2002 Basic Microeconomics Long Test PDF

**\ LONG TEST** **BA211: BASIC MICROECONOMICS\ ** **Instructions: Read each sentence/ situation carefully and select the BEST answer among the choices and write its corresponding letter.** 1. Positive economics is concerned with: A. What ought to be B. Value judgments C. Object...

**\ LONG TEST** **BA211: BASIC MICROECONOMICS\ ** **Instructions: Read each sentence/ situation carefully and select the BEST answer among the choices and write its corresponding letter.** 1. Positive economics is concerned with: A. What ought to be B. Value judgments C. Objective analysis D. Prescribing policies 2. Normative economics is concerned with: E. Theories and models F. Facts and evidence G. Policies and value judgments H. Supply and demand 3. What does the concept of scarcity imply for economic decision-making? I. Unlimited resources J. Unlimited wants K. Limited resources and unlimited wants L. Perfect balance between resources and wants 4. What is the purpose of financial markets in the Circular Flow Model? M. To regulate taxes N. To provide public goods O. To facilitate saving and borrowing P. To control inflation 5. What does the Circular Flow Model NOT show? Q. The flow of income R. The relationship between government and firms S. The role of financial markets T. The global trade balance 6. Which of the following is NOT a factor of production? A. Land B. Labor C. Money D. Capital 7. Marginal thinking involves: A. Total costs and benefits B. Additional costs and benefits C. Ignoring costs D. Considering sunk costs 8. Supply and Demand curves intersect at: A. Maximum price B. Market equilibrium C. Minimum price D. None of the above 9. Karl Marx is best known for his critique of: A. Socialism B. Capitalism C. Mercantilism D. Monetarism 10. In the Circular Flow Model, firms provide households with: A. Taxes B. Goods and services C. Savings D. Public goods 11. **A movement along the demand curve can be caused by:** A. A change in the price of the good. B. A change in consumer income. C. A change in tastes and preferences. D. A change in the price of a related good. 12. **If the price of coffee increases, what happens to the demand for tea, assuming they are substitutes?** A. Demand for tea decreases. B. Demand for tea increases. C. Demand for tea remains the same. D. The demand curve for tea shifts to the left. 13. **A decrease in the price of a substitute good will:** A. Shift the demand curve for the original good to the left. B. Shift the demand curve for the original good to the right. C. Increase the quantity demanded of the original good. D. Have no effect on the demand curve of the original good. 14. **The demand for luxury goods is typically:** A. Inelastic. B. Perfectly inelastic.. C. Elastic. D. Unit elastic. 15. **The substitution effect occurs when:** A. Consumers buy more of a good because the price of a substitute has increased. B. Consumers buy less of a good because their income has decreased. C. Consumers substitute a cheaper good for a more expensive one. D. The demand for a good shifts to the left. 16. **If the price of a key input decreases, the supply curve will most likely:** A. **Shift to the right** B. **Shift to the left** C. **Move along the curve** D. **Remain unchanged** 17. **An increase in the number of sellers in a market would likely result in:** A. **A movement along the supply curve** B. **A rightward shift in the supply curve** C. **A leftward shift in the supply curve** D. **No change in the supply curve** 18. **What method of supply analysis uses statistical models to quantify relationships?** A. **Historical Method** B. **Experimental Method** C. **Econometric Method** D. **Survey Method** 19. **Which of the following would likely cause the supply curve to shift to the left?** A. **An increase in the number of sellers** B. **A decrease in input costs** C. **A government-imposed tax on production** D. **An improvement in technology** 20. **When there is a rightward shift in the supply curve, it indicates:** A. **An increase in supply** B. **A decrease in supply** C. **A decrease in quantity supplied** D. **No change in supply** 21. Positive Economics focuses on: A. What ought to be in the economy B. Personal opinion on economic policies C. Objective analysis and facts economic phenomena D. Moral judgements in economics 22. The Circular Flow Model illustrates: A. The flow of money and goods/services in an economy B. How government regulate markets C. The role of international trade in the economy D. The impact of technology on production 23. Macroeconomics examines: A. Specific markets and pricing strategies B. The behavior of individual consumers C. The overall economic growth and national income D. Production decisions in individual firms 24. What economic concept describes the relationship between the availability of a product and the desire for it? A. Scarcity B. Supply and Demand C. Opportunity Cost D. Marginal Thinking 25. Which of the following best defines the concept of opportunity cost? A. The cost of goods and services B. The Solow Growth Model C. The Circular Flow Model D. The Comparative Advantage Model **Instructions. Read each sentence or phrase carefully. Choose TRUE if the statement is correct and FALSE if the statement is incorrect** 26. **The demand for luxury goods is generally inelastic.** 27. **If a product has many substitutes, its demand is likely to be more elastic.** 28. **The elasticity of supply is usually higher in the short run than in the long run.** 29. **A product with perfectly inelastic demand will have no change in quantity demanded regardless of price changes.** 30. **Necessities tend to have inelastic demand because consumers continue to buy them despite price increases.** Prepared by: **ERIKSON C. MULAWIN** Faculty **ANSWER KEY** 1. **C** 2. **C** 3. **C** 4. **C** 5. **D** 6. **C** 7. **B** 8. **B** 9. **B** 10. **B** 11. **A** 12. **B** 13. **A** 14. **C** 15. **C** 16. **A** 17. **B** 18. **C** 19. **C** 20. **A** 21. **C** 22. **A** 23. **C** 24. **B** 25. **B** 26. **F** 27. **T** 28. **F** 29. **T** 30. **T**