Micro Econ Sample Test

Sample Test Questions for ECON 102 with answers marked

1. Economics deals primarily with the concept of
a.
scarcity.
b.
money.
c.
poverty.
d.
banking.

2. The adage, "There is no such thing as a free lunch," means
a.
even people on welfare have to pay for food.
b.
the cost of living is always increasing.
c.
people face tradeoffs.
d.
all costs are included in the price of a product.

3. Government policies resulting in reduced efficiency include
(i)
the welfare system

(ii) unemployment insurance

(iii) progressive income tax

a.
(i) only

b.
(ii) only

c.
(i) and (ii) only

d.
(i), (ii), and (iii)

4. In building economic models, economists often omit
a.
assumptions.
b.
theories.
c.
details.
d.
equations.

Table 1
Assume that Andia and Zardia can switch between producing wheat and producing beef at a constant rate.

Minutes Needed to Make 1

Bushel of Wheat
Pound of Beef
Andia
20
12
Zardia
15
10

5. Refer to Table 1. What is Andia’s opportunity cost of producing one pound of beef?
a.
3/5 bushel of wheat
b.
6/5 bushels of wheat
c.
4/3 bushels of wheat
d.
5/3 bushels of wheat

6 . Suppose there are only two people in the world. Each person’s production possibilities frontier also represents his or her consumption possibilities when
a.
neither person faces trade-offs.
b.
the frontiers are straight lines.
c.
the frontiers are bowed out.
d.
they choose not to trade with one another.

7. Regan grows flowers and makes ceramic vases. Jayson also grows flowers and makes ceramic vases, but Regan is better at producing both goods. In this case, trade could
a.
benefit both Jayson and Regan.
b.
benefit Jayson, but not Regan.
c.
benefit Regan, but not Jayson.
d.
benefit neither Jayson nor Regan.

8. The production possibilities frontier illustrates
a.
the combinations of output that an economy should produce.
b.
the combinations of output that an economy should consume.
c.
the combinations of output that an economy can produce.
d.
All of the above are correct.

Figure 1

9. Refer to Figure 1. If this economy devotes all of its resources to the production of clocks, then it will produce
a.
0 clocks and 35 candles.
b.
10 clocks and 25 candles.
c.
16 clocks and 0 candles.
d.
16 clocks and 35 candles.

Figure 2

10. Refer to Figure 2. The curves shown are
a.
supply curves.
b.
demand curves.
c.
preference curves.
d.
income-consumption curves.