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Microeconomics Unit Test 96%

question
Profit equals the total amount of money made minus
a. expenses.
b. prices.
c. revenue.
d. supply.
answer
a. expenses.
question
The total amount of a product available in a market at a given price is called the
a. count.
b. demand.
c. number.
d. supply.
answer
d. supply.
question
To generate higher profit margins, producers must work to
a. increase their total supply.
b. increase their total expenses.
c. decrease their customer base.
d. decrease their production costs.
answer
d. decrease their production costs.
question
When an oligopoly exists, how many producers dominate the market?
a. none
b. one
c. a few
d. many
answer
c. a few
question
_____ is the type of competition that occurs in a competitive market without identical producers.
a. Monopolistic
b. Pure competition
c. An oligopoly
answer
a. Monopolistic
question
The chart compares the price of graphic T-shirts to the quantity demanded.

This chart shows the link between
a. interest in a product and the price a consumer pays.
b. interest in a product and the price a producer pays.
c. amount of a product and the price a consumer pays.
d. amount of a product and the price a producer pays.
answer
a. interest in a product and the price a consumer pays.
question
How can producers maximize their profit? Check all that apply.
a. They can work to increase their marginal cost.
b. They can work to decrease their marginal cost.
c. They can raise prices to increase marginal revenue.
d. The can lower prices to decrease marginal revenue.
e. They can keep marginal costs below marginal revenues.
f. They can keep marginal revenues below marginal costs.
answer
b. They can work to decrease their marginal cost.
c. They can raise prices to increase marginal revenue.
e. They can keep marginal costs below marginal revenues.
question
What is the best definition of marginal cost?
a. the possible income from producing an additional item
b. the price of producing one additional unit of a good
c. the additional income gained from selling an additional good
d. the financial gain from business activity minus expenses
answer
b. the price of producing one additional unit of a good
question
According to the law of supply, price and quantity move
a. along a track in the same direction.
b. along a track in opposite directions.
c. from different points toward one another.
d. from the same point away from one another.
answer
a. along a track in the same direction.
question
The chart shows the marginal cost of producing apple pies.
According to the chart, the marginal cost of producing the second pie is
a. 1.00
b. .50
c. .25
d. 1.25.
answer
b. .50
question
What is the difference between a price floor and a price ceiling?
a. A price floor is the minimum price allowed for a good. A price ceiling is the maximum price allowed for a good.
b. A price floor is the maximum price allowed for a good. A price ceiling is the minimum price allowed for a good.
c. A price ceiling below the equilibrium price has no effect.
d. A price floor above the equilibrium price has no effect.
answer
a. A price floor is the minimum price allowed for a good. A price ceiling is the maximum price allowed for a good.
question
Brenda's Boards manufactures skateboards. Each skateboard sells for $45 and includes the following expenses: $3 for the wheels and mounts, $1 for the plastic board, $1 for the paint, and $10 for the labor. What is the total profit the company earns after selling 100 boards?
$300
$350
$3,000
$3,500
answer
$3,000
question
The graph shows a point of equilibrium.

If the quantity supplied is greater than the quantity demanded, what must happen to the price in order to reach equilibrium?
a. The price of the product will increase to meet equilibrium.
b. The price of the product will decrease to meet equilibrium.
c. Supply and demand must be raised.
d. Supply and demand must be lowered.
answer
b. The price of the product will decrease to meet equilibrium.
question
Equilibrium is defined when
a. supply is limited and demand decreases.
b. supply and demand meet.
c. demand is higher than supply.
d. supply is higher than demand.
answer
b. supply and demand meet.
question
The graph shows excess demand.

Which explains why the price indicated by p2 on the graph is lower than the equilibrium price?
a. As prices fall, quantity demanded goes up.
b. As prices fall, quantity demanded goes down.
c. As prices fall, quantity demanded stays the same.
d. As prices fall, quantity demanded disappears.
answer
b. As prices fall, quantity demanded goes down.
question
Which is an example of a government monopoly in the United States?
a. the US Postal Service
b. the Internal Revenue Service (IRS)
c. the US Environmental Protection Agency (EPA)
d. the National Park Service
answer
a. the US Postal Service
question
The graph shows excess supply.

