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ECO/365

PRINCIPLES OF MICROECONOMICS

The Latest Version A+ Study Guide

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ECO 365 Week 1 Practice: The Fundamentals of


Economic Quiz
Complete the Week 1 The Fundamentals of
Economics Quiz in McGraw-Hill Connect®. These
are randomized questions.

Note: You have unlimited attempts available to


complete practice assignments. The highest scored
attempt will be recorded. These assignments have
earlier due dates, so plan accordingly. Grades must
be transferred manually to eCampus by your
instructor. Don't worry, this might happen after the
due date.

The opportunity cost of an action is always equal to:

the next-best alternative for the resources used to


undertake the action.

the things you could have done instead of the action


you chose to undertake.

the time you give up to undertake the action.

the money you give up to undertake the action.

Economic reasoning is based on the premise that:

all decisions or actions are costless.


all decisions or actions have a cost associated with
them.

only non-economic decisions or actions have a cost


associated with them.

only economic decisions or actions have a cost


associated with them.

The fish in the ocean are what type of market


resource

Land

Capital

Entrepreneurial ability

Labor
Which of the following scenarios most accurately
reflects the concept of scarcity

The steak Henry did not buy because he is a


vegetarian.

The Smith Household produces an average of three


bags of trash a week.

Sienna enjoys viewing flowers in the city garden


during her walk.

Brett is a farmer with an open field on which he can


plant either soybeans or corn.

Bob, the owner of a local deli in town, needs to


purchase something that economists would label as
"capital" to help him produce sandwiches. Which of
the following is an example of capital

Ham for the sandwiches


An additional worker

A new idea that automates the making of


sandwiches

A meat slicer to cut ham for sandwiches

In the circular flow model of the market system,


households

Multiple Choice

buy products and resources.

sell products and resources.

buy products and sell resources.

sell products and buy resources.


Use the following graph of the market for milk to
answer the question below.

In this market, the equilibrium price is _______ and


equilibrium quantity is _______.

Multiple Choice

$28 per gallon; 150 million gallons

$1.00 per gallon; 35 million gallons

$1.50 per gallon; 30 million gallons

$1.50 per gallon; 28 million gallons

Use the following graph to answer the question


below.
At a quantity of 130, marginal benefit equals
______ and marginal cost equals _____.

Multiple Choice

$1.60, $0.50

$1.00, $1.00

$0.50, $1.60

$1.60, $1.60

Pam sees that the price of bananas has risen in the


grocery store. All else equal, she decides to buy
more tangerines than she normally purchases.
From the information given, you might conclude
that:
bananas are a luxury good.

tangerines and bananas are complements.

tangerines and bananas are substitutes.

tangerines are an inferior good.

Use the following graph to answer the question


below.

At a quantity of 290, marginal benefit equals


______ and marginal cost equals _____.

Multiple Choice

$0.50, $1.60
$1.60, $0.50

$1.00, $1.00

$1.60, $1.60

When studying human behavior, economists


assume rational self-interest. This means that
people

Multiple Choice

make decisions based on some desired outcome.

have all the information they need to make a


decision.

always make the right decisions.


are quite selfish and are not concerned about
others.

Use the following market data to answer the


question below.

Price per Unit Quantity Purchased by Consumer


Quantity Sold by Producer
$52,000 0
101,800 300
151,600 600
201,400 900
251,200 1,200
301,000 1,500

In the market shown in the table, the equilibrium


quantity is

Multiple Choice
900.

1,400.

1,600.

1,200.

Use the following market data to answer the


question below.

Price per Unit Quantity Purchased by Consumer


Quantity Sold by Producer
$52,000 0
101,800 300
151,600 600
201,400 900
251,200 1,200
301,000 1,500
In the market shown in the table, the marginal cost
of 600th unit is

Multiple Choice

$10.

$20.

$25.

$15.

Marginal cost can be defined as the change in

Multiple Choice

cost resulting from one less unit of production.


benefit resulting from one more unit of production.

cost resulting from one more unit of production.

benefit resulting from one less unit of production.

The problems of inflation and unemployment are

Multiple Choice

not relevant to the U.S. economy.

major topics of microeconomics.

major topics of macroeconomics.

only relevant to European economies.


