Economics Micro & Macro (CliffsAP)

49. Which of the following statements is true of a
    monopoly but nottrue of a perfectly competitive
    firm?
    A. Other firms can easily enter the market.
    B. The demand for the product is price inelastic.
    C. The firm will earn zero economic profit.
    D. The market price is affected by decisions
    made by the firm.
    E. The firm is trying to maximize consumer
    surplus.


50. How would the market price and quantity of
    tagless t-shirts produced be changed if the
    competitive market for tagless t-shirts became
    monopolistic?
    Price Quantity
    A. Decrease Stay the same
    B. Decrease Increase
    C. Increase Increase
    D. Decrease Decrease
    E. Increase Decrease


51. What best describes a situation where the production
    of a good results in negative externalities and the
    government does not regulate production?
    A. The quantity of goods being produced will
    be efficient.
    B. The government will lose tax revenue.
    C. The firm will earn an economic profit.
    D. The marginal cost of producing is greater for
    the firm than for society.
    E. The marginal cost of producing is greater for
    society than for the firm.


52. Assume that time is the only resource required to
    produce a good. The following table shows the
    different amounts of time it takes for two
    individuals to make one paper airplane and one
    origami swan.

Bill Bob

Plane 2 minutes 10 minutes

Swan 3 minutes 20 minutes

Which of the following statements is true according to

the table?

A. Bill should be self sufficient, because there

would be no gains from trade.

B. Bob should give-up because he is slow at

both tasks.

C. There would be gains from trade if Bill

specializes in planes and Bob specializes in

swans.

D. There would be gains from trade if Bob and

Bill both specialize in planes.

E. There would be gains from trade if Bill

specializes in swans and Bob specializes in

planes.

53. Which of the following is true for an ordinary
    good?
    A. As income rises, consumption of good
    increases.
    B. As price of good falls, consumption is not
    impacted.
    C. As price of good falls, consumption
    decreases.
    D. As price of good falls, the demand curve
    shifts to the right.
    E. None of the above.


54. All of the following will cause a shift in the
    demand curve except:
    A. The price of a substitute good increases.
    B. A change in consumer preferences.
    C. Advertising is increased.
    D. The price of the good decreases.
    E. The number of buyers in the market
    increases.


55. An increase in the quality of manure allows corn
    farmers to grow more corn on the same amount
    of land. If the market for corn is perfectly
    competitive, what will happen to the equilibrium
    price and quantity of corn?
    Price Quantity
    A. Increase Increase
    B. Decrease Decrease
    C. Decrease Increase
    D. Stay the same Increase
    E. Increase Decrease

Microeconomics Full-Length Practice Test 1

Microeconomics Full-Length

Practice Test 1

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