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Microeconomics Practice Quiz Chapter 1 - Statistics

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  • This quiz has been taken 40 times
  • The average score is 15 of 30
Answer Stats
Question Answer % Correct
Which of the following best shows rational decision-making? Buying coffee because you decided the enjoyment was worth the $2 and the effort to get it.
92%
What does it mean that people respond to incentives? People change their behavior when the costs or benefits of an action change.
92%
When economists say people are rational, they mean: People weigh costs and benefits and make choices they believe improve their well-being
92%
Which statement about incentives is most accurate? Both consumers and firms systematically adjust behavior when benefits or costs change.
83%
Which of the following best illustrates how firms respond to incentives? A retail store lowers prices during a sale to increase customer traffic
75%
Canadian banks typically do not use bulletproof glass or heavy security. Which economic principle explains this decision? The expected monetary loss from robberies is less than the cost of installing extensive security
75%
Suppose a firm considers producing an additional unit of output. The marginal cost is $8, and the marginal revenue is $6. What should the firm do? Not produce the additional unit, since marginal cost exceeds marginal revenue
67%
When economists say decisions are made “at the margin,” they mean People evaluate the additional benefit and additional cost of one more unit of activity.
64%
In the Netflix binge-watching example, why is the friend’s argument (“you’ll still get 70% even if you don’t study”) flawed from an economic perspective? It fails to compare the marginal benefit of watching another episode with the marginal cost of studying less.
53%
A student is deciding whether to watch another Netflix episode or study. Which decision rule applies? Watch another episode only if the added enjoyment outweighs the reduced study performance.
53%
According to the rationality assumption, people: Do not intentionally make decisions that would leave them worse off.
50%
When economists state that people respond to economic​ incentives, who are the people that respond to​ incentives? Customers and firms
47%
Tangible products like cars and televisions are referred to as __________. Goods
44%
A local city government offered commuters a small cash payment for using public transit instead of driving. In the first few months, transit ridership increased by almost 50 percent. However, the effect declined when commuters were required to take transit at least 5 days per week to receive the payment instead of only 2 days per week. PART A: Why might a monetary payment affect whether or not people take public transit when the environmental benefits of reducing car use are well documented? When deciding whether or not to take public transit, people compare convenience and time lost with the relatively small environmental benefit of a single trip. A monetary payment creates an immediate incentive for each individual ride.
44%
PART B: Why might a payment not cause some people to take public transit? When deciding whether or not to use transit, a person might weigh their options. If the cost of not driving their own car outweighs the reward, they may choose not to take transit.
44%
__________ goods and services are those bought by businesses to be used to increase efficiency or enhance production. Capital
42%
Which of the following best explains why economics is sometimes called the “marginal science”? Economists focus on how small, incremental changes affect decisions and outcomes.
42%
____________ occurs when a good or service is produced at the lowest possible cost. ____________ occurs when production is in accordance with consumer preferences. Productive efficiency ...... Allocative efficiency
42%
Economists use models to answer questions and analyze issues
42%
In what way do economists assume that people are​ rational? Economists assume that people use all available information as they take actions intended to achieve their goals
39%
When does productive efficiency occur? People weigh costs and benefits and make choices they believe improve their well-being
39%
What is a hypothesis in an economic model? A statement about an economic variable that may be either correct or incorrect.
36%
Which of the following is a positive economic statement? If minimum wage rates rise, then unemployment will rise.
36%
MegaMart, a large discount grocery chain, is planning to expand into the city of Brookdale. While consumers welcome the lower prices, local farmers’ markets and small organic stores have strongly opposed MegaMart’s entry. They argue that MegaMart will reduce sales at local shops, put many workers out of business, and increase unemployment in the region. Which of the following can most reasonably be concluded from the information given in the question? Opponents believe that displaced workers from local businesses will struggle to find new employment in the short term.
33%
Economic decisions are made at every level in society. When we try to decide which production method to use among several alternatives, which of the following key economic questions are we trying to answer? How do we produce the products?
31%
Which of the following countries has an economy where households and firms make these​ decisions? Japan
31%
What does it mean to say that optimal decisions are made at the​ margin? The optimal decision is to continue any activity up to the point where the marginal benefit equals the marginal cost.
31%
Which of the following is not a step that economists use in developing a useful economic​ model? Make a value judgement about the merits of the hypothesis.
28%
Economic decisions are made at every level in society. When we try to decide which production method to use among several alternatives, which of the following key economic questions are we trying to answer? How do we produce the products?
25%
Economic data is used to test models.
19%
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