Econom!cs !s pr!mar!ly the study of ________.

A) the mental funct!ons and behav!or of !nd!v!duals and groups

B) the state, nat!on, government, and pol!t!cs and pol!c!es of governments
C) the problems related to the ex!stence and evolut!on of soc!ety
D) how agents choose to allocate scarce resources and how these cho!ces affect soc!ety

Scarc!ty of resources ar!ses when ________.

A) people try to make dec!s!ons w!th l!ttle !nformat!on
B)a l!m!ted amount of resources and l!m!tless needs and wants
C) the economy !s run by a central planner d!ctat!ng who gets what
D) the pr!ces of !tems are so h!gh that only a small m!nor!ty of people can afford them

Dur!ng opt!m!zat!on, a rat!onal econom!c agent ______________.

A) expresses both the total costs and total benef!ts of each alternat!ve us!ng the same un!t (l!ke US dollar, Euro, TL,
etc.)
B) does not care !f an alternat!ve !s feas!ble or not
C) does not calculate the benef!ts of alternat!ves based on her preferences
D) only takes !nto account the monetary costs of each ava!lable !tem

Opportun!ty cost of an !tem !s _______________.

A) The money that you spend !n order to purchase an !tem
B) The net benef!t that you get from that !tem
C) The net benef!t of the second-best feas!ble !tem
D) The monetary cost of the second-best feas!ble !tem

A student !s allowed to choose only one out of four courses as an elect!ve. The ava!lable courses are
Mathemat!cs, Phys!cs, Chem!stry, and B!ology. She l!kes Mathemat!cs more than Phys!cs, she enjoys Phys!cs
more than B!ology, and she prefers B!ology to Chem!stry. If she !s a rat!onal student, wh!ch course would she
select as an elect!ve? What would be the opportun!ty cost of th!s cho!ce?
A) She would choose Phys!cs as her elect!ve, and the opportun!ty cost would be Mathemat!cs.
B) She would choose Mathemat!cs as her elect!ve, and the opportun!ty cost would be Phys!cs.
C) She would choose Phys!cs as her elect!ve, and the opportun!ty cost would be Chem!stry.
D) She would choose B!ology, and the opportun!ty cost would be Chem!stry.

When a rat!onal econom!c agent opt!m!zes us!ng total values (also called opt!m!zat!on !n levels), he mentally
calculates _____________.
A) the total net benef!ts of each feas!ble alternat!ve
B) only the benef!ts of alternat!ves, and does not care about costs
C) only the costs of alternat!ves, and does not care about benef!ts
D) the change !n total benef!t due to sh!ft!ng from one feas!ble alternat!ve to another

If a rat!onal econom!c agent opt!m!zes us!ng total values (also called opt!m!zat!on !n levels) !n a case where the
total benef!ts of each feas!ble alternat!ve are !dent!cal but total costs d!ffer across feas!ble alternat!ves, she
chooses _____________.
A) the feas!ble alternat!ve assoc!ated w!th the m!n!mum net benef!t among all other feas!ble alternat!ves.
B) the feas!ble alternat!ve assoc!ated w!th the max!mum cost.
C) the feas!ble alternat!ve w!th the m!n!mum cost.
D) the alternat!ve assoc!ated w!th a negat!ve marg!nal net benef!t.

Marg!nal net benef!t !s ______________.

A) equal to “marg!nal benef!t - marg!nal cost”
B) equal to “marg!nal cost - marg!nal benef!t”
C) the max!mum net benef!t that one could get from the pool of feas!ble alternat!ves
D) a var!able used !n opt!m!zat!on !n levels (also called opt!m!zat!on us!ng total values)
Marg!nal cost !s _____________.
A) the decrease !n your net benef!t due to sw!tch!ng between two feas!ble alternat!ves
B) the change !n your cost due to sw!tch!ng between two feas!ble alternat!ves
C) the m!n!mum cost level one could get from the pool of feas!ble alternat!ves
D) always pos!t!ve

Bernardo has two feas!ble alternat!ves: Alternat!ve X w!th a benef!t of $40 and a cost of $15 & Alternat!ve Y w!th
a benef!t of $60 and a cost of $25. Accord!ng to th!s !nformat!on, wh!ch one of the follow!ng !s correct?
A) Bernardo can opt!m!ze by choos!ng Alternat!ve X.
B) The marg!nal net benef!t of sw!tch!ng from Alternat!ve X to Alternat!ve Y !s $10.
C) The marg!nal net benef!t of sw!tch!ng from Alternat!ve X to Alternat!ve Y !s -$10.
D) The marg!nal cost of sw!tch!ng from Alternat!ve X to Alternat!ve Y !s -$10.

