1. Which of the following is the BEST example of a microeconomic topic? A. The impact that money supply has on inflation B. The trade-off between inflation and unemployment C. The reasons for increases in the price of soft drink D. The effect that federal budget deficits have on the interest rate 2. Which of the following statements is TRUE of a market? A. An increase in demand, with no change in supply, will increase the equilibrium price and quantity B. An increase in supply, with no change in demand, will decrease the equilibrium price and quantity C. A decrease in supply, with no change in demand, will decrease the equilibrium price and increase the equilibrium quantity D. All of the above 3. Which of the following statement is FALSE? A. Every economic choice has an opportunity cost B. Technology is the body of knowledge and skills applied to how goods are produced C. Economic growth is illustrated as an inward shift of the production possibilities curve D. The production possibilities curve shows the maximum combination of two goods that an economy can produce 4. Consider the market for chicken. Assuming that chicken and beef are substitutes, AN INCREASE in the price of beef will: A, increase the supply of chicken, creating a lower price and a greater amount of chicken purchased in the market. B, decrease the supply of chicken, creating a higher price and a smaller amount of chicken purchased in the market. C. decrease the demand for chicken, creating a lower price and a smaller amount of chicken purchased in the market. D. increase the demand for chicken, creating a higher price and a greater amount of chicken purchased in the market.5. The long run is a period of time: A. in which production occurs beyond one year. B. in which production occurs beyond five yours. C. that is too short to change the size of a firm's plant. D. that is long enough to permit changes in all fir's inputs, both fixed and variable. 6: If a firm's use of labor obeys the law of diminishing returns, than: A. its marginal cost must be falling. B. it does not have enough time to hire or fire workers C. hiring additional workers adde less and less additional output. D. doubling the number of workers causes the time output also to double, 7. The maximum point of an average product curve in the short run can be found at the level of output when: A, none of the above. marginal product is negative. C. marginal product curve is at its maximum. D. marginal product and merage product intersect. 8. The law of diminishing marginal returns implies that, in the short run: A. price must fall beyond a certain point B. output must fall beyond a certain point. C. total cool must fall beyond a certain point, D. the marginal product of the variable input must eventually decrease. 9. Which describes a barrier to entry? A. Something that establishes a barrier to expanding output B. Anything that protects a firm from the arrival of new competitor C. A goverment regulation that bars a monopoly from earning an economic profit D. Firs already in the market incurring economic losses so that no new firm wants to enter the market 10. A differentiated product has A. no close substitutes B. many perfect substitutes. C. no substitutes of arry kind. D. close but not perfect substitutes.Questions 11-12 are based on the following Graph 1 below. Prical$ par unity MC ATC MA D Quintly Graph 1 11. What price will the monopolist charge in order to maximbus profit? A. $2 B. $5 C. $6 D. $7 12. At the profit-maximizing price and output, the total revenue is: A. $9 B. $10. C. $15. D. $21. Questions 13-14 are based on the following Graph 2 below. Prices Graph 2
