Quiz  /  Microeconomics Basics Quiz

  • 1. 
    Which of the following would be an opportunity cost of going to college?

  • Four years of foregone earnings in the labor market
  • The tuition cost of college
  • Non-tuition expenses incurred during college
  • The student debt accumulated during college

  • 2. 
    The invisible hand refers to:

  • Milton Friedman’s definition of the way a central bank should operate.
  • Adam Smith’s description of the workings of market economies.
  • David Ricardo’s depiction of global gains from international trade.
  • Paul Krugman’s interpretation of the events preceding the financial crisis of 2007-08.

  • 3. 
    Two points on the same indifference curve represent the same...

  • Utility level
  • Price level
  • Income level
  • Capital level

  • 4. 
    Which of the following changes would most likely increase the price of music CDs?

  • An increase in the price of cheese
  • An economic recession that reduces the incomes of all individuals
  • A decrease in the popularity of online music streaming services
  • A decrease in the cost of CD production

  • 5. 
    According to British economist David Ricardo, the gains from international trade depend on:

  • The amount of gold available for trade
  • The possession of natural resources
  • Comparative advantage in production
  • The restrictions placed by the government on trade transactions

  • 6. 
    Which of the following is not a characteristic of a perfectly competitive industry?

  • Producers set the price of their products freely.
  • Economic profit is driven to almost zero due to competition.
  • The industry consists of many small firms producing similar products.
  • There is no government intervention in the industry.

  • 7. 
    Which of the following industries is most prone to the occurrence of natural monopolies?

  • Agriculture
  • Utility
  • Computer software
  • Retail

  • 8. 
    Elasticity in economics is:

  • The relative difference in price and marginal cost.
  • An index used to measure market competitiveness.
  • A term that is used to describe the degree of flexibility in wages.
  • A measure of responsiveness.

  • 9. 
    The demand curve for cigarettes is steep because:

  • It is hard to change the price of cigarettes.
  • The cigarette market is competitive.
  • When the price increases quantity of cigarettes supplied increases rapidly.
  • The quantity of cigarettes demanded does not vary much with price.

  • 10. 
    When the planting of a beautiful garden in one home increases the happiness of the neighbors who also have a view of the garden, the garden is said to create a...

  • Production possibilities frontier
  • Positive externality
  • Positive marginal cost
  • Human factor of production
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