MicroEconomics

QUIZ NO. 4

Multiple Choice— Select the option that best completes the sentence or provides the answer to the question.

Elasticity in economics is:

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

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

Utility level
Income level
Capital level
Price level

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

Agriculture
Utility
Computer software
Retail

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

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

The invisible hand refers to:

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

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

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

The demand curve for cigarettes is steep because:

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

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...

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

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

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

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

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

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