Macroeconomics approaches the study of
economics from the viewpoint of

Multiple Choice

governmental units.

the operation of specific product and resource


markets.

individual firms.

the entire economy.

Which of the following is a labor resource

Multiple Choice

a computer programmer
a piece of software used by a firm

silicon (sand) used to make computer chips

a computer

The circular flow model illustrates

Multiple Choice

how natural and other resources are created.

how money is created by the banking system.

the importance of having a central plan for the


economy.
the interdependence of businesses and consumers.

The economizing problem is essentially one of


deciding how to make the best use of

Multiple Choice

limited resources to satisfy limited economic wants.

unlimited resources to satisfy limited economic


wants.

unlimited resources to satisfy unlimited economic


wants.

limited resources to satisfy unlimited economic


wants.

Microeconomics is concerned with


Multiple Choice

how government debt affects aggregate economic


activity.

a detailed examination of specific economic units


that make up the economic system.

the establishing of an overall view of the operation


of the aggregate economic system.

the aggregate or total levels of income,


employment, and output.

In analyzing human decision and action,


economists assume that

Multiple Choice

there are no scarce resources in the economy.


costs are more important than benefits.

scarcity is more important than choice.

people’s behavior reflects rational self-interest.

The basic truth that underlies the study of


economics is the fact that we all face

Multiple Choice

taxes.

risk.

scarcity.

death.
Markets can:

provide unlimited goods and services.

make buyers and sellers better off.

force producers to make things they do not want to


make.

force buyers to buy things they do not want to buy.

Use the table below to answer the following


question.

Output Total Cost


0 $10
1 20
2 28
3 38
4 53
5 73
6 98

The marginal cost of producing 3 units of output is

Multiple Choice

$28.

$0.

$10.

$38.

Which of the following is the best synonym for


"marginal" in economics
Multiple Choice

additional

basic

minor

scarce

Which of the following is not a main function of the


entrepreneur

Multiple Choice

to make routine pricing decisions

to make strategic business decisions

to assume the risk of economic losses


to innovate

The four factors of production (or types of


resources) are

Multiple Choice

land, labor, capital, and entrepreneurial ability.

land, labor, capital, and money.

labor, capital, entrepreneurial ability, and money.

labor, capital, technology, and entrepreneurial


ability.

Which of the following is a land resource

Multiple Choice
a machine for detecting earthquakes

natural gas

an oil drilling rig

a farmer

The main function of the entrepreneur is to

Multiple Choice

create market demand.

make routine pricing decisions.

purchase capital.

innovate.
Use the following graph to answer the question
below.

The price where marginal benefit equals marginal


cost is

Multiple Choice

$1.60.

$1.60.

$0.50.

$1.00.

In the resource market

Multiple Choice
households buy resources from businesses.

businesses borrow financial capital from


households.

households sell resources to businesses.

businesses sell services to households.

The concept of a market is a

Multiple Choice

store.

location where buyers and sellers meet to negotiate


prices and determine quantities traded.

place where sellers increase their wealth.


group of buyers and sellers of a good or service.

The table below represents the demand for bottles


of sunscreen at Daytona Beach on a sunny June
day.

Demand for Sunscreen


Price (dollars) Quantity of Sunscreen Demanded
(bottles)
$47,200
6 6,800
8 6,400
106,000
125,600

If the price of a bottle of sunscreen is $8, what will


be the quantity demanded
6,000 bottles

1,600 bottles

8,000 bottles

6,400 bottles

Marcus budgets $120 a week for groceries. When


the price of all food goes up by 10% he buys less
salmon. This can best be explained by:

diminishing marginal utility.

the substitution effect.

the income effect.

a change in income.
Which of the following scenarios is an example of a
person interacting outside of a market

Mark places his comic book collection up for sale on


eBay.

Young buys fresh radishes at the local farmers’


market.

Melissa votes for her favorite performer at a local


talent show.

Isabella agrees to fix Miguel’s sink if Miguel paints


Isabella’s porch.

Tastes and preferences generally do not change for


goods or services in markets.

False
True
When economists speak of "demand" in a particular
market, they refer to

Multiple Choice

the whole demand curve or schedule.

how much of an item buyers want to buy at a given


price.

one point on the demand curve.

one price-quantity combination on the demand


schedule.

