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 Bookboon.com
Hazbo Skoko
Simplified Principles of Microeconomics

will design one or more tests that will be accessible via eLibrary and Premium.

st of 20 questions taken by random out of a bank of 30+ questions for each test, so there is some randomness to the test. Each answer wi
nswers, so the possible responses will not be the same each time.

ate 30+ questions

n: Consists of text, and potentially assisted with a picture.
ate 7+ possible answers, one completely right (5 points), some partially right (1-4 points), some wrong (0 points)
e will be 80 points.

a passing grade, there should be the opportunity to have a certificate printed or emailed, stating that the person in question has passed th

Question and Answer text

All economic question arise from:

Scarcity.
Limited resources.
Limited supply of resources.
Supply.
Elasticity.
Necessities.
Demand.
Income.

Question and Answer text

Because of scarcity we must give up some of one good in order to acquire more of
another good. This is a concept of:
Opportunity costs.
Relative cost of one in terms of another good.
Implicit costs.
Specialisation.
Competition.
Comparative advantage.
Absolute advantage.
Marginal analysis.

Question and Answer text

Economists use the convention that:

The quantity is presented on the horisontal while the price is presented on vertical axis.
The Q is presented on the horisontal while the P is presented on vertical axis.
The quantity and price are presented in the third coordinate system's square.
The P is presented on the horisontal while the Q is presented on vertical axis.
The quantity is presented on the vertical while the price is presented on horisontal axis.
The price and income are presented in the third coordinate system square.
The quantity and price are presented on the horisontal axis.
The quantity and price are presented on the vertical axis.

Question and Answer text

Economics as a social discipline is about:

How incentives and disincentives affect typical human behavior.

Rational activities of an average person.
How economic humans might behave in an everyday situation.
Sport's activities.
Childhood activities.
Adulthood activities.
Activities in the stock market.
Choosen activities to get fit.

Question and Answer text

The line that show when the price goes up the quantity goes down is called:

Demand curve.
Demand schedule.
Demand.
Necessity line.
Production line.
Supply schedule.
Supply curve.
Cost curve.

Question and Answer text

The relationship shown by the demand curve is called:

Inverse relationship of the price and quantity, because the price and quatity go in opposite directions.
Inverse relationship.
Negative relationship.
Positive relationship.
As the price and the quatity go in opposite directions, such a relationship is called positive.
Elastic relationship.
Flexible relationship.
Economic relationship.

Question and Answer text

What are your opportunity costs reading for an hour this text instead working for $100

Earning $100.
100 dollars net.
Making money.
Sleeping one hour.
Watching TV.
Going outside for a walk.
Singing in the bathroom.
Answering those questions above.

Question and Answer text

Looking at the fig. 6 (p.31) from the text, how much you are willing to pay for three item

Four dollars.
At the price represented by the point E on the demand curve.
At the price of $4 represented by the point E on the demand curve.
Seven dollars.
Six dollars.
Three dollars.
Zero dollars.
Five dollars and fifty cents.

Question and Answer text

Looking at the fig. 6 (p.31), if the price is $3, how many items you would be willing to b

Four items.
At the intersection represented by F on the demand curve meaning I would buy four items.
I might have to buy 4 items as the point F is showing.
Depends on my income.
Depends on the supply side.
I woud not buy any items at that price as I might find it cheaper somewhere else.
If the price is $3 I might consider buying six items as it might be something I need.
Depends on which item is that.

Question and Answer text

The 'Law of demand' states:

When the price goes down you are more willing to buy more and vice versa.
When the price goes up you are more willing to buy less and vice versa.
When the price goes down you are more willing to buy more.
When the price is constant you are more willing to buy more and vice versa.
When the price is constant you are more willing to buy less and vice versa.
When the price is constant you are not willing to buy more.
When the price is constant you are not willing to buy less.
When the price goes up you are more willing to buy as usual quantity.

