微观经济学题库

1 SECTION A Multiple choice questions Students should attempt to find the best answer for each question Each question is worth two mark 2 Section B Short answers Students should attempt to answer any three 3 from the following five 5 short answer questions Each short answer question is worth fifteen 15 marks II Term definition 2 points per each 20 points in total III Discussion 4 points per each 20 points in total Chapter 1 What is the opportunity cost of seeing a movie ANW the opportunity cost of seeing a movie includes the monetary cost of admission plus the time cost of going to the theater and attending the show The time cost depends on what else you might do with that time if it s staying home and watching TV the time cost may be small but if it s workin g an extra three hours at your job the time cost is the money you could have earned What does the invisible hand of the market place do ANW The invisible hand of the marketplace represents the idea that even though individuals and firms are all acting in their own self interest prices and the marketplace guide them to do what is good for society as a whole Chapter 2 Draw and explain a production possibilities frontier for an economy that produces computer and car Draw and explain a circular flow for an economy 2 Chapter 4 The case study presented in the chapter discussed cigarette taxes as a way to reduce smoking Now think about the markets for other tobacco products such as cigars and chewing tobacco a Are these goods substitutes or complements for cigarettes b Using a supply and demand diagram show what happens in the markets for cigars and chewing tobacco if the tax on cigarettes is increased c If policymakers wanted to reduce total tobacco consumption what policies could they combine with the cigarette tax ANS a Cigars and chewing tobacco are substitutes for cigarettes since a higher price for cigarettes wo uld increase the demand for cigars and chewing tobacco b An increase in the tax on cigarettes leads to increased demand for cigars and chewing tobacco The result as shown in Figure 25 for cigars is a rise in both the equilibrium price and quantity of cigars and chewing tobacco c The results in part b showed that a tax on cigarettes leads people to substitute cigars and chewi ng tobacco for cigarettes when the tax on cigarettes rises To reduce total tobacco usage policyma kers might also want to increase the tax on cigars and chewing tobacco or pursue some type of pu blic education program 90 A very hot summer in Atlanta will cause a the demand curve for lemonade to shift to the left b the demand for air conditioners to decrease c the demand for jackets to decrease d a movement downward and to the right along the demand curve for tank tops 3 91 If a study by medical researchers found that brown sugar caused weight loss while white sugar caused weight gain then we likely would see a an increase in demand for brown sugar and a decrease in demand for white sugar b a decrease in demand for brown sugar and an increase in demand for white sugar c an increase in demand for both brown sugar and white sugar d no change in demand for either type of sugar because weight loss is not a determinant of demand 92 Which of the following events could shift the demand curve for gasoline to the left a The income of gasoline buyers rises and gasoline is a normal good b The income of gasoline buyers falls and gasoline is an inferior good c Public service announcements run on television encourage people to walk or ride bicycles instead of driving cars d The price of gasoline rises 93 An increase in the number of college scholarships issued by private foundations would a increase the supply of education b decrease the supply of education c increase the demand for education d decrease the demand for education 94 Today people changed their expectations about the future This change a can cause a movement along a demand curve b can affect future demand but not today s demand c can affect today s demand d cannot affect either today s demand or future demand 95 If Juan expects to earn a higher income next month he may choose to a save more now and spend less of his current income on goods and services b save less now and spend more of his current income on goods and services c decrease his current demand for goods and services d move along his current demand curves for goods and services 96 You love peanut butter You hear on the news that 50 percent of the peanut crop in the South has been wiped out by drought and that this will cause the price of peanuts to double by the end of the year As a result a your demand for peanut butter will increase but not until the end of the year b your demand for peanut butter increases today c your demand for peanut butter decreases as you look for a substitute good d your demand for peanut butter shifts left today Let the demand and supply for a good be given by qd 1600 38p qs 2 p 400 What is the equilibrium quantity and price Figure 4 4 4 Panel a Panel b D P P Q Q quantity price D D quantity price 110 Refer to Figure 4 4 The graphs show the demand for cigarettes In Panel a the arrows are consistent with which of the following events a The price of marijuana a complement to cigarettes increased b Mandatory health warnings were placed on cigarette packages c Several foreign countries banned U S cigarettes in their countries d A tax was placed on cigarettes 111 Refer to Figure 4 4 The graphs show the demand for cigarettes In Panel a the arrows are consistent with which of the following events a Tobacco and marijuana are complements and the price of marijuana decreased b Tobacco is a gateway drug and the price of marijuana increased c The price of cigarettes increased d The arrows are consistent with all of these events 112 Refer to Figure 4 4 The graphs show the demand for cigarettes In Panel b the arrows are consistent with which of the following events a The price of cigarettes increased b A tax was placed on cigarettes