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Microeconomics — Test Answers

24 verified answers
1
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Which statements correctly explain price floors and price ceilings? Choose four correct answers.

A
Price floors help producers by raising prices.
B
Effective price ceilings are set below equilibrium.
C
Price ceilings help consumers by lowering prices.
D
Effective price floors are set above equilibrium.
E
Ineffective price floors tend to be too high.
F
Ineffective price ceilings tend to be too low.
2
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Which best describes how specialized producers decrease their opportunity costs?

A
by increasing production of certain items
B
by limiting the types of goods produced
C
by reducing production costs
D
by focusing on target markets
3

Which best describes the availability of substitutes in a monopoly?

A
There are no substitutes.
B
There are different brands.
C
Products have different features.
D
Price points vary.
4

Profit equals the total amount of money made minus

A
supply.
B
prices.
C
revenue.
D
expenses.
5

Which is the best measurement to use to determine who might have the absolute advantage?

A
high opportunity cost
B
high efficiency
C
low efficiency
D
low opportunity cost
6

Which is an example of a product that is considered a need?

A
video game
B
sports equipment
C
breakfast food
D
music player
7

Which best describes how the government sanctions technological monopolies?

A
by prohibiting others from entering the market
B
by creating the technology itself
C
by issuing a patent for the technology
D
by authorizing one producer
8

The total amount of a product available in a market at a given price is called the

A
number.
B
supply.
C
demand.
D
count.
9

Goods that are considered to be needs tend to be

A
elastic when the supply changes.
B
elastic when the price changes.
C
inelastic when the supply changes.
D
inelastic when the price changes.
10

A market supply schedule shows

A
the prices and quantity in an entire market.
B
the products of two companies only.
C
how prices affect a single producer.
D
how prices affect a group of consumers.
11

When supply is higher than demand, prices will

A
rise until the demand falls.
B
rise until the supply falls.
C
fall until the supply rises.
D
fall until the demand rises.
12

According to the law of supply, price and quantity move

A
from different points toward one another.
B
along a track in the same direction.
C
along a track in opposite directions.
D
from the same point away from one another.
13

Equilibrium is defined when

A
supply is higher than demand.
B
supply is limited and demand decreases.
C
supply and demand meet.
D
demand is higher than supply.
14

Which calculation helps determine which producer has the absolute advantage?

A
Resources used divided by amount produced
B
Resources used multiplied by amount produced
C
Amount produced minus resources used
D
Amount produced divided by resources used
15

On a graph, an equilibrium point is where

A
the supply and demand curves head up.
B
a supply curve and a demand curve meet.
C
a supply curve is higher than a demand curve.
D
the supply and demand curves head down.
16

Brenda’s Boards manufactures skateboards. Each skateboard sells for $45 and includes the following expenses: $3 for the wheels and mounts, $1 for the plastic board, $1 for the paint, and $10 for the labor. What is the total profit the company earns after selling 100 boards?

A
$3,500
B
$3,000
C
$300
D
$350
17

Supply and demand coordinate to determine prices by working

A
separately.
B
together.
C
competitively.
D
with other factors.
18

Why is pure competition considered an unsustainable system?

A
Consumers cannot distinguish between products.
B
Few barriers exist to entry, meaning that the market inevitably floods.
C
Price differentiation is often too minimal to matter.
D
Producers cannot make a profit if they keep dropping their prices.
19

Brenda’s Boards manufactures skateboards. Each skateboard sells for $45 and includes the following expenses: $3 for the wheels and mounts, $1 for the plastic board, $1 for the paint, and $10 for the labor. What is the total revenue the company makes after selling 10 boards?

A
$400
B
$350
C
$450
D
$300
20

Natural monopolies occur when one producer

A
can meet the market’s entire demand.
B
is the only one authorized to produce a given product.
C
controls the method of production.
D
creates unique products.

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