Economics Micro & Macro (CliffsAP)

Microeconomics Full-Length Practice Test 1

Section I

■ 60 multiple choice questions 70 minutes

Section II

■ 1 long free-response question and

■ 2 short free-response questions 10 minutes for planning

50 minutes for writing

Total Time: 2 Hours and 10 Minutes

Microeconomics Section I: Multiple-Choice Questions

Directions: You have 70 minutes to complete the 60 multiple-choice questions in this section of the exam.

1. In a perfectly competitive market all of the
   following are true except:
   A. Producers and consumers are price takers.
   B. There are many small firms.
   C. Entry and exit into the industry are costless.
   D. Firms produce different products.
   E. There are no transaction costs.


2. What characteristics are true of an oligopoly?
   I. A few large firms.
   II. All products are identical.
   III. High entry/exit costs.

A. I only

B. II only

C. I and II only

D. I and III only

E. I, II, and III

3. Mrs. Buttermilk enjoys eating maple syrup with
   her pancakes for breakfast. If one day the price of
   pancakes increases, which of the following will
   result?
   A. The supply curve for maple syrup will shift
   to the left.
   B. The demand curve for maple syrup will shift
   to the left.
   C. The supply curve for pancakes will shift to
   the left.
   D. The demand curve for pancakes will shift to
   the right.
   E. Nothing will happen to the demand curve for
   maple syrup since it is vertical.


4. A well-known consumer magazine concludes that
   SUVs are the safest type of motor vehicles to
   drive. What effect does this have on the motor
   vehicle market?
   A. An increase in the price of sedans, a
   substitute for SUVs
   B. A decrease in the price of sedans, a substitute
   for SUVs
   C. An increase in production costs for SUVs
   D. A decrease in the price of sedans, a
   complement to SUVs
   E. A decrease in the price of SUVs


5. The government wants to take actions to prevent
   people from smoking. What policy should they
   enact in order to curb the demand of smokers?
   A. Create a price ceiling above the equilibrium
   price.
   B. Create a price floor above the equilibrium
   price.
   C. Increase the property tax for tobacco firms.
   D. Decrease the income tax for tobacco firms.
   E. Increase the sales tax of cigarettes.


6. If a farmer can produce 1 pound of tomatoes in
   2 hours and 1 pound of oranges in 4 hours, what
   is the opportunity cost of producing 1 pound of
   oranges?
   A. 1/2 pound of tomatoes
   B. 1 pound of tomatoes
   C. 2 pounds of tomatoes
   D. 1/2 pound of oranges
   E. 1 pound of oranges