c The prohibition of cigarette advertisements on television d Tobacco and marijuana are complements and the price of marijuana decreased 108 When supply and demand both increase equilibrium a price will increase b price will decrease c quantity may increase decrease or remain unchanged d price may increase decrease or remain unchanged 109 Suppose that demand for a good increases and at the same time supply of the good decreases What would happen in the market for the good 5 a Equilibrium price would decrease but the impact on equilibrium quantity would be ambiguous b Equilibrium price would increase but the impact on equilibrium quantity would be ambiguous c Equilibrium quantity would decrease but the impact on equilibrium price would be ambiguous d Equilibrium quantity would increase but the impact on equilibrium price would be ambiguous 110 A weaker demand together with a stronger supply would necessarily result in a a lower price b a higher price c an increase in equilibrium quantity d a decrease in equilibrium quantity 111 Suppose that demand for a good decreases and at the same time supply of the good decreases What would happen in the market for the good a Equilibrium price would decrease but the impact on equilibrium quantity would be ambiguous b Equilibrium price would increase but the impact on equilibrium quantity would be ambiguous c Equilibrium quantity would decrease but the impact on equilibrium price would be ambiguous d Equilibrium quantity would increase but the impact on equilibrium price would be ambiguous 112 Suppose the number of buyers in a market increases and a technological advancement occurs also What would we expect to happen in the market a Equilibrium price would decrease but the impact on equilibrium quantity would be ambiguous b Equilibrium price would increase but the impact on equilibrium quantity would be ambiguous c Equilibrium quantity would decrease but the impact on equilibrium price would be ambiguous d Equilibrium quantity would increase but the impact on equilibrium price would be ambiguous 113 Suppose the incomes of buyers in a market for a particular normal good decrease and there is also a reduction in input prices What would we expect to occur in this market a Equilibrium price would decrease but the impact on equilibrium quantity would be 6 ambiguous b Equilibrium price would increase but the impact on equilibrium quantity would be ambiguous c Equilibrium quantity would decrease but the impact on equilibrium price would be ambiguous d Equilibrium quantity would increase but the impact on equilibrium price would be ambiguous 114 What would happen to the equilibrium price and quantity of coffee if the wages of coffee bean pickers fell and the price of tea fell a Price would fall and the effect on quantity would be ambiguous b Price would rise and the effect on quantity would be ambiguous c Quantity would fall and the effect on price would be ambiguous d Quantity would rise and the effect on price would be ambiguous 115 Music compact discs are normal goods What will happen to the equilibrium price and quantity of music compact discs if musicians accept lower royalties compact disc players become cheaper more firms start producing music compact discs and music lovers experience an increase in income a Price will fall and the effect on quantity is ambiguous b Price will rise and the effect on quantity is ambiguous c Quantity will fall and the effect on price is ambiguous d Quantity will rise and the effect on price is ambiguous ANS DDIF 3REF 4 4 NAT AnalyticLOC EquilibriumTOP EquilibriumMSC Analytical 116 What will happen to the equilibrium price of new textbooks if more students attend college paper becomes cheaper textbook authors accept lower royalties and fewer used textbooks are sold a Price will rise b Price will fall c Price will stay exactly the same d The price change will be ambiguous ANS DDIF 3REF 4 4 NAT AnalyticLOC EquilibriumTOP EquilibriumMSC Analytical 7 117 New oak tables are normal goods What would happen to the equilibrium price and quantity in the market for oak tables if the price of maple tables rises the price of oak wood rises more buyers enter the market for oak tables and the price of wood saws increased a Price will fall and the effect on quantity is ambiguous b Price will rise and the effect on quantity is ambiguous c Quantity will fall and the effect on price is ambiguous d Quantity will rise and the effect on price is ambiguous Chapter 5 When consumers face rising gasoline prices they typically a reduce their quantity demanded more in the long run than in the short run b reduce their quantity demanded more in the short run than in the long run c do not reduce their quantity demanded in the short run or the long run d increase their quantity demanded in the short run but reduce their quantity demanded in the long run Which of the following is likely to have the most price inelastic demand a mint flavored toothpaste b toothpaste c Colgate mint flavored toothpaste d a generic mint flavored toothpaste If the price of natural gas rises when is the price elasticity of demand likely to be the highest a immediately after the price increase b one month after the price increase c three months after the price increase d one year after the price increase Studies indicate that the price elasticity of demand for cigarettes is about 0 4 A government policy aimed at reducing smoking changed the price of a pack of cigarettes from 2 to 6 According to the midpoint method the government policy should have reduced smoking by a 30 b 40 c 80 d 250 If a 15 increase in price for a good results in a 20 decrease in quantity demanded the price elasticity of demand is a 0 75 b 1 25 c 1 33 d 1 60 8 Refer to Figure 5 10 If rectangle D is larger than rectangle A then a demand is elastic between prices P1 and P2 b a decrease in price from P2 to P1 will cause an increase in total revenue c the magnitude of the percent change in price between P1 and