Question and Answer text

The 'Law of demand' states there is an inverse relationship between the P and Q, meani

When the price is increasing, the quantity demanded is decreasing and vice versa.
When the price is increasing, the quantity you demand is decreasing and vice versa.
When the price is increasing, you demand less quantity and vice versa.
When the price is increasing, you demand more items and vice versa.
When the price is increasing, the quantity you demand is increasing as well and vice versa.
When the price is decreasing, the quantity you demand is decreasing.
When the price is decreasing, the quantity you demand is constant.
When the price is constant, the quantity you demand is decreasing.

Question and Answer text

What the movement along the demand curve illustrates?

Changes in price of the product that cause an inverse change in the quantity demanded.
Changes in price of the product.
Changes in price of the product consequently cause a change in the quantity demanded.
Changes in price of the product causes a change in the demand.
Changes in price of the product causes a change in the quantity supplied.
Changes in price of the product causes a change in the supply.
Changes in price of the product causes a change in the supply and demand.
Changes in price of the product causes a change in the demanded supply.

Question and Answer text

What a shift of the demand curve illustrates?

Changes of non-price (of the product itself) factors that cause a shift in the demand curve.
Changes of other products' prices (not the product in question) that cause a shift in the demand curve.
Changes of all other factors factors that cause a shift in the demand curve.
When the price is increasing, the quantity demanded is decreasing and vice versa.
When the price is decreasing, the quantity you demand is constant.
Changes of all other factors factors that cause a movement along the demand curve.
Changes of non-price (of the product itself) factors that cause a movement along the demand curve.
Changes in the price of factors of production that cause a shift in the demand curve.

Question and Answer text

The 'Law of supply' states:

When the price goes down you are willing to supply less and vice versa.
When the price goes up you are willing to supply more and vice versa.
When the price goes down you are willing to supply less.
When the price is decreasing you are more willing to supply more and vice versa.
When the price is increasing you are more willing to supply less and vice versa.
When the price is constant you are not willing to supply more.
When the price is constant you are not willing to supply less.
When the price goes up you are more willing to supply as usual quantity.

Question and Answer text

The 'Law of supply' states there is a direct (positive) relationship between the P and Q, meaning:

When the price is increasing, the quantity supplied is increasing and vice versa.
When the price is increasing, the quantity you supply is increasing and vice versa.
When the price is increasing, you supply more quantity and vice versa.
When the price is increasing, you supply less items and vice versa.
When the price is decreasing, the quantity you supply is increasing and vice versa.
When the price is increasing, the quantity you supply is decreasing.
When the price is decreasing, the quantity you supply is constant.
When the price is constant, the quantity you supply is decreasing.

Question and Answer text

What the movement along the supply curve illustrates?

Changes in price of the product that cause a direct (positive) change in the quantity supplied.
Changes in price of the product supplied.
Changes in price of the product consequently cause a change in the quantity supplied.
Changes in price of the product causes a change in the supply.
Changes in price of the product causes a change in the quantity demanded.
Changes in price of the product causes a change in the demand.
Changes in price of the product causes a change in the supply and demand.
Changes in price of the product causes a change in the supplied demand.

Question and Answer text

What a shift of the supply curve illustrates?

Changes of non-price (of the product itself) factors that cause a shift in the supply curve.
Changes of other products' prices (not the product in question) that cause a shift in the supply curve.
Changes of all other factors factors that cause a shift in the supply curve.
When the price is increasing, the quantity supplied is decreasing and vice versa.
When the price is decreasing, the quantity you supply is constant.
Changes of all other factors factors that cause a movement along the supply curve.
Changes of non-price (of the product itself) factors that cause a movement along the supply curve.
Changes in the price of factors of production that cause a shift in the supply curve.

Question and Answer text

What a term elasticity means in economics?

It means responsiveness.
It means sensitivity.
It means reaction.
It means flexibility.
It means plasticity.
It does not mean anything.
It does mean action.
it does not mean reaction.