An econom!c agent opt!m!z!ng us!ng marg!nal analys!s (or called opt!m!zat!on !n d!fferences) must not sw!tch
from alternat!ve A to alternat!ve B (assum!ng that the total benef!ts of the two alternat!ves are d!fferent from
each other, as well as the!r total costs) !f th!s results !n ________________.
A) a pos!t!ve marg!nal net benef!t
B) a negat!ve marg!nal net benef!t
C) a pos!t!ve marg!nal benef!t
D) a negat!ve marg!nal cost

An econom!c agent opt!m!z!ng us!ng marg!nal analys!s (or called opt!m!zat!on !n d!fferences) must sw!tch from
alternat!ve A to alternat!ve B (assum!ng that the total benef!ts of the A & B are !dent!cal, but the!r total costs are
d!fferent from each other) !f th!s results !n ________________.
A) a pos!t!ve marg!nal cost
B) a negat!ve marg!nal net benef!t
C) a pos!t!ve marg!nal benef!t
D) a negat!ve marg!nal cost

Wh!ch of the follow!ng examples best descr!bes the Law of Demand?

A) When John's !ncome doubles, h!s telephone b!ll also doubles.
B) When the pr!ce of bread doubles, John's consumpt!on of bread halves.
C) When the pr!ce of watches !ncreases, a local manufacturer starts offer!ng more watches for sale.
D) When a new ant!-tobacco commerc!al !s released, the consumpt!on of tobacco products decreases sharply.

The w!ll!ngness to pay for a commod!ty ________.

A) decreases as consumpt!on of the commod!ty !ncreases
B) !ncreases as consumpt!on of the commod!ty !ncreases
C) !s always less than the market pr!ce of the commod!ty
D) !s always greater than the market pr!ce of the commod!ty

Wh!ch of the follow!ng factors !s expected to cause the demand curve for coffee to sh!ft to the r!ght?
A) A fall !n the manufactur!ng cost of coffee
B) A h!gher tax on the sale of tea, a subst!tute for coffee
C) A h!gher personal tax on the !ncome of all consumers
D) An !ncrease !n the supply of coffee due to better weather

Other th!ngs rema!n!ng same, a leftward sh!ft !n the demand curve w!ll lead to a(n) ________.
A) !ncrease !n the equ!l!br!um pr!ce and the equ!l!br!um quant!ty
B) decrease !n the equ!l!br!um pr!ce and the equ!l!br!um quant!ty
C) decrease !n the equ!l!br!um pr!ce and an !ncrease !n the equ!l!br!um quant!ty
D) !ncrease !n the equ!l!br!um pr!ce and a decrease !n the equ!l!br!um quant!ty

A fall !n the pr!ce of flour, used !n mak!ng cakes, !s l!kely to ________ of cakes.
A) !ncrease the supply
B) decrease the supply
C) !ncrease the quant!ty suppl!ed
D) decrease the quant!ty suppl!ed

Other th!ngs rema!n!ng the same, a r!ghtward sh!ft !n the supply curve w!ll lead to a(n) ________.
A) !ncrease !n the equ!l!br!um pr!ce and the equ!l!br!um quant!ty
B) decrease !n the equ!l!br!um pr!ce and the equ!l!br!um quant!ty
C) decrease !n the equ!l!br!um pr!ce and an !ncrease !n the equ!l!br!um quant!ty
D) !ncrease !n the equ!l!br!um pr!ce and a decrease !n the equ!l!br!um quant!ty

The equ!l!br!um quant!ty !n a perfectly compet!t!ve market !s determ!ned at the po!nt of ________.
A) !ntersect!on of the demand and supply curves
B) tangency between the demand and supply curves
C) !ntersect!on of the supply curve and the quant!ty ax!s
D) !ntersect!on of the demand curve and the quant!ty ax!s

A shortage occurs !n a market when ________.

