微观经济学题库

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 1What 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 working 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 2Draw and explain a production possibilities frontier for an economy that produces computer and car.Draw and explain a circular flow for an economyChapter 4The 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?ing 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 taxANS：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 causea.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.91. If a study by medical researchers found that brown sugar caused weight loss while white sugarcaused weight gain, then we likely would seea.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 ofdemand.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 bicyclesinstead of driving cars.d.The price of gasoline rises.93. An increase in the number of college scholarships issued by private foundations woulda.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 changea.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 toa.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 byqd = 1600−38pqs = 2 p + 400What is the equilibrium quantity and price?Figure 4-4Panel (a) Panel (b)pricePD'Dquantity110. 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, equilibriuma.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?a.Equilibrium price would decrease, but the impact on equilibrium quantity would beambiguous.b.Equilibrium price would increase, but the impact on equilibrium quantity would beambiguous.c.Equilibrium quantity would decrease, but the impact on equilibrium price would beambiguous.d.Equilibrium quantity would increase, but the impact on equilibrium price would beambiguous.110. A weaker demand together with a stronger supply would necessarily result ina. 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 beambiguous.b.Equilibrium price would increase, but the impact on equilibrium quantity would beambiguous.c.Equilibrium quantity would decrease, but the impact on equilibrium price would beambiguous.d.Equilibrium quantity would increase, but the impact on equilibrium price would beambiguous.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 beambiguous.b.Equilibrium price would increase, but the impact on equilibrium quantity would beambiguous.c.Equilibrium quantity would decrease, but the impact on equilibrium price would beambiguous.d.Equilibrium quantity would increase, but the impact on equilibrium price would beambiguous.113. Suppose the incomes of buyers in a market for a particular normal good decrease and there is alsoa 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 beambiguous.b.Equilibrium price would increase, but the impact on equilibrium quantity would beambiguous.c.Equilibrium quantity would decrease, but the impact on equilibrium price would beambiguous.d.Equilibrium quantity would increase, but the impact on equilibrium price would beambiguous.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: D DIF: 3 REF: 4-4NAT: Analytic LOC: Equilibrium TOP: Equilibrium MSC: Analytical116. 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: D DIF: 3 REF: 4-4NAT: Analytic LOC: Equilibrium TOP: Equilibrium MSC: Analytical117. 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 5When consumers face rising gasoline prices, they typicallya. 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 thelong run.*Which of the following is likely to have the most price inelastic demand?a. mint-flavored toothpasteb. toothpastec. Colgate mint-flavored toothpasted. 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 increaseb. one month after the price increasec. three months after the price increased. 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 bya. 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 isa. 0.75.b. 1.25.c. 1.33.d. 1.60.Refer to Figure 5-10. If rectangle D is larger than rectangle A, thena. 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 magnitudeof 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 bya. 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 abouta. 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.206. When demand is inelastic the price elasticity of demand isa.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 totalrevenue, they should alla.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 ofa.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 aa.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 taxin 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?86ANS: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.How does elasticity affect the burden of a tax? Justify your answer using supply and demanddiagrams.The tax burden falls more heavily on the side of the market that is more inelastic.DIF: 2 REF: 6-2 NAT: Analytic60. To say that a price floor is binding is to say that the price floora.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 whena. 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 bea.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, thena.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 thepersonal 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 isa.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 ofa. a price ceiling.b. a price floor.c. a wage subsidy.d. a tax.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 aprice floor.c.Rent control is an example of a price floor, and the minimum wage is an example of a priceceiling.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 curvea.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 curvea.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, then there will be a(n)a.downward shift of the demand curve.b.upward shift of the demand curve.c.movement up and to the left along the demand curve.d.movement down and to the right along the demand curve.5. If a tax is levied on the sellers of a product, then there will be a(n)a.downward shift of the supply curve.b.upward shift of the supply curve.c.movement up and to the right along the supply curve.d.movement down and to the left along the supply curve.138. Suppose that the demand for picture frames is elastic and the supply of picture frames is inelastic.A tax of $1 per frame levied on picture frames will increase the price paid by buyers of pictureframes bya.less than $0.50.b.$0.50.c.between $0.50 and $1.d.$1.139. Suppose that the demand for picture frames is elastic and the supply of picture frames is inelastic.A tax of $1 per frame levied on picture frames will decrease the effective price received bysellers of picture frames bya.less than $0.50.b.$0.50.c.between $0.50 and $1.d.