Principles of Microeconomics for Applied Engineering MCQs
Principles of Microeconomics for Applied Engineering MCQs
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1: What is the ability-to-pay principle?
A. The view that everyone should pay the same amount in taxes regardless of income
B. The view that taxes should be based on how much someone consumes
C. The view that those with less income should pay more in taxes than those with more income
D. The view that those with greater income should pay more in taxes than those with less income.
2: What is absolute advantage?
A. A person or country is equally efficient at producing a good in comparison with another person or country.
B. A person or country is more efficient at producing a good in comparison with another person or country.
C. There is no comparison between a person or country's efficiency at producing a good.
D. A person or country is less efficient at producing a good in comparison with another person or country.
3: What is the definition of accounting profits?
A. Accounting profits are total revenue minus total costs, where total costs include the implicit opportunity costs.
B. Accounting profits are total revenue minus total costs, where total costs exclude the implicit opportunity costs.
C. Accounting profits are total revenue minus explicit opportunity costs.
4: Which of the following is true about accounting profits?
A. Accounting profits are total revenue minus total costs.
B. Accounting profits include implicit opportunity costs.
C. Accounting profits are total revenue minus explicit costs.
D. Accounting profits are total revenue minus implicit opportunity costs.
5: What is a ad valorem tariff?
A. A tax on exports evaluated as a percentage of the value of the import
B. A tax on imports evaluated as a percentage of the value of the export
C. A tax on imports evaluated as a percentage of the value of the import
D. A tax on exports evaluated as a percentage of the value of the export
6: What is adverse selection?
A. A situation in which the people who choose to buy insurance will be the riskiest group in the population
B. A situation in which the people who choose to buy insurance will be the healthiest group in the population
C. A situation in which the people who choose to buy insurance will be the least risky group in the population
D. A situation in which the people who choose to buy insurance will be the average group in the population
7: Adverse selection is a situation in which the people who choose to buy insurance will be the:
A. Neediest group in the population
B. Riskiest group in the population
C. Healthiest group in the population
D. Wealthiest group in the population
8: What causes the labor supply curve to take on a negative slope?
A. An increase in the wage.
B. The income effect outweighs the substitution effect of an increase in the wage.
C. The substitution effect of an increase in the wage.
D. The income effect of an increase in the wage.
9: What labor supply curve is shown in the situation where the income effect outweighs the substitution effect of an increase in the wage?
A. Inelastic labor supply curve
B. Backward-bending labor supply curve
C. Upward-sloping labor supply curve
D. Forward-bending labor supply curve
10: What does the term "barriers to entry" refer to?
A. Something that makes it difficult for firms to enter a market.
B. A market with no potential entrants.
C. Anything that prevents firms from entering a market.
D. A market with few entrants.
11: What is meant by "capital abundant"?
A. More labor available than capital.
B. The same level of capital per worker in one country as compared to another.
C. A lower level of capital per worker in one country relative to another.
D. A higher level of capital per worker in one country relative to another.
12: What is capital gain?
A. The decrease in the value of an asset through an increase in its price.
B. The increase in the value of an asset through an increase in its price.
C. The increase in the value of an asset through a decrease in its price.
D. The decrease in the value of an asset through a decrease in its price.
13: What is capital intensive production?
A. Production that uses a relatively low level of capital per worker.
B. Production that does not use any capital.
C. Production that uses a relatively high level of capital per worker.
D. Production that is labour intensive.
14: What is capital loss?
A. The decrease in the value of an asset through a decrease in its price.
B. The decrease in the value of an asset through an increase in its price.
C. The increase in the value of an asset through a decrease in its price.
D. The increase in the value of an asset through an increase in its price.
15: What is the basic principle of capitalism?
A. An economic system based on a command economy
B. An economic system based on a market economy in which capital is owned by the state
C. An economic system based on a market economy in which capital is individually owned
D. An economic system based on a centrally planned economy
16: What is the definition of "cartel"?
A. A group of consumers in the same industry who coordinate pricing and production decisions.
B. A group of wholesalers in the same industry who coordinate pricing and production decisions.
C. A group of producers in the same industry who coordinate pricing and production decisions.
D. A group of retailers in the same industry who coordinate pricing and production decisions.
17: What are the two perpendicular lines called in a Cartesian coordinate system?
A. Variables
B. Intervals
C. Axes
D. Points
18: What does