EXERCISE - MICROECONOMICS

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1. A decrease in the price of oil should lead to:
a) An increase in the demand for cars.
b) An increase in the quantity of cars demanded.
c) An increase in the quantity of oil supplied.
d) An increase in the demand for oil.
b) Cars are an inferior good for Berta.
c) Cars are a normal good for Berta.
d) Bicycles and cars are substitutes for Berta.
6. If a price increase of good 1 increases the
quantity demanded of good 2, then good 2 is a

2. An increase in consumer income will increase a) Substitute good.

the demand for a _______ and decrease the b) Complementary good.
demand for a _________ c) Bargain.
d) Inferior good.
a) substitute good, inferior good
b) normal good, inferior good
c) inferior good, normal good 7. What are competitive markets and why are they
d) normal good, complementary good so important in economics?

a) Competitive markets are markets with many

3. A change in the price of a good causes a shift
of the demand curve of the good.
a) TRUE
b) FALSE
4. A demand curve can shift because of changing
a) Incomes
b) Prices of related goods
c) Tastes
d) All of the above
5. Berta just graduated from college. During
college, Berta earned 3000 euros a year
working part time. After graduation, Berta has
obtained a job that will pay 30,000 euros per
year. After receiving her first paycheck, Berta
bought a car and gave away the bike that she
had used before as a gift to a friend. Therefore,
buyers and sellers who trade a homogeneous
good. Although these markets do not exist in
reality, they could appear in some places in the
future and we have to be prepared for this
circumstance.
b) Competitive markets are markets with many
buyers and sellers who trade a homogeneous
good. These markets are important because
they are the only kind of market that we observe
in reality.
c) Competitive markets are markets with many
buyers and sellers who trade a homogeneous
good. These markets are important because
they are easy to analyze and because they
represent a good approximation of many
markets that we observe in reality.
d) Competitive markets are markets with many
buyers and few sellers who trade slightly
different products. These markets are important
because they are easy to analyze and because
they represent a good approximation of many
markets that we observe in reality.

a) Bicycles are a normal good for Berta.

8. Suppose that in the world demand for Coca 12. Which of the following statements is NOT
Cola in 2000 is given by the applicable to a market economy?
equation: P = 3 − 2Q, where P is the price
and Q the quantity. If it is discovered in 2015 a) Companies decide whom to hire and what to
that Coca Cola is bad for your health and this is produce.
the only change affecting the demand, which is b) There is no agent who is responsible for
a plausible demand for Coca Cola in 2015? improving the welfare of society as a whole.
c) Individuals decide what companies to work for
a) P = 5 − 2Q. and what goods to buy with their income.
b) P = 1 − 2Q.  d) Government policies are the main forces that
c) None of the other options are a plausibly. guide the decisions of companies and
d) All options are a plausibly individuals.

9. An increase in the consume's income has
produced an increase in the sales of a clothing
company. Which of the following corresponds to
this situation according to the model of perfect
competition:
a) Sales increased because of a movement along
the demand curve.
b) Sales increased because a drop in wages.
c) None of the other options is correct.
d) Sales increased because of the law of
decreasing marginal utility.
13. The marginal cost of a tennis school only
depends on the wage of its instructors. The
tennis instructors’ labour union negotiates a 7%
increase in instructors’ wages. This means that:
a) The supply curve shifts towards the left.
b) The supply curve shifts towards the right.
c) The supply curve changes its slope from
positive to negative, because of the reduction in
the number of clients due to the higher cost.
d) None of the above.

14. Suppose the supply of Coke is given by P=2Q.

10. The sum of the quantities of a good demanded A technological improvement in the production
by all the potential buyers in the market at each of Coke
possible price is:
a) Shifts the supply curve.
a) The supply curve b) Reduces the marginal cost of production.
b) The market demand curve c) Decreases the price consumers pay in
c) The demand curve equilibrium, assuming that the demand is not
d) The market supply curve perfectly elastic.
d) All of the above are correct

11. How do we call the object that summarizes the

quantity of a product that buyers wish to
purchase under any possible circumstances
that affect this decision?

a) The demand.
b) The supply.
c) The excess demand.
d) The excess supply.