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Microeconomics — Test Answers

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1
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What most likely will happen if the pie maker continues to make additional pies?

A
The marginal costs will continue to fall, decreasing the total cost, while the marginal revenue remains the same, decreasing the profit earned for each pie.
B
The marginal costs will continue to fall, decreasing the total cost, while the marginal revenue remains the same, increasing the profit earned for each pie.
C
The marginal costs will continue to rise, increasing the total cost, while the marginal revenue remains the same, decreasing the profit earned for each pie.
D
The marginal costs will continue to rise, increasing the total cost, while the marginal revenue remains the same, increasing the profit earned for each pie.
2
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On a graph, an equilibrium point is where

A
a supply curve is higher than a demand curve.
B
the supply and demand curves head down.
C
a supply curve and a demand curve meet.
D
the supply and demand curves head up.
3

When supply is higher than demand, prices will

A
fall until the supply rises.
B
fall until the demand rises.
C
rise until the demand falls.
D
rise until the supply falls.
4

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

A
Effective price floors are set above equilibrium.
B
Ineffective price floors tend to be too high.
C
Ineffective price ceilings tend to be too low.
D
Effective price ceilings are set below equilibrium.
E
Price floors help producers by raising prices.
F
Price ceilings help consumers by lowering prices.
5

Which best describes the availability of substitutes in a monopoly?

A
There are different brands.
B
There are no substitutes.
C
Price points vary.
D
Products have different features.
6

In economics, if a good is inelastic,

A
its supply or demand is too sensitive to price changes.
B
producers have lost an interest in manufacturing it.
C
consumers have lost an interest in purchasing it.
D
its supply or demand is not sensitive to price changes.
7

Which best describes how the government sanctions technological monopolies?

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

Natural monopolies occur when one producer

A
controls the method of production.
B
is the only one authorized to produce a given product.
C
can meet the market’s entire demand.
D
creates unique products.
9

Profit equals the total amount of money made minus

A
expenses.
B
prices.
C
supply.
D
revenue.
10

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

A
sports equipment
B
breakfast food
C
video game
D
music player
11

Why is pure competition considered an unsustainable system?

A
Producers cannot make a profit if they keep dropping their prices.
B
Price differentiation is often too minimal to matter.
C
Few barriers exist to entry, meaning that the market inevitably floods.
D
Consumers cannot distinguish between products.
12

Equilibrium is defined when

A
demand is higher than supply.
B
supply is limited and demand decreases.
C
supply is higher than demand.
D
supply and demand meet.
13

A market supply schedule shows

A
how prices affect a group of consumers.
B
the prices and quantity in an entire market.
C
how prices affect a single producer.
D
the products of two companies only.
14

Which aspect of monopolistic competition gives consumers more choice?

A
Price is not an important factor.
B
Producers rely on consumer decisions to succeed.
C
Few barriers to market entry exist.
D
Producers are more concerned about selection than profits.
15

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

A
supply.
B
demand.
C
count.
D
number.
16

Supply and demand coordinate to determine prices by working

A
competitively.
B
with other factors.
C
together.
D
separately.
17

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
$3,000
B
$3,500
C
$350
D
$300
18

Goods that are considered to be needs tend to be

A
inelastic when the price changes.
B
elastic when the supply changes.
C
elastic when the price changes.
D
inelastic when the supply changes.
19

Excess supply is created when price or [Dropdown 1] move away from the equilibrium point.

Answer:

quantity

20

According to the law of supply, price and quantity move

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

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