$1.140. In which of these cases will the tax burden fall most heavily on sellers of the good?a.The demand curve is relatively steep and the supply curve is relatively flat.b.The demand curve is relatively flat and the supply curve is relatively steep.c.The demand curve and the supply curve are both relatively flat.d.The demand curve and the supply curve are both relatively steep.Chapter 7What is consumer surplus, and how is it measured?Consumer surplus measures the benefit to buyers of participating in a market. It is measured as the amount a buyer is willing to pay for a good minus the amount a buyer actually pays for it. For an individual purchase, consumer surplus is the difference between the willingness to pay, as shown on the demand curve, and the market price. For the market, total consumer surplus is the area under the demand curve and above the price, from the origin to the quantity purchased.What is producer surplus, and how is it measured?Producer surplus measures the benefit to sellers of participating in a market. It is measured as the amount a seller is paid minus the cost of production. For an individual sale, producer surplus is measured as the difference between the market price and the cost of production, as shown on the supply curve. For the market, total producer surplus is measured as the area above the supply curve and below the market price, between the origin and the quantity sold.Table 7-5For each of three potential buyers of oranges, the table displays the willingness to pay for the first three oranges of the day. Assume Alex, Barb, and Carlos are the only three buyers of oranges, and only three oranges can be supplied per day.37. Refer to Table 7-5. If the market price of an orange is $1.20, how many the market quantityof oranges demanded per day is? Explain it.Chapter 102. Using a supply and demand diagram, demonstrate how a positive externality leads tomarket inefficiency. How might the government help to eliminate this inefficiency?ANS:When a positive externality exists, the private value (or demand curve) is less than the social value. The market equilibrium quantity will be less than the socially optimal quantity. The government could help eliminate this inefficiency by subsidizing the product. In this example, the size of the per-unit subsidy would be P3 - P1.DIF: 2 REF: 10-1 NAT: AnalyticThe Coase theorem suggests that efficient solutions to externalities can be determined through bargaining. Under what circumstances will private bargaining fail to produce a solution? ANS:Private parties may fail to bargain to an efficient solution under a variety of circumstances. First, the transaction costs of bargaining may be so high that one or both of the parties decides not to bargain. Second, the bargaining may not take place if one or both of the parties believes that the agreement cannot be enforced. Third, one or both of the parties may try to hold out for a better deal, in which case the bargaining process breaks down. Fourth, if there are a large number of parties taking part in the negotiations, the costs of coordination may be so great that the bargaining is not successful.DIF: 1 REF: 10-3 NAT: Analytic12. An externality exists whenevera.the economy cannot benefit from government intervention.b.markets are not able to reach equilibrium.c. a firm sells its product in a foreign market.d. a person engages in an activity that influences the well-being of a bystander and yet neitherpays nor receives payment for that effect.13. When externalities are present in a market, the well-being of market participantsa.and market bystanders are both directly affected.b.and market bystanders are both indirectly affected.c.is directly affected, and market bystanders are indirectly affected.d.is indirectly affected, and market bystanders are directly affected.14. Dog owners do not bear the full cost of the noise their barking dogs create and often take too fewprecautions to prevent their dogs from barking. Local governments address this problem bya.making it illegal to "disturb the peace."b.having a well-funded animal control department.c.subsidizing local animal shelters.d.encouraging people to adopt cats.15. Which of the following statements about a well-maintained yard best conveys the general natureof the externality?a. A well-maintained yard conveys a positive externality because it increases the home's marketvalue.b. A well-maintained yard conveys a negative externality because it increases the property taxliability of the owner.c. A well-maintained yard conveys a positive externality because it increases the value ofadjacent properties in the neighborhood.d. A well-maintained yard cannot provide any type of externality.16. Since restored historic buildings convey a positive externality, local governments may choose toa.regulate the demolition of them.b.provide tax breaks to owners who restore them.c.increase property taxes in historic areas.d.Both a and b are correct.17. All externalitiesa.cause markets to fail to allocate resources efficiently.b.cause equilibrium prices to be too high.c.benefit producers at the expense of consumers.d.cause equilibrium prices to be too low.Figure 10-53. Refer to Figure 10-5. Which of the following statements is correct?a.To induce firms to internalize the externality in this market, the government should impose atax measured by P2 - P0.b.To induce firms to internalize the externality in this market, the government should offer asubsidy measured by P2 - P0.c.To induce firms to internalize the externality in this market, the government should impose atax measured by P2 - P1.d.There is no externality in this market.4. Suppose that an MBA degree creates no externality because the benefits of an MBA areinternalized by the student in the form of higher wages. If the government offers subsidies for MBAs, then which of the following statements is correct?a.The equilibrium quantity of MBAs will equal the socially optimal quantity of MBAs.b.The equilibrium quantity of MBAs will be greater than the socially optimal quantity ofMBAs.c.The equilibrium quantity of MBAs will be less than the socially optimal quantity of MBAs.d.There is not enough information to answer the question.5. Suppose that an MBA degree creates no externality because the benefits of an MBA areinternalized by the student in the form of higher wages. If there are no government subsidies for MBAs, then which of the following statements is correct?a.The equilibrium quantity of MBAs will equal the socially optimal quantity of MBAs.b.The equilibrium quantity of MBAs will be greater than the socially optimal quantity ofMBAs.c.The equilibrium quantity of MBAs will be less than the socially optimal quantity of MBAs.d.There is not enough information to answer the question.6. Since externalities tend to keep markets from reaching a socially optimal equilibrium,government actiona.is always needed because private solutions can never be attained.b.is needed when private solutions fail to arise.c.will be needed only to correct for positive externalities.d.will be needed only to correct for negative externalities.7. Firms that are involved in more than one type of business could be evidence of an attempt toa.increase private profit at the expense of consumers.b.internalize some forms of positive externalities.c.reduce the impact of government regulations on their business.d.increase the private marginal cost of production.8. Private contracts between parties with mutual interestsa.will reduce the well-being of society.b.will lead to market outcomes in which the public interest is sacrificed for personal gain.c.can solve some inefficiencies associated with positive externalities.d.will create negative externalities.9. Which of the following statements is not correct?a.Private markets tend to over-produce products with negative externalities.b.Private markets tend to under-produce products with positive externalities.c.Private parties can bargain to efficient outcomes even in the presence of externalities.d.Private parties are usually more successful in achieving efficient outcomes than governmentpolicies.10. Private solutions may not be possible due to the costs of negotiating and enforcing these solutions.Such costs are calleda.transaction costs.b.corrective costs.c.input costs.d.private costs.Chapter 11。