that country X is operating

a. beyond its production possibilities frontier
(PPF).
b. on its PPF.
c. inside (below) its PPF.
d. at a productive efficient point.
e. b and d
8. What is the reason for the law of increasing marginal opportunity costs?
a. There is no reason: it is just one of the laws of economics.
b. Resources have varying abilities and those with lower opportunity costs of producing a good will
be used to produce it before resources with higher opportunity costs produce it.
c. The price of a good rises as more of it is demanded.
d. As more of a good is produced, the taxes applied to the production of the good rise.
e. c and d
9. If the demand curve for a good shifts leftward,

a. quantity demanded is less at each price.
b. quantity demanded remains constant at each price.
c. quantity demanded is greater at each price.
d. demand is greater at each price.
10. An increase in the number of buyers in a particular market for a good will result in
a ________________ for that good.
a. movement up along the demand curve
b. movement down along the demand curve
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c. leftward shift in the demand curve
d. rightward shift in the demand curve
11. The law of demand states that price and quantity demanded are
a. directly related, ceteris paribus.
b. inversely related, ceteris paribus.
c. independent.
d. positively related, ceteris
paribus.
12. Which of the following is not one of the four broad categories of resources?
a. labor
b. government
c. capital
d. entrepreneurship
e. land
13. Produced goods used as inputs for the production of other goods comprise the
resource known as
a. natural resources.
b. services.
c. capital.
d. entrepreneurship.
14. In all cases, microeconomics deals with
a. what should be.

b. relatively small units in the
economy.
c. the entire economy.
15. Which of the following statements is false?

a. There are always opportunity costs to making choices.
b. Because of scarcity, choices must be made.
c. Elementary education at public schools is free.
d. When government builds a new highway, taxpayers end up with less of some of the things they
would otherwise have.
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16. Refer to the Exhibit above. The opportunity cost of 1 unit of cheese in terms of units
of wine is __________ for country A.
a. 1/2
b. 2
c. 10
d. 5
e. none of the
above
17. Refer to the Exhibit above. The opportunity cost of 1 unit of wine in terms of units of
cheese is __________ for country A.
a. 1/2
b. 2
c. 10
d. 5
e. none of the
above
18. Which of the following illustrates the law of demand?

a. Jorge buys fewer pencils at $2 per pencil than at $1 per pencil, ceteris paribus.
b. Chen buys more ice cream at $4 per half-gallon than at $3 per half gallon, ceteris
paribus.
c. Karissa buys fewer sweaters at $50 each than at $35 each, ceteris paribus.
d. a, b, and c
e. a and c
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19. To an economist, an increase in demand means the same thing as an increase in quantity
demanded.
a. True
b. False
20. Attempts to determine "what is" are part of __________ economics.

a. positive
b. normative
c. positive and normative
d. neither positive nor
normative
21. Saying "the marginal costs are greater than the marginal benefits" is the same as saying
a. the average costs are greater than the average benefits.
b. the total costs are greater than the average benefits.
c. the benefits are greater than the costs.
d. the additional costs are greater than the additional
benefits.
e. the costs minus the benefits equal the net costs.
22. When the price of Toyota Corollas rises, ceteris paribus, the demand for Corollas
falls.
a. True
b. False
23. In moving along a demand curve, everything is held constant except buyers'
income.
a. True
b. False
24. Demand takes into account goods, but not services.

a. True
b. False
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25. If Max's demand for hot dogs falls as his income rises, then for Max hot dogs
are
a. a bad good.
b. an inferior good.
c. a preferential good.
d. a normal good.
e. a neutral good.

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INTRODUCTION TO MICROECONOMICS-ECON 102 (Home assignment #1)

ANSWER ALL 25 MULTIPLE CHOICE QUESTIONS

3. Amy's opportunity cost of going to the movies is

NOTE: PRODUCTION POSSIBILITIES FRONTIER (PPF) IS PRODUCTION POSSIBILITIES CURVE (PPC)

b. attainable and productive efficient.

c. attainable but productive inefficient.

d. attainable and neither productive efficient nor productive

b. shift inward but not outward.

c. shift inward or outward.

d. shift neither inward nor outward.

d. ability to produce goods and services has increased.

7. Country X has a high unemployment rate. It follows that country X is operating

9. If the demand curve for a good shifts leftward,

14. In all cases, microeconomics deals with

a. what should be.

15. Which of the following statements is false?

18. Which of the following illustrates the law of demand?

20. Attempts to determine "what is" are part of __________ economics.

24. Demand takes into account goods, but not services.

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