In understanding and analyzing "demand," we focus


on how much of a product the buyers are

Multiple Choice
willing and able to buy at different prices.

actually buying now and in the recent past at


various prices.

willing and wanting to buy at different prices.

willing and able to buy with their given income.

The most important purpose of a market is to

Multiple Choice

bring buyers and sellers together so they can trade.

bring buyers and sellers together so they can argue.

bring buyers and sellers together so they can barter.


increase the sellers’ wealth.

An increase in the demand for music downloads


indicates that more music downloads are

Multiple Choice

demanded because sellers are selling more music


downloads.

demanded even if prices of music downloads stay


the same.

demanded because sellers are putting music


downloads on sale.

demanded because music download prices have


decreased.
All else held constant, an increase in the price of
tablets will result in a

Multiple Choice

leftward shift of the demand curve for tablets.

movement up and to the left along the demand


curve for tablets.

rightward shift of the demand curve for tablets.

decrease in the demand for tablets.

When economists say that the demand for a


product has decreased, they mean that

Multiple Choice
the product has become more expensive and thus
consumers are buying less of it.

consumers are now willing and able to buy less of


this product at each possible price.

the demand curve has shifted to the right.

the product has become particularly scarce for


some reason.

When the price of a product increases, consumers


shift their purchases to other products whose prices
are now relatively lower. This statement describes

Multiple Choice

the income effect.

the rationing function of prices.


the substitution effect.

an inferior good.

Who determines the price and quantity traded in a


market

Multiple Choice

prices and quantities traded are not generally


determined in markets

buyers

sellers

buyers and sellers


Prices usually allocate resources efficiently because
they allocate

Multiple Choice

consumption to the highest cost of good or service.

consumption to the lowest value good or service.

resources to the highest value good or service.

resources to the lowest value good or service.

If the price of Pepsi decreases, all else held


constant, then we’d expect to see a consequent
shift of the demand curve for
Multiple Choice

Coke to the left.

Pepsi to the left.

Pepsi to the right.

Coke to the right.

In a market, buyers want to pay the _____ possible


price and sellers want to charge the _____ possible
price.

Multiple Choice

lowest, lowest

lowest, highest

highest, highest
highest, lowest

The horizontal axis of a graph that shows a market


demand curve indicates the

Multiple Choice

different prices at which a product can be


purchased.

various quantities of a product at which the market


will be cleared.

quantities that consumers are willing and able to


buy at various prices.

number of consumers who are in the market for a


product.
For most products, purchases tend to fall with
decreases in consumers' incomes. Such products
are known as

Multiple Choice

average goods.

direct goods.

normal goods.

inferior goods.

All else held constant, the law of demand suggests


that as

Multiple Choice
the price of tablets decreases, the quantity of
tablets demanded will decrease.

income increases, the quantity of tablets demanded


will increase.

the price of tablets decreases, the quantity of


tablets demanded will increase.

the demand for tablets increases, the price of


tablets will increase.

The law of demand states that, all else held


constant,

Multiple Choice

price and quantity demanded are directly related.

consumers will buy more of a product at high prices


than at low prices.
the larger the number of buyers in a market, the
lower the product price will be.

price and quantity demanded are inversely related.

If product Y is an inferior good, a decrease in


consumer incomes will

Multiple Choice

make buyers want to buy less of product Y.

shift the demand curve for product Y to the right.

shift the demand curve for product Y to the left.

not affect the sales of product Y.


In order to derive a market demand curve from
individuals’ demand curves, we add up the

Multiple Choice

various individuals’ quantities demanded at each


price.

total number of buyers in the market at each time


period.

various prices that each buyer is willing and able to


pay.

incomes of all buyers, assuming that their tastes


remain constant.
The demand schedule for a product shows the
relationship between how much of the product
buyers are willing and able to buy and the

Multiple Choice

product’s price.

buyers’ incomes.

time period, say, from one month to the next.

cost of producing the product.