A) supply exceeds demand
B) pr!ce !s lower than the equ!l!br!um pr!ce
C) pr!ce !s h!gher than the equ!l!br!um pr!ce
D) the marg!nal ut!l!ty of consumpt!on !s negl!g!ble

At a pr!ce of $1 per table, the quant!ty suppl!ed of tables !s 100 un!ts, whereas the quant!ty demanded !s 70
un!ts. G!ven th!s !nformat!on, wh!ch of the follow!ng statements !s true?
A) The equ!l!br!um pr!ce !s $1 per table.
B) The market clear!ng pr!ce !s $1 per table.
C) At a pr!ce of $1 per table, there !s a surplus !n the market.
D) At a pr!ce of $1 per table, there !s a shortage !n the market.

The follow!ng table shows the market demand and supply schedules for notebooks.

Pr!ce ($ per un!t) Quant!ty Demanded (un!ts) Quant!ty Suppl!ed (un!ts)

1 20 4
2 16 6
3 14 10
4 12 12
5 10 14
6 7 17
7 4 20
8 2 22
9 1 25
Refer to the table above. What !s the equ!l!br!um pr!ce of notebooks?
A) $2 B)$4 C)$6 D)$7

Refer to the table above. What !s the equ!l!br!um quant!ty of notebooks?

A) 4 un!ts. B) 10 un!ts C) 12 un!ts D) 20 un!ts

Refer to the table above. Wh!ch of the follow!ng statements !s true?

A) There !s a surplus of 4 notebooks !n the market when pr!ce of one notebook !s $5
B) There !s a surplus of 10 notebooks !n the market when pr!ce of one notebook !s $8
C) There !s a shortage of 4 notebooks !n the market when pr!ce of one notebook !s $6
D) There !s a shortage of 12 notebooks !n the market when pr!ce of one notebook !s $4

Wh!ch of the follow!ng correctly descr!bes !ncent!ves?

A) Incent!ves refer to the max!mum pr!ce that a buyer !s w!ll!ng to pay for a good.
B) Incent!ves are rewards or penalt!es that mot!vate people to behave !n a part!cular way. C) Incent!ves are pr!ces that
are f!xed by the government and not by market forces.
D) Incent!ves refer to the m!n!mum pr!ce at wh!ch a seller !s w!ll!ng to sell a product.

Suppose the pr!ces of a pa!r of jeans, a sh!rt, and a t!e are $30, $20, and $10, respect!vely. Wh!ch of the
follow!ng statements !s true !n th!s context?
A) The opportun!ty cost of buy!ng a pa!r of jeans !s 2 t!es.
B) The opportun!ty cost of buy!ng a t!e !s 3 pa!rs of jeans.
C) The opportun!ty cost of buy!ng a t!e !s 2 sh!rts.
D) The opportun!ty cost of buy!ng a sh!rt !s 2 t!es.

Wh!ch of the follow!ng statements !s true?

A) A consumer's buy!ng dec!s!ons do not !nd!cate anyth!ng about her tastes and preferences.
B) A consumer's demand for a good determ!nes the pr!ce of the good !n a perfectly compet!t!ve market.
C) The relat!ve pr!ces of goods do not affect a consumer's buy!ng dec!s!on.
D) A consumer !n a perfectly compet!t!ve market buys only a t!ny fract!on of the total amount produced.

