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2nd Economics Test Review (Principles Of Micro & Macro Economics) – Q’s And A’s
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2nd Economics Test Review (Principles Of Micro &Macro Economics) – Q’s And A’s
Negative externalities arise:
A. when firms pay more than the opportunity cost of resources
B. when the demand curve for a product is located too far to the left
C. when firms "use" resources without being compelled to pay for their full
costs
D. only in capitalistic societies Correct Ans - C
Rivalry and excludability are the main characteristics of:
A. capital goods
B. private goods
C. public goods
D. consumption goods Correct Ans - B
The market sytem does not produce public goods because:
A. There is no need or demand for such goods
B. Private firms cannot stop consumers who are unwilling to pay for such
goods from benefitting from them
C. public enterprises can produce such goods at lower cost than can private
enterprises
D. their production seriously distorts the distribution of income
Correct Ans - B
A demand curve for a public good is determined by:
A. summing vertically the individual demand curves for the public good
B. summing horizontally the individual demand curves for the public good
C. combining the amounts of the public good that the individual members
of society demand at each price
D. multiplying the per-unit cost of the public good by the quantity made
available Correct Ans - A or C
At the optimal quantity of a public good:
A. marginal benefit exceeds marginal cost by the greatest amount
B. total benefit equals total cost
C. marginal benefit equals marginal cost
D. marginal benefit is zero Correct Ans - C
, Marginaly utility can be:
A. positive, but not negative
B. positive or negative, but not zero
C. positive, negative, or zero
D. decreasing but not negative Correct Ans - C
The total utility of a product is calculated by:
A. summing the marginal utility from the first unit of a product that is
consumed and the last unit of a product that is consumed
B. multiplying the marginal utility of a unit of the product consumed times
the average quantity consumed
C. summing the marginal utilities for each successive unit of the product
that is consumed
D. multiplying price times quantity and dividing by marginal utility
Correct Ans - C
A consumer with a fixed income will maximize utility when each good is
purchased in amounts such that the:
A. total utility is the same for each good
B. Marginal utility of each good is maximized
C. Marginal utility per dollar spent is the same for all goods
D. marginal utility per dollar spent is maximized for each good Correct
Ans - C
A consumer's demand curve for a product is downsloping because:
A. total utility falls below marginal utility as more of a product is consumed
B. marginal utility diminishes as more of a product is consumed
C. time becomes less valuable as more of a product is consumed
D. the income and substitution effects precisely offset each other
Correct Ans - B
The price ratio of the two products is the:
A. marginal rate of substitution
B. Slope of the budget line
C. Point of tangency for equilibrium
D. Elasticity of demand for the two products Correct Ans - B
Costs to an economist:
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