P2 is smaller than the magnitude of the corresponding percent change in quantity demanded d All of the above are correct If the price elasticity of demand for tuna is 0 7 then a 1 5 increase in the price of tuna will decrease the quantity demanded of tuna by a 1 05 and tuna sellers total revenue will increase as a result b 1 05 and tuna sellers total revenue will decrease as a result c 2 14 and tuna sellers total revenue will increase as a result d 2 14 and tuna sellers total revenue will decrease as a result When a supply curve is relatively flat a sellers are not very responsive to changes in price b the supply is relatively inelastic c the supply is relatively elastic d Both a and b are correct A 10 percent increase in gasoline prices reduces gasoline consumption by about a 6 percent after one year and 2 5 percent after five years b 2 5 percent after one year and 6 percent after five years c 10 percent after one year and 20 percent after five years d 0 percent after one year and 1 percent after five years 9 206 When demand is inelastic the price elasticity of demand is a less than 1 and price and total revenue will move in the same direction b less than 1 and price and total revenue will move in opposite directions c greater than 1 and price and total revenue will move in the same direction d greater than 1 and price and total revenue will move in opposite directions 14 If corn farmers know that the demand for corn is inelastic and they want to increase their total revenue they should all a plant more corn so that they would be able to sell more each year b increase spending on fertilizer in an attempt to produce more corn on the acres they farm c reduce the number of acres they plant in corn d contribute to a fund that promotes technological advances in corn production 15 There are fewer farmers in the United States today than 200 years ago because of a increases in farm technology b increased government regulations in farming c an elastic demand for food d environmental programs designed to reduce soil erosion 16 How did the farm population in the United States change between 1950 and 2008 a It dropped from 10 million to fewer than 3 million people b It dropped from 20 million to fewer than 5 million people c It dropped from 30 million to just over 6 million people d It increased from 10 million to almost 13 million people 17 Between 1950 and 2008 there was a a 20 percent drop in the number of farmers but farm output more than tripled b 30 percent drop in the number of farmers but farm output more than tripled c 50 percent drop in the number of farmers but farm output more than doubled d 70 percent drop in the number of farmers but farm output more than doubled 5 Using the graph shown in which the vertical distance between points A and B represents the tax in the market answer the following questions a What was the equilibrium price and quantity in this market before the tax b What is the amount of the tax c How much of the tax will the buyers pay d How much of the tax will the sellers pay e How much will the buyer pay for the product after the tax is imposed f How much will the seller receive after the tax is imposed g As a result of the tax what has happened to the level of market activity 10 D S B A 60008000 6 8 11 quantity price ANS a Equilibrium price was 8 and equilibrium quantity was 8 000 units b The tax is 5 c Buyers will pay 3 d Sellers will pay 2 e 11 f 6 g Instead of 8 000 units bought and sold only 6 000 will be bought and sold 11 How does elasticity affect the burden of a tax Justify your answer using supply and demand diagrams The tax burden falls more heavily on the side of the market that is more inelastic DIF 2REF 6 2NAT Analytic 12 60 To say that a price floor is binding is to say that the price floor a results in a shortage b is set below the equilibrium price c causes quantity supplied to exceed quantity demanded d All of the above are correct 61 A surplus results when a a nonbinding price floor is imposed on a market b a nonbinding price floor is removed from a market c a binding price floor is imposed on a market d a binding price floor is removed from a market 62 The imposition of a binding price floor on a market causes quantity demanded to be a greater than quantity supplied b less than quantity supplied c equal to quantity supplied d Both a and b are possible 63 If a price floor is a binding constraint on a market then a the equilibrium price must be above the price floor b the quantity demanded must exceed the quantity supplied c sellers cannot sell all they want to sell at the price floor d buyers cannot buy all they want to buy at the price floor 73 When a binding price floor is imposed on a market to benefit sellers a every seller in the market benefits b every buyer in the market benefits too c every seller who wants to sell the good will be able to do so but only if they appeal to the personal biases of the buyers d some sellers will not be able to sell any amount of the good 76 An example of a price floor is a the regulation of gasoline prices in the U S in the 1970s b rent control c the minimum wage d any restriction on price that leads to a shortage 77 The minimum wage is an example of a a price ceiling b a price floor c a wage subsidy d a tax 13 78 Which of the following is correct a Rent control and the minimum wage are both examples of price ceilings b Rent control is an example of a price ceiling and the minimum wage is an example of a price floor c Rent control is an example of a price floor and the minimum wage is an example of a price ceiling d Rent control and the minimum wage are both examples of price floors 2 If a tax is levied on the sellers of a product then the demand curve a will shift down b will shift up c will become flatter d will not shift 3 If a tax is levied on the sellers of a product then the supply curve a will shift up b will shift down c will become flatter d will not shift 4 If a tax is levied on the sellers of a product t