.....INTRODUCTION TO ECONOMICS............

Question 1

Microeconomics concepts can help you make better personal decisions. For example, which of these tools might be useful when deciding whether to buy an energy-efficient refrigerator or one without energy features?

Don’t Know

Price elasticity

Fiscal Policy

Net present value

Question 2

When his software company started to lose money, the CEO’s solution was to raise prices in the hopes of boosting revenues and profits. However, revenues fell and his strategy bankrupted the company. What microeconomic concept did he fail to apply?

Price elasticity

Fiscal Policy

Net present value

Don’t Know

Question 3

Microeconomics focuses on:

1. The behavior of individual markets and the smaller individual units that make up the broader economy -- businesses, consumers, investors, and workers.

2. Problems in the broader economy like inflation and unemployment and the rate of economic growth.

Both 1 and 2

Don’t know

Question 4

Who is the intellectual forefather of microeconomics?

John Maynard Keynes

Don’t Know

Adam Smith

Milton Friedman

Question 5

The “invisible hand” analogy from the classic book The Wealth of Nations argues that:

The self-interested actions of individuals leads to problems like monopoly and price gouging so markets need to be regulated.

The self-interested actions of individuals guide market outcomes to yield great economic benefits for the broader society.

None of the answer choices

Don’t know

Question 6

How many sectors of an economy like that of the United States, Germany, or Japan fulfill Adam Smith’s vision of a perfectly competitive marketplace delivering goods and services at lowest price and highest quality.

Most

Don't know

All

Very few

Question 7

The U.S. economy may be characterized as:

Perfectly competitive

Mixed

Primarily monopolies

Don’t know

Question 8

Oligopolies are industries which typically have:

Don’t know

Numerous firms

A single firm

A small number of large firms.

Question 9

Oligopolies are typically characterized by:

Regulated prices

Don’t know

Collusive practices such as price fixing

Fierce price competition

Question 10

A Command Economy:

Makes all the important decisions about production and distribution.

Owns most of the means of production (land and capital).

Is the employer of most workers and tells them how to do their jobs.

All of the above

Don't know

Question 11

What are the most important questions to ask in microeconomics from a societal point of view?

What shall be produced

How shall it be produced?

For whom shall it be produced for?

All of the above

Don’t know

Question 12

When the government raises taxes to redistribute income from the rich to the poor through mechanisms like food stamps or Medicare:

Economic efficiency is reduced

There is no effect on economic efficiency

Economic efficiency improves

Don’t Know

Question 13

The Production Possibilities Frontier or PPF:

Illustrates how economies grow from frontier societies into industrial ones

Shows the maximum amounts of production that can be obtained given its technological knowledge and quantity of inputs available.

Calculates the optimal ratio of capital to labor

Don’t know

Question 14

If a country is operating on its PPF:

Resources are allocated fairly

Resources are allocated efficiently

Both

Don’t know

Question 15

The opportunity cost of a decision is:

1. The time spend involved in making the decision.

2. The value of a good or service forgone.

Both 1 and 2

Don’t know

Question 16

The theory of consumer and household behavior:

Explains the downward slope of the demand curve

The shape of the demand curve

All of the above

Don’t know

Question 17

Production Theory helps us understand:

Why the supply curve slopes downward

Why firms price and produce products the way they do.

Both

Don’t know

Question 18

Market failures include:

1. Imperfect competition, such as monopolies.

2. Externalities and public goods, such as pollution and national defense.

Both 1 and 2

Don’t know

Question 19

The concept of market failure provides a rationale for:

Libertarianism

Parliamentary Government

Government intervention into the free market

Don’t know

Question 20

A Monopoly:

Don’t know

Results in over-consumption

Increases economic efficiency

Sets prices too high

Question 21

In the presence of a negative externality like pollution:

Both

The private costs of production are greater than the social costs of production

Production is too high relative to the efficient outcome

Don’t know

Question 22

Which of these is a non-rival good that leads to the public goods problem?

Lighthouse

Computer

Hamburger

Don’t Know

Question 23

Which of these is a major factor of production?

Land

Labor

Capital

All of the above

Don’t know

Question 24

An analysis of the capital markets will help us understand:

How to evaluate the profitability of investments

How businesses set wages

How rents are set in real estate markets

Don’t know