Question and Answer text

What is the difference between a movement along the supply (demand) curve and a shift in the supply (demand)?

A movement along the supply (demand) curve is caused by the price changes while a shift is caused by changes in non-price fa
A movement along the supply curve is caused by the price changes while a shift is caused by changes in non-price factors.
A movement along the demand curve is caused by the price changes while a shift is caused by changes in non-price factors.
A movement along the supply curve is caused by non-price changes while a shift is caused by changes in the price.
A shift in the demand curve is caused by the price changes while a movement along the demand is caused by changes in non-p
A shift in the demand curve is caused by the price changes while a movement along the demand is caused by changes in incom
A movement along the demand curve is caused by the income changes while a shift is caused by changes in price factors.
A movement along the demand curve is caused by the climate changes while a shift is caused by changes in income.

Question and Answer text

Which concept economists use to measure magnitude (sensitivity) of quantity demanded to the price change?

The price elasticity of demand.

A measure of (elasticity) the proportional change in the quantity demanded compared to the proportional change in price.
The ratio of the percentage change in quantity to the percentage change in price.
The ratio of the percentage change in price to the percentage change in quantity.
The ratio of the absolute change in quantity to the absolute change in price.
The ratio of the percentage change in quantity to the absolute change in price.
The ratio of the absolute change in quantity to the percentage change in price.
The ratio of the absolute change in price to the absolute change in quantity.

Question and Answer text

If the price is icreased by 1%, the quantity demanded decreases by 0.60%, what can we say about the price elasticity of dem

The price elasticity of demand is inelastic.

Its inelastic.
The reaction of the quantity demanded to the price changes is small.
The price elasticity of demand is elastic.
The price elasticity of demand is minus one (-1).
Its neither elastic nor inelastic.
The change is minor so the result of the elasticity calculation is inconclusive.
The change is negative so the result of the elasticity calculation is incorrect.

Question and Answer text

How would you interpret the elasticity result of -3?

If price increases (decreases) by 1%, the quantity demanded decreases (increases) by 3%. The minus sign represents only the i
If price increases (decreases) by 1%, the quantity demanded decreases (increases) by 3%.
For each percentage of price increase (decrease), the quantity demanded decreases (increases) by 3%.
If price increases (decreases) by 1%, the quantity demanded decreases (increases) by minus 3%.
If price increases by 1%, the quantity demanded increases by 3%.
If price increases by 1%, the quantity demanded increases by -3%.
As the minus sign is showing, if price decreases by 1%, the quantity demanded decreases by minus 3%.
Since the result is negative (-3) the elasticity is not possible to calculate so the interpretation is impossible.

Question and Answer text

If the elasticity is elastic (E>1) which relationship is observed between the price and total revenue (TR)?

If the elasticity is elastic (E>1) the negative relationship between the price and the revenue is observed; i.e. If E>1 and P decrea
The negative relationship is observed between P and TR because if E>1 and P decreases then TR increases..
If E>1 and P decreases then TR increases so its negative relationship.
If E>1 and P increases then TR increases so its negative relationship.
It's a positive relationship.
If E>1 and P increases then TR decreases, resulting in a positive relationship between P and Q.
If E>1 and P increases then TR decreases, resulting in an incorrect relationship between P and Q.
There is no relationship between P and TR.

Question and Answer text

If the price is increased by 1%, the quantity supplied increases by 1.2%, what can we say about the price elasicity of supply?

The price elasticity of supply is elastic.

The sensitivity of the quantity supplied to the price increase is higher.
The proportional change of the quantity supplied is higher then the proportional change of price.
The price elasticity of supply is inelastic.
The proportional changes of P and Q are almost the same.
The price elasticity of supply is more or less equal to 1.
The sensitivity of the quantity supplied to the price increase is small.
The elasticity of quantity supplied is higher the the price elasticity by 0.2%.

