1. Which of the following is generally considered to be a microeconomic question?

a. The relationship between the money supply and nominal GDP

b. The relationship between inflation and unemployment

c. The responsiveness of aggregate demand to change in government expenditure

d. The relationship between productivity of workers and wages received by them

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2. Which of the following best describes the difference between micro and macroeconomics?

1. Macroeconomics studies the actions of large firms while microeconomics studies the behavior of small firms and individuals.
2. Macroeconomics is the study of aggregate factors while microeconomics is the study of individuals and individual firms.
3. Macroeconomics deals with bigger, more important issues, while microeconomics deals with the smaller, less significant details.
4. Macroeconomics studies long-run behavior (one-year or more) while microeconomics studies short-run or immediate behavior.

3. Fill in the blank.

Opportunity cost is the equivalent of ( ) cost.

4. A taxi company currently has nine cabs in its fleet, and its total daily cost is $4,000. If the company added a tenth cab, its daily total cost would be $4,200, or $420 per cab. Adding the tenth cab will increase the daily total revenue by $300. The company should add the tenth cab based on the economic theory.

a.True

b.False

5. Which of the following is a normative statement?

A) The taxes paid by the poor should be reduced in order to improve the income distribution in the U.S.

B) State governments should not subsidize corporations by training welfare recipients.

C) Presidential candidates should not be given funds from the federal government to run campaigns.

D) The sea otter should not be allowed to spread into Southern California coastal waters, because it will reduce the value of fisheries.

E) all of the above

6. Which of the following is true of sunk costs?

1. It is a type of opportunity cost.
2. It is a type of implicit cost.
3. It should be ignored when making decisions.
4. It includes annual costs like payroll, insurance expenses, etc.