Economics Micro & Macro (CliffsAP)

Microeconomics Full-Length Practice Test 2

Microeconomics Full-Length

Practice Test 2

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22. Question 22 refers to the following graph.

All of the following statements are true for a monopolistic firm that wants to maximize profits, except:

A. The monopolistic firm should produce where ATC intersects the demand curve.

B. The monopolistic firm should increase production because it is producing at an inefficient rate.

C. The distance between A and B represents the profit from each unit sold.

D. The quantity produced and sold is determined by the firm.

E. The monopolistic firm is earning economic profit.

Q

P

P’

P

MC

A

B

D

ATC

23. Which two major factors are used to derive an
    individual’s labor supply curve in the labor
    market?
    A. Wage and savings
    B. Income and leisure
    C. Unemployment and demand for workers
    D. Population and capital
    E. Technology and production


24. Tornado Pizza Co. just opened for business and
    needs to hire workers. The wage rate for each
    worker is $70 per day, and the price of each pizza
    is $12. How many workers should Tornado Pizza
    Co. hire?

Number of Number Marginal

Workers of Pizzas Product Labor

00

11010

A. 2188

B. 3246

C. 4284

D. 5302

E. 6311

25. A tire factory causes considerable air pollution in
    the process of making tires. Which of the
    following would help decrease air pollution?
    A. Allow pollution based on the number of tires
    demanded.
    B. Decrease pollution until the benefit of clean
    air is equal to the cost of producing less
    pollution.
    C. Eliminate air pollution through government
    intervention.
    D. Decrease pollution until the benefit of clean
    air is maximized.
    E. Decrease pollution by passing regulation for
    cleaner air.


26. Which of the following statements best explains the
    opportunity cost of a firm that builds a new factory?
    A. The firm will have to allocate funds from
    other resources.
    B. Future profits are only based on current
    assumptions.
    C. The cost of the new factory is the
    opportunity cost.
    D. Interest that would be collected on the cash
    value of the building.
    E. Depreciation value of the new factory.