In moving along a demand curve, which of the


following is not held constant

Multiple Choice
price expectations

the price of the product for which the demand curve


is relevant

people's tastes and preferences

consumer incomes

All else being equal, if the law of supply states that


as the price of a good, service, or resource rises

Multiple Choice

the quantity demanded will decrease, which


explains the shape of the supply curve.
the quantity demanded will increase, which explains
the shape of the supply curve.

the quantity supplied will increase, which explains


the shape of the supply curve.

the quantity supplied will decrease, which explains


the shape of the supply curve.

Economists use the term "demand" to refer to

Multiple Choice

a particular price-quantity combination on a stable


demand curve.

a schedule of various combinations of market prices


and quantities demanded.
an upsloping line on a graph that relates consumer
purchases and product price.

the total amount spent on a particular commodity


over a fixed time period.

Imagine that the market supply of peaches comes


from Georgia (GA) and South Carolina (SC). The
supply schedule below shows the quantity of
peaches supplied in each state at each price.

Individual and Market Supply of Peaches


Quantity of Peaches Supplied (pounds)
Price (dollars per pound) GA SC Market
$10 20,000 18,000 38,000
8 16,000 15,000 31,000
6 12,000 12,000 24,000
4 8,000 9,000 17,000
2 4,000 6,000 10,000
Instructions: Enter your answers as a whole
number.

a. In the table, complete the column labeled


“Market.”

b. How many pounds of peaches will be supplied to


the market when the price is $6 per pound

24,000 pounds

Which of the following scenarios would likely shift


the supply of cars to the left (decrease in supply)

Automobile workers become more productive.

The price of cars decreases.

The price of steel and aluminum increase.


The price of automotive paint decreases.

Use the figure below to answer the following


question.

An increase in price, all else held constant, would


cause a change from

Multiple Choice

point 4 to point 5.

point 5 to point 1.

point 3 to point 4.

point 1 to point 3.
In order to derive the market supply curve from
individual supply curves, we add up the

Multiple Choice

total number of sellers in the market at a given time.

various quantities that individual sellers are willing


and able to supply at different prices.

costs that all individual sellers incur in producing the


product.

various prices that individual sellers are charging for


the quantities of the product available.
Which of the following statements is true about
supply

Multiple Choice

As price decreases, producers are willing and able


to put more of the good on the market for sale.

As price increases, producers are willing and able


to put more of the good on the market for sale.

There is an inverse relationship between price and


quantity supplied.

Supply refers to the amount of inventory that sellers


have in their warehouses.

Which of the following scenarios would likely shift


the supply curve for potatoes to the right (increase
in supply)
Potato growers expect the price of potatoes to be
lower this year than last year.

A new harvester enables farmers to bring in ripe


potatoes twice as fast as they did before.

Teenagers in potato-farming towns leave to go to


college.

The price of fertilizer increases.

Use the figure below to answer the following


question.

The diagram shows three supply curves for apples.


Which of the following would cause the supply of
apples to shift from S1 to S3

Multiple Choice
a decrease in the price of resources used to
produce apples

a decrease in the price of apples in the market

a decrease in the number of apple farmers

an increase in the number of apple farmers

Use the figure below to answer the following


question.

The diagram shows three supply curves for cars


today. Which of the following would cause the
supply of cars to shift from S1 to S2

Multiple Choice

expectations of lower car prices in the future


a decrease in the number of car producers

an increase in the price of cars in the market

expectations of higher car prices in the future

Use the figure below to answer the following


question.

The figure shows three supply curves for wheat.


Which of the following would cause the supply of
wheat to shift from S1 to S2

Multiple Choice

an increase in the price of water

an increase in the price of wheat

a new tax on wheat production


a decrease in the price of water

When economists say that the supply for a product


has decreased, they mean that the

Multiple Choice

supply curve has shifted to the right.

product has become more expensive and thus


consumers are buying less of it.

supply curve has shifted to the left.

product has become particularly abundant for some


reason.
An increase in the supply of music downloads
indicates that more music downloads will be

Multiple Choice

demanded, because sellers are putting music


downloads on sale.

supplied, because music download prices have


decreased.

demanded, because sellers are selling more music


downloads.

supplied, even if prices of music downloads stayed


the same.

