QUIZ MICROECONOMICS 1

QUIZ MICROECONOMICS - NUMBER 1
1. The scarcity problem:

A: has been solved in all industrialised nations.
B. persists only because countries have failed to achieve continuous full
employment.
C: has been eliminated in affluent societies such as Australia.
D: persists because material wants exceed available productive
resources.
2. Which of the following is not one of the three basic economics issues?
A: What goods and services should be produced?
B. Which products should be in short supply and which in excess
supply?
C. For whom should the total output be produced?
D: How should production be organised?
3. The study of economics is primarily concerned with:

A: choices that are made in seeking to use scarce resources efficiently.
B. keeping private businesses from losing money.
C.determining the most equitable distribution of society's output.
D: demonstrating that capitalistic economies are superior to socialistic
economies.
4. The basic purpose of the ceteris paribus assumption is to:

A: allow one to focus upon macro variables by ignoring micro variables.
B. determine whether X causes Y or vice versa.
C. allow one to focus upon micro variables by ignoring macro variables.
D. allow one to reason about the relationship between two variables,
without the intrusion of other variables.
5. The fundamental problem of economics is:

A. to establish an equitable system of personal and business taxation.
B: the scarcity of productive resources relative to material wants.
C. the establishment of prices that accurately reflect the relative
scarcities of products and resources.
D. to establish a democratic political framework for the provision of social
goods and services.
6. 'Productive efficiency' refers to:

A: the production of the product-mix most wanted by society.
B. the use of the least-cost method of production.
C: the full employment of all available resources.
D: production, at some point, inside of the production possibilities curve.
7. The idea of 'allocative efficiency' refers to:

A: the production of the product-mix most wanted by society.
B. the use of the least-cost method of production.
C: production, at some point, inside of the production possibilities curve
D: the full employment of all available resources.
8. According to the law of supply:

A: price and quantity supplied are inversely related.
B. price and quantity supplied are directly related.
C: the larger the number of producers in a market, the higher product
price.
D. producers will sell more of a given product at low prices than they will
at high prices.
9. Which of the following will not cause the supply for product M to
change?
A: A change in technology.
B: A change in the price of inputs which produce M.
C: An increase in tax imposed by Government.
D: A change in the price of M.
10. A market is defined as:

A: face-to-face contacting between buyer and seller.
B. reflection of upsloping demand and downsloping supply curves.
C: the exchange of goods, but not services.
D: an institution that brings together buyers and sellers.
11. When the price of a product decreases, a consumer is able to buy
more of it with a given money income. This describes:
A: the income effect.

B. the cost effect.
C: the substitution effect.
D. the inflationary effect.
12. If consumer incomes decrease, the demand for product X:
A: will necessarily remain unchanged.

B: may shift either to the right or left.
C: will necessarily shift to the left.
D: will necessarily shift to the right.
13. A tax imposed by the Goverment will:

A: shift the demand curve to the left.
B. tend to decrease equilibrium price.
C: shift the supply curve to the right.
D: shift the supply curve to the left.
14: An increase in the price of a product will reduce the amount of it

purchased because:
A: the higher price means that real incomes have risen.
B: consumers will substitute other products for the one whose price has
risen.
C. supply curves are upsloping.
D: consumers substitute relatively high-priced products for relatively low-
priced products.
15. 'Because of unseasonably cold weather, the supply of oranges has

substantially decreased. This statement indicates that:
A: consumers will be willing and able to buy fewer oranges at each
possible price.
B: the equilibrium quantity of oranges will rise.
C: the amount of oranges that will be available at various prices has
declined.
D: the price of oranges will fall.
16. A price floor on rice will:

A: clear the market for rice.
B: result in a surplus of rice.
C: force otherwise profitable farmers out of business.
D: result in a shortage of rice.
17. The price of product X is reduced from $100 to $80 and, as a result,
the quantity demanded increases from 50 to 70 units. From this we can
conclude that the demand for X in this price range:
A: is elastic.
B: has declined.
C: is inelastic.
D. is of unit elasticity.
18. 'A price shocks' are associated with:

A: ceiling prices and the resulting product shortages
B. price floors and the resulting product surpluses.
C: ceiling prices and the resulting product surpluses.
D: price floors and the resulting product shortages.
19. If the price elasticity of demand for a product is 2.0, then a price cut
from $2.00 to $1.50 will:
A: increase the quantity demanded by 50%.
B: increase the quantity demanded by 5.0%.
C: decrease the quantity demanded by 5.0%.
D: do none of the above.
20. In which of the following instances will total revenue decline?

A: Price rises and demand is elastic.
B: Price falls and demand is elastic.
C: Price rises and supply is elastic.
D. Price rises and supply is inelastic.

QUIZ MICROECONOMICS 1

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QUIZ MICROECONOMICS - NUMBER 1

1. The scarcity problem:

3. The study of economics is primarily concerned with:

4. The basic purpose of the ceteris paribus assumption is to:

5. The fundamental problem of economics is:

6. 'Productive efficiency' refers to:

7. The idea of 'allocative efficiency' refers to:

8. According to the law of supply:

10. A market is defined as:

A: the income effect.

12. If consumer incomes decrease, the demand for product X:

A: will necessarily remain unchanged.

13. A tax imposed by the Goverment will:

14: An increase in the price of a product will reduce the amount of it

15. 'Because of unseasonably cold weather, the supply of oranges has

16. A price floor on rice will:

18. 'A price shocks' are associated with:

20. In which of the following instances will total revenue decline?

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