Microeconomics
1) A positive aspect of the production of capital is:
a. future production of consumer goods decreases
b. future production of consumer goods increases
c. future creation of capital increases
d. future creation of capital decreases
Competency: Capital and natural resource markets
2) If an individual dislikes risk, they are referred to as:
a. risk neutral
b. risk taker
c. risk adverse
d. risk loving
Competency: Economic uncertainties
3) Which one of the following would be true of a highly elastic demand?
a. there are few close substitutes
b. there are many close substitutes
c. there is a short time for customers to respond to price changes
d. the per unit price is a very small portion of consumer budgets
Competency: Elasticity
4) Keeping specific groups of workers in low paying jobs is known as which one of the
following?
a. occupational segregation
b. wage discrimination
c. statistical discrimination
d. stereotyping
Competency: Labor market and wages
5) Market failure results in:
a. economic efficiency
b. economic equity
c. economic instability
d. economic inefficiency
Competency: Market failure
6) A monopoly has no competition because:
a. of the small demand for the product
b. there is a lack of profit in the industry
c. entry into the market is blocked
d. there is too much risk
Competency: Monopolies
7) Which one of the following is not necessarily a characteristic of a duopoly?
a. collusive behavior
b. two firms only in the industry
c. firms produce homogeneous products
d. there is only one market for the goods
Competency: Oligopolies and duopolies
8) Blake decides to work an hour of overtime rather than meet his friends at the video arcade.
His overtime pay is $10 per hour. The opportunity cost of working overtime is:
a. the enjoyment he would have received playing video games with his friends
b. the $10 he earns
c. the $10 he earns minus the enjoyment of playing video games with his friends
d. nothing since he would have had less than $10 worth of enjoyment playing video
games with his friends
Competency: Opportunity cost
9) The model used to illustrate opportunity cost is:
a. the paradox of value
b. the production possibilities frontier
c. the entrepreneurship coefficient calculator
d. the factors of production model
Competency: Production factors
10) Movement along the demand curve represents:
a. the inverse relationship between price and marginal utility
b. a change in demand
c. the inverse relationship between price and quantity demanded
d. diminishing marginal utility
Competency: Supply and demand
ANSWER KEY
1. b
2. c
3. b
4. a
5. d
6. c
7. a
8. a
9. b
10. c