Which needs to happen to the price indicated by p2 on the graph in order to achieve equilibrium?
a. It needs to be increased.
b. It needs to be decreased.
c. It needs to reach the price ceiling.
d. It needs to remain unchanged.
answer
b. It needs to be decreased.
question
Which is an example of a negative incentive for producers?
a. a chance to make more money
b. a special sale at a department store
c. a coupon clipped from a newspaper
d. a sharp increase in production costs
answer
d. a sharp increase in production costs
question
The graph shows a point of equilibrium.

What does "P" represent on the graph?
a. the point where equilibrium is achieved
b. the price at the equilibrium point
c. the average price of goods sold
d. the point where supply and demand drop
answer
b. the price at the equilibrium point
question
The graph shows excess demand.

Which needs to happen in order to stop disequilibrium from occurring?
a. Q needs to be coordinated with supply.
b. Q needs to be coordinated with demand.
c. The price of goods needs to be increased.
d. The price of goods needs to be decreased.
answer
...
question
The chart shows the marginal revenue of producing apple pies.

According to the chart, the marginal revenue

a. decreases by ten dollars as production increases.
b. increases by ten dollars as production increases.
c. falls to zero dollars as production increases.
d. remains the same as production increases.
answer
d. remains the same as production increases.
question
Which statement best describes incentives?
a. Incentives are mostly positive.
b. Incentives are mostly negative.
c. Incentives can be positive or negative.
d. Incentives are neither positive nor negative.
answer
c. Incentives can be positive or negative.
question
How do changing prices affect supply and demand?
a. As price increases, both supply and demand increase.
b. As price decreases, both supply and demand decrease.
c. As price increases, supply decreases, but demand increases.
d. As price decreases, supply decreases, but demand increases.
answer
d. As price decreases, supply decreases, but demand increases.
question
In pure competition, producers compete exclusively on the basis of
a. selling identical items.
b. advertising heavily to promote their good.
c. producing the unique features of their good.
d. focusing on maintaining a positive image.
answer
a. selling identical items.
question
The market for which item generally involves pure competition?
a. cola
b. corn
c. jeans
d. ice cream
answer
b. corn
1 of 25
question
Profit equals the total amount of money made minus
a. expenses.
b. prices.
c. revenue.
d. supply.
answer
a. expenses.
question
The total amount of a product available in a market at a given price is called the
a. count.
b. demand.
c. number.
d. supply.
answer
d. supply.
question
To generate higher profit margins, producers must work to
a. increase their total supply.
b. increase their total expenses.
c. decrease their customer base.
d. decrease their production costs.
answer
d. decrease their production costs.
question
When an oligopoly exists, how many producers dominate the market?
a. none
b. one
c. a few
d. many
answer
c. a few
question
_____ is the type of competition that occurs in a competitive market without identical producers.
a. Monopolistic
b. Pure competition
c. An oligopoly
answer
a. Monopolistic
question
The chart compares the price of graphic T-shirts to the quantity demanded.

This chart shows the link between
a. interest in a product and the price a consumer pays.
b. interest in a product and the price a producer pays.
c. amount of a product and the price a consumer pays.
d. amount of a product and the price a producer pays.
answer
a. interest in a product and the price a consumer pays.
question
How can producers maximize their profit? Check all that apply.
a. They can work to increase their marginal cost.
b. They can work to decrease their marginal cost.
c. They can raise prices to increase marginal revenue.
d. The can lower prices to decrease marginal revenue.
e. They can keep marginal costs below marginal revenues.
f. They can keep marginal revenues below marginal costs.
answer
b. They can work to decrease their marginal cost.
c. They can raise prices to increase marginal revenue.
e. They can keep marginal costs below marginal revenues.
question
What is the best definition of marginal cost?
a. the possible income from producing an additional item
b. the price of producing one additional unit of a good
c. the additional income gained from selling an additional good
d. the financial gain from business activity minus expenses
answer
b. the price of producing one additional unit of a good
question
According to the law of supply, price and quantity move
a. along a track in the same direction.
b. along a track in opposite directions.
c. from different points toward one another.
d. from the same point away from one another.
answer
a. along a track in the same direction.
question
The chart shows the marginal cost of producing apple pies.
According to the chart, the marginal cost of producing the second pie is
a. 1.00
b. .50
c. .25
d. 1.25.
answer
b. .50
question
What is the difference between a price floor and a price ceiling?
a. A price floor is the minimum price allowed for a good. A price ceiling is the maximum price allowed for a good.
b. A price floor is the maximum price allowed for a good. A price ceiling is the minimum price allowed for a good.
c. A price ceiling below the equilibrium price has no effect.
d. A price floor above the equilibrium price has no effect.
answer
a. A price floor is the minimum price allowed for a good. A price ceiling is the maximum price allowed for a good.
question
Brenda's Boards manufactures skateboards. Each skateboard sells for $45 and includes the following expenses: $3 for the wheels and mounts, $1 for the plastic board, $1 for the paint, and $10 for the labor. What is the total profit the company earns after selling 100 boards?
$300
$350
$3,000
$3,500
answer
$3,000
question
The graph shows a point of equilibrium.