Use the figure below to answer the following


question.
The figure above shows three supply curves for
wheat. Which of the following would cause the
quantity of wheat supplied to increase from point a
to point b

Multiple Choice

a decrease in the price of wheat

a subsidy for wheat production

a tax on wheat production

an increase in the price of wheat

Use the figure below to answer the following


question.
The figure above shows three supply curves for
wheat. Which of the following would cause the
supply of wheat to shift from S1 to S2

Multiple Choice

a tax on wheat production

a decrease in the price of wheat

a subsidy for wheat production

an increase in the price of wheat

The vertical axis of a graph that shows a market


supply curve indicates the

Multiple Choice
number of sellers who are in the market for this
product.

various quantities of output at which the market will


be cleared.

cost of the amount of output produced.

prices at which firms would be willing and able to


sell their different products.

Use the figure below to answer the following


question.

The figure above shows three supply curves for


wheat. Which of the following would cause the
supply of wheat to shift from S1 to S2

Multiple Choice
a subsidy for wheat production

an increase in the price of wheat

a decrease in the price of wheat

a tax on wheat production

Which one of the following is not assumed to be


constant when the supply curve for a product is
drawn

Multiple Choice

price of the product

number of producers

price of inputs used to make the product


state of technology

Use the figure below to answer the following


question.

The figure above shows three supply curves for


wheat. Which of the following would cause the
supply of wheat to shift from S1 to S2

Multiple Choice

a decrease in consumer incomes, assuming wheat


is a normal good

a change in consumer tastes away from wheat


bread

the development of a more effective insecticide


against cutworms
an increase in the price of fertilizer

Use the figure below to answer the following


question.

The figure shows three supply curves for apples. If


you observe the supply of apples shift from S1 to
S3, which of the following could be responsible for
this shift

Multiple Choice

The producers of apples now must pay a tax.

Apple production has increased.

The producers of apples now receive a subsidy.


Apple producers are willing to sell more at every
price.

Samantha needs to purchase something that


economists would label as "labor" to help her
produce court documents for her law firm. Which of
the following is an example of labor

A stenographer who can type courtroom


proceedings

A stenography machine to type courtroom


proceedings

Filing cabinets to store the typed courtroom


documents

The ability to see that organizing courtroom


documents is an unfilled market need
Use the figure below to answer the following
question.

The figure above shows three supply curves for


wheat. Which of the following would cause the
supply of wheat to shift from S1 to S3

Multiple Choice

a subsidy for wheat production

a decrease in the price of wheat

a tax on wheat production

an increase in the price of wheat

Use the figure below to answer the following


question.
The figure above shows three supply curves for
wheat. Which of the following would cause the
quantity of wheat supplied to decrease from point b
to point a

Multiple Choice

an increase in the price of wheat

a tax on wheat production

a decrease in the price of wheat

a subsidy for wheat production

In understanding and analyzing "market supply," we


focus on how much all firms

Multiple Choice
have sold in the recent past at various prices.

want to supply at a given price.

are willing and able to supply at different prices.

will supply in the future at various prices.

All else being equal, if the price of a product


decreases, we would expect

Multiple Choice

quantity supplied to decrease.

supply to decrease.

demand to increase.

quantity supplied to increase.


When economists say that the supply for a product
has increased, they mean that the

Multiple Choice

product has become particularly scarce for some


reason.

supply curve has shifted to the left.

product has become more expensive and thus


consumers are buying less of it.

supply curve has shifted to the right.


Use the figure below to answer the following
question.

The diagram shows three supply curves for apples


today. Which of the following would cause the
current supply of apples to shift from S1 to S3

Multiple Choice

a decrease in the price of apples in the market

an increase in the number of corn farmers

expectations of lower apple prices in the future

expectations of higher apple prices in the future

A recurring theme in economics is that people

Multiple Choice
can increase resources by limiting their economic
wants.

have limited economic wants and limited resources.

have unlimited resources but limited economic


wants.

have unlimited economic wants but limited


resources.

Which of the following can best be characterized as


a subject of macroeconomics

An examination of how much of a particular good


gets produced
An examination of inflation

An examination of consumer behavior

An examination of where goods come from

Which of the following can best be characterized as


a subject of microeconomics

An examination of how much of a particular good


gets produced

An examination of inflation

An examination of an economy’s overall level of


production

An examination of a country's imports and exports