ECON 1000: INTRODUCTION TO MICROECONOMICS DEPARTMENT OF ECONOMICS FACULTY OF LIBERAL ARTS AND PROFESSIONAL STUDIES YORK UNIVERSITY

Prof. Sadia M. Malik Exam Questions MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. Note: The answers are written in bold text 1)

Which of the followin g is a microe conomi c topic?

1)

C A)

the reasons why the average price level in a country falls B)

the effect of the government budget deficit on inflation C )

the D)

reasons why a consumer buys less honey

the reasons why the labour force in a country decreases E)

the cause of increasing unemployment 2)

The fact that human wants cannot be fully satisfie d with availabl e resourc es is called the proble m of

3)

A A )

s ci c t a y r.

marginal D)

cost.

opportunity cost. E)

the big 3)

tradeoff.

When a firm decides to produc e more hybrid cars and fewer gas guzzler s, it is answeri ng the _______ _ questio n.

4)

C A )

"when"

B)

"who"

C)

"what"

D)

"where"

E) " hw

During the next hour John can choose one of the followin g three activiti es: playing basket ball, watchin g televisi on, or reading a book. The opportu nity cost of reading a book

6)

C A )

iet s b al tl h a e n d v t a h le u v e al u o e fof w p at lc a hi y n ig n te g le vi b si a o s n. k

is the D)

value of playing basketball if John prefers that to watching television.

depends on how much the book cost when it was purchased. E)

depends on how much John enjoys the book.

5)

If you take an additio nal class this term, you can graduat e earlier. This is an exampl e of

7)

A A )

m l a b re g n ie n fi a t.

opportunity cost. D)

the pursuit social interest. E)

total cost. 6)

"The rich should face higher income tax rates than the poor." This is an exampl e of

8)

E A )

a e st n at e e g m a e tn it. v

neither a D)

normative nor a positive statement.

a positive E)

statement.

a 7)

normative statement.

If Harold can increas e product ion of good X without decreas ing product ion of any other good, then Harold

9)

E A )

ir s o d p u rct o io d n u p c o is n si g bi lit o ie n s fr h o in s ti e p r.

must have a linear production possibilities frontier. D)

must prefer good X to any other good. E)

is

producing inside his production possibilities frontier.

Use the figure below to answer the following questions.

Figure 2.1.2 8)

Refer to the product ion possibil ities frontier in Figure 2.1.2. At point A, the opportu nity cost of produci ng 3 more units of X

12)

D A )

i un sits of 3 X.

is 30 units of Y. D)

is 20 units of Y. E)

cannot be from the diagram. determined 9)

Comple te the followin g sentenc e. As you consum e more and more of a good,

16)

B A )

m re a as res g de i pe n nd a in lg on b w e he n re e yo fu i ar te on i th n e cpr rod e uc a tio sn e po sssi bil o iti res fro d nti e er. c

the price of the good rises. D)

marginal E)

benefit increases.

marginal

benefit always equals marginal cost.

Use the figure below to answer the following questions.

Figure 2.2.1 10)

In Figure 2.2.1, the curve labelled A is the _______ _ curve and the curve labelled B is the _______ _ curve.

17)

A A )

m os a t; rm g ar igi n na a l lbe ne c fit

production possibilities; trade D)

marginal E)

benefit; marginal cost

marginal

benefit; trade

11)

A technol ogical improv ement is represe nted by

20)

B A )

a th e m pr o od v uc e tio m n e po n ssi tbil iti a es l fro o nti n er. g

a point D)

inside the production possibilities frontier.

a point E)

outside the production possibilities frontier.

a movement

from a point inside the production possibilities frontier to a point on the production possibilities frontier.

Use the information below to answer the following questions. Fact 2.4.1 In an eight-hour day, Andy can produce either 24 loaves of bread or 8 kilograms of butter. In an eight-hour day, Rolfe can produce either 8 loaves of bread or 8 kilograms of butter. 12)

Given Fact 2.4.1, the opportu nity cost of produci ng 1 loaf of bread is

21)

A A )

1f /or 3 A nd k y ian ld o 1 g kil rog a ra m m of o bu ftt er b fo u r tR tol e fe r.

8 kilograms of butter for both Andy and Rolfe. D)

3 kilograms of butter for Andy and 1 kilogram of butter for Rolfe. E)

not 13)

calculable from the given information.

From Fact 2.4.1, we know that

22)

B A )

Apr n od d uc y in g h br a ea sd, w thil h e e An dy l an o d w Ro e lfe rha ve o eq p ua p l o op rpo trtu u nit n y i co tsts y of pr cod o uc sin tg bu o tte fr.

Andy has D)

the lower opportunity cost of producing both bread and butter.

Andy has E)

the higher opportunity cost of producing both bread and butter.

Andy has the lower 14)

opportunity cost of producing butter, while Rolfe has the lower opportunity cost of producing bread.

Which one of the followin g events shifts the deman d curve for grape jelly to the right?

24)

B A )

a e in d th e e cpo rpu e lat a io sn

a decrease in the price of grape jelly D)

an increase in the price of peanut butter, a complement of grape jelly E)

a decrease in the price of strawberry preserves, a substitute for grape jelly

15)

The deman d curve slopes downw ard to the right becaus e

25)

C A )

o la fw of tsu h pp e ly.

of the law of demand. D)

of E)

comparative advantage.

as income 16)

rises, the quantity demanded increases.

The price of good A rises, and the deman d curve for good B shifts leftwar d. We can conclud e that

26)

B A )

B no rm i al sgo od a .

A and B are complements in production. D)

B is an E)

inferior good.

A and B are substitutes. 17)

Consid er the market for cell phones . Suppos e the price of a cell phone falls. Explain the effect of this event on the quantit y of cell phones deman ded and on the deman d for cell phones .

27)

D A )

T m h an e de d q is u un a ch n an tge id tan y d th o e fde m can e d l for l ce ll p ph h on o es n de e cr sea se d s. e

The cell phones demanded increases and the demand for cell phones also increases. quantity of D)

The cell phones demanded increases and the demand for cell phones is quantity of unchanged. E)

The quantity of 18)

cell phones demanded decreases and the demand for cell phones is unchanged.

If a 10 percent rise in price leads to an 8 percent decreas e in quantit y deman ded, the price elasticit y of deman d is

34)

C A )

80.

B)

1.25.

C)

0.8.

D)

0.125.

E) 8. 1

Suppos e that Simon Fraser Univers ity decides to raise tuition fees to increas e the total revenu e it receive s from student s. This policy works only if the deman d for a Simon Fraser Univers ity educati on is

39)

B A )

g nd rfor e a a Un tiv e er rsit y tof h W a es n ter n tOn h tar e io ed d uc e ati m on a .

unit elastic. D)

perfectly E)

elastic.

elastic.

10)

Which of the followin g would result in a movem ent along, but not a shift of the supply curve for spinach ?

46)

A A )

A th e rpr iic s e e of sp iin n ac h

An increase in wages of workers in spinach fields D)Great weather that produces a bumper spinach crop this year