If the quantity supplied is greater than the quantity demanded, what must happen to the price in order to reach equilibrium?
a. The price of the product will increase to meet equilibrium.
b. The price of the product will decrease to meet equilibrium.
c. Supply and demand must be raised.
d. Supply and demand must be lowered.
answer
b. The price of the product will decrease to meet equilibrium.
question
Equilibrium is defined when
a. supply is limited and demand decreases.
b. supply and demand meet.
c. demand is higher than supply.
d. supply is higher than demand.
answer
b. supply and demand meet.
question
The graph shows excess demand.

Which explains why the price indicated by p2 on the graph is lower than the equilibrium price?
a. As prices fall, quantity demanded goes up.
b. As prices fall, quantity demanded goes down.
c. As prices fall, quantity demanded stays the same.
d. As prices fall, quantity demanded disappears.
answer
b. As prices fall, quantity demanded goes down.
question
Which is an example of a government monopoly in the United States?
a. the US Postal Service
b. the Internal Revenue Service (IRS)
c. the US Environmental Protection Agency (EPA)
d. the National Park Service
answer
a. the US Postal Service
question
The graph shows excess supply.

Which needs to happen to the price indicated by p2 on the graph in order to achieve equilibrium?
a. It needs to be increased.
b. It needs to be decreased.
c. It needs to reach the price ceiling.
d. It needs to remain unchanged.
answer
b. It needs to be decreased.
question
Which is an example of a negative incentive for producers?
a. a chance to make more money
b. a special sale at a department store
c. a coupon clipped from a newspaper
d. a sharp increase in production costs
answer
d. a sharp increase in production costs
question
The graph shows a point of equilibrium.

What does "P" represent on the graph?
a. the point where equilibrium is achieved
b. the price at the equilibrium point
c. the average price of goods sold
d. the point where supply and demand drop
answer
b. the price at the equilibrium point
question
The graph shows excess demand.

Which needs to happen in order to stop disequilibrium from occurring?
a. Q needs to be coordinated with supply.
b. Q needs to be coordinated with demand.
c. The price of goods needs to be increased.
d. The price of goods needs to be decreased.
answer
...
question
The chart shows the marginal revenue of producing apple pies.

According to the chart, the marginal revenue

a. decreases by ten dollars as production increases.
b. increases by ten dollars as production increases.
c. falls to zero dollars as production increases.
d. remains the same as production increases.
answer
d. remains the same as production increases.
question
Which statement best describes incentives?
a. Incentives are mostly positive.
b. Incentives are mostly negative.
c. Incentives can be positive or negative.
d. Incentives are neither positive nor negative.
answer
c. Incentives can be positive or negative.
question
How do changing prices affect supply and demand?
a. As price increases, both supply and demand increase.
b. As price decreases, both supply and demand decrease.
c. As price increases, supply decreases, but demand increases.
d. As price decreases, supply decreases, but demand increases.
answer
d. As price decreases, supply decreases, but demand increases.
question
In pure competition, producers compete exclusively on the basis of
a. selling identical items.
b. advertising heavily to promote their good.
c. producing the unique features of their good.
d. focusing on maintaining a positive image.
answer
a. selling identical items.
question
The market for which item generally involves pure competition?
a. cola
b. corn
c. jeans
d. ice cream
answer
b. corn
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