The f!gure on the left shows the budget constra!nt of Lesley when she !s faced w!th two goods: burgers and
!cecream.
If the l!ne represents Lesley's budget constra!nt, and Lesley has $60 budget to be spent on burgers and !ce
cream, what !s the pr!ce of burger and !ce cream?
A) Pburger = $10, and P!cecream = $6
B) Pburger = $5, and P!cecream = $3
C) Pburger = $12, and P!cecream = $3
D) Only the rat!o of the pr!ces can be determ!ned
If the pr!ce of a burger doubled, Lesley's new budget constra!nt ________.
A) w!ll start from the same po!nt on the vert!cal ax!s, but w!ll cross the hor!zontal ax!s at 3
B) w!ll start from the same po!nt on the vert!cal ax!s, but w!ll cross the hor!zontal ax!s at 12
C) w!ll start from the same po!nt on the hor!zontal ax!s, but w!ll cross the vert!cal ax!s at 5
D) w!ll start from the same po!nt on the hor!zontal ax!s, but w!ll cross the vert!cal ax!s at 20

If Lesley's budget for burgers and !ce creams !s cut by half, Lesley's new budget constra!nt ________.
A) w!ll cross the vert!cal ax!s at 5, and w!ll cross the hor!zontal ax!s at 3
B) w!ll start from the same po!nt on the vert!cal ax!s, but w!ll cross the hor!zontal ax!s at 3
C) w!ll start from the same po!nt on the hor!zontal ax!s, but w!ll cross the vert!cal ax!s at 5
D) w!ll cross the vert!cal ax!s at 20, and w!ll cross the hor!zontal ax!s at 12

The follow!ng table shows the marg!nal benef!t that Marcus der!ves by consum!ng d!fferent quant!t!es of hotdog
and soda. The pr!ce of a hotdog !s $3, and the pr!ce of a soda !s $1.

Quant!ty Soda Hotdog

Marg!nal Benef!ts ($) Marg!nal Benef!ts ($)
1 10 18
2 8 12
3 6 6
4 4 3
5 2 1
6 1 0.6
What !s opt!mal comb!nat!on of Soda and Hotdog for Marcus, !f h!s weekly budget for hotdog and soda !s $14?
A) 2 sodas and 4 hotdogs
B) 3 sodas and 3 hotdogs
C) 6 sodas and 5 hotdogs
D) 5 sodas and 3 hotdogs

What !s opt!mal comb!nat!on of Soda and Hotdog for Marcus, !f h!s weekly budget for hotdog and soda !s $10?
A) 2 sodas and 4 hotdogs
B) 3 sodas and 3 hotdogs
C) 6 sodas and 5 hotdogs
D) 4 sodas and 2 hotdogs

The pr!ce of a soda !ncreases from $1 to $2 (assume marg!nal benef!ts ($) values !n the table stay unchanged).
What !s opt!mal comb!nat!on of Soda and Hotdog for Marcus, !f h!s weekly budget for hotdog and soda !s $10?
A) 2 sodas and 2 hotdogs
B) 3 sodas and 3 hotdogs
C) 6 sodas and 5 hotdogs
D) 4 sodas and 2 hotdogs

Ryan buys 4 pa!rs of jeans when the pr!ce !s $25. He buys 3 pa!rs when the pr!ce !ncreases to $50. Ryan's
percentage change !n quant!ty demanded !s ________, when the pr!ce !ncrease by ________ percent, and thus
h!s pr!ce elast!c!ty of demand !s ________.
A) -25%; + 100%; -0.25
B) -25%; + 100%; -4
C) +25%; - 100%; -4
D) -15%; + 75%; -0.25

Wh!ch of the follow!ng statements !s true of the cross-pr!ce elast!c!ty of demand?

A) The cross-pr!ce elast!c!ty of demand between subst!tutes !s zero.
B) The cross-pr!ce elast!c!ty of demand between complements !s zero.
C) The cross-pr!ce elast!c!ty of demand between subst!tutes !s negat!ve. D) The cross-pr!ce elast!c!ty of demand
between complements !s negat!ve.

Econom!sts est!mate that the !ncome elast!c!ty of demand for women's ha!rstyl!ng serv!ces !s +3.5, suggest!ng
that ________.
A) ha!rstyl!ng serv!ces are an !nfer!or good and quant!ty demanded w!ll decrease as !ncomes !ncrease
B) ha!rstyl!ng serv!ces are an !nfer!or good and quant!ty demanded w!ll !ncrease as !ncomes !ncrease
C) ha!rstyl!ng serv!ces are a normal good and quant!ty demanded w!ll decrease as !ncomes !ncrease
D) ha!rstyl!ng serv!ces are a normal good and quant!ty demanded w!ll !ncrease as !ncomes !ncrease