Question and Answer text

If the elasticity is inelastic (E<1) which relationship is observed between the price and total revenue (TR)?

If the elasticity is inelastic (E<1) the positive relationship between the price and the revenue is observed; i.e. If E<1 and P decre
The positive relationship is observed between P and TR because if E<1 and P decreases then TR decreases.
If E<1 and P decreases then TR increases so its positive relationship.
If E<1 and P increases then TR increases so its negative relationship.
Its negative relationship.
If E<1 and P decreases then TR decreases, resulting in an incorrect relationship between P and Q.
If E<1 and P decreases then TR decreases, resulting in the same relationship between P and Q.
There is no relationship between P and TR.

Question and Answer text

How would you define a competitive market?

A competitive market is one where customers and suppliers negotiate the price and quantity based on their respective goals, f
A competitive market is one where market agents negotiate the price and quantity based on their respective goals, free from
A competitive market is one where market actors negotiate the price and quantity free from outside interference.
A competitive market is one where customers and suppliers negotiate their respective goals, free from outside interference.
A market where customers and suppliers negotiate free from outside interference.
A market where customers and suppliers negotiate free trade agreement.
A market where customers and suppliers are free from outside interference.
A market where the demand and supply are freely negotiated within boundaries of that particular market place.

Question and Answer text

At which point the quantity demanded and the quantity suppied are equal?

The quantity demanded and the quantity suppied are equal at the equilibrium point.
The quantity demanded and the quantity suppied are equal at the point of intersection of the demand and supply curves.
At the point where customers and suppliers are in balance.
At the point where customers and suppliers are in the disequilibrium points.
At the point where customers and suppliers are in a dire strait.
The quantity demanded and the quantity suppied are equal at the point of intersection of the demand and income curves.
The quantity demanded and the quantity suppied are equal at the point of the equal price elasticity.
At the point where customers and suppliers have equal income.

Question and Answer text

When sellers 'meet TINA'?

In a perfectly competitive market, sellers must accept the market price or exit from the market, as There Is No Alternative (TIN
One of the assumption of a competitive market is that sellers are 'price takers'; i.e. they 'meet TINA' (There Is No Alternative).
Price takers means sellers are too small in relation to the size of the market to influence price so they take it or leave the mark
Sellers usually 'meet TINA' during negotiations in the market.
Sellers 'meet TINA' in the monopoly market.
Sellers do not 'meet TINA' as in a perfectly competitive market there are always alternatives.
Sellers 'meet TINA' when they are stuck in negotiations in a perfectly competitive market for too long.
In a perfectly competitive market there is one seller only which is called 'TINA'.

Question and Answer text

Define the marginal costs of production.

The marginal cost of production is the additional cost caused by each additional unit of production.
The marginal cost of production is defined as the ratio of change in total cost over change in the quantity of output.
A marginal cost is an additional cost caused by increased output by a unit.
A marginal cost is an additional cost of production.
A marginal cost is an additional cost caused by an increased output.
A marginal cost is a marginaly small cost caused by increased output by a unit.
Total marginal costs are equal to the total costs minus fixed costs.
Total marginal costs are equal to the total variable costs minus total fixed costs.

Question and Answer text

What the Marginal-Average Rule states?

When the marginal cost (MC) is less then the average variable cost (AVC), then the AVC is decreasing; when the MC is larger th
When the marginal cost (MC) is less then the average variable cost (AVC), then the AVC is decreasing.
When the MC is larger the AVC, then the AVC is increasing.
When the marginal cost (MC) is larger then the average variable cost (AVC), then the AVC is decreasing; when the MC is less th
When the MC is larger the AVC, then the total average cost (TVC) is increasing.
When the MC is less the AVC, then the TVC is decreasing.
When the MC is equal to the AVC, then the TVC is decreasing.
When the MC is equal the AVC, then the TVC is increasing.
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some wrong (0 points)

stating that the person in question has passed the test.

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