1.We can use microeconomic analysis
     
    A. To understand how markets work.
    B. To make personal and managerial decisions.
    C. To evaluate the merits of public choices.
    D. All of the above
    E. None of the above.
2. Suppose the price of fertilizer falls. What would happen to the price and quantity of corn?
     
    A. The price of corn rises and the quantity of corn falls.
    B. The price of corn rises and the quantity of corn rises.
    C. The price of corn falls and the quantity of corn falls.
    D. The price of corn falls and the quantity of corn rises.
    E. None of the above is correct.
3. Which of the following would cause the demand curve for orange juice to shift to the right?
    A. More people expect the price of orange juice will fall next month.
    B. The Surgeon General releases a study suggesting that orange juice consumption reduces the risk of cancer.
    C. The price of grapefruit juice falls
    D. Consumer incomes fall
    E. New technology allows processors to get more juice from each orange
     
4. When the price of the product rises, all of the following will occur EXCEPT
     
    A. Because they can't afford as much, consumers will decrease the quantity they demand.
    B. Firms will now be able to sell additional units for more than the opportunity cost of producing them.
    C. Consumer tastes will change, causing the demand curve for this product to shift to the left and the supply curve to shift to the right.
    D. Quantity demanded will decrease because some consumers will not choose to sacrifice a greater quantity of other goods to buy this one.
    E. There are no exceptions all of the above are will occur as a result of an increase in the price.
     
5. Consider two individuals, Phil and Simon, who can produce fish or coconuts. The table below shows that in an hour Phil can gather 6 coconuts or catch 4 fish.
    Person
    Coconuts per hour
    Fish per hour
    Phil
    6
    4
    Simon
    3
    1

    Which of the following statements about Phil and Simon is correct?

    A. Phil should specialize in the production of fish because he can produce them at lower cost than Simon.
    B. Phil would not want to trade because he can produce more of both fish and coconuts than Simon.
    C. Simon's opportunity cost of producing fish is 4.
    D. Phil has a comparative advantage in the production of coconuts.
    E. Phil can produce both goods at lower cost than Simon.
     

6. A surplus in the sugar market
     
    A. Exists when the quantity producers want to sell exceeds the quantity buyers want to purchase.
    B. Will lead to an increase in the price of sugar.
    C. Will be eliminated because the demand for sugar will automatically increase to meet the supply
    D. Exists when the price buyers are willing to pay exceed the price at which sellers are willing to sell.
    E. None of the above
     
7. The marginal principle states that
     
    A. An individual should produce or consume at a level where costs equal zero.
    B. An individual should produce or consume at a level where marginal benefits equal zero.
    C. An individual should produce or consume at a level where marginal costs equal opportunity costs.
    D. An individual should produce or consumer as long as the opportunity cost is greater than the benefits from consuming or producing
    E. An individual should produce or consume as long as the marginal benefit at least equals the marginal cost.
     
8. Suppose that when the price of chocolates is $4.50 per pound, 19 pounds are consumed. When the price falls to $3.00 per pound, 16 pounds are consumed. Which of the following might have caused this change?
     
    A. Consumer income decreased.
    B. The price of milk (an input into chocolate production) has fallen
    C. A technological advancement in chocolate production has occurred.
    D. The price of caramels (a substitute) has risen.
    E. More chocolate producers expected the demand for chocolates to be higher in the future.
     
9. Which of the following is correct?
    1. As the price of a substitute good falls the demand for a product inreases.
B. Macroeconomics is the study of the choices made by individual households, firms, and governments, and their interaction in markets.
C. The production possibilities curve is bowed out because sensible people want to divide their purchases and consume a variety of goods and services.
D. Because resources are not equally adaptable to the production of all good, the marginal opportunity cost of producing another unit will fall as more of a good is produced.
E. None of the above is correct. 10.  Suppose that the marginal utility of chicken divided by the price of chicken exceeds the marginal utility of fish divided by the price of fish. The consumer will maximize her utility by
    1. More chicken less fish
    2. Less chicken and more fish
    3. More of both goods
    4. Less of both goods
    5. None of the above

      6.  

       
       

      Answers
      1. D
      2. D
      3. B
      4. C
      5. A
      6. A
      7. E
      8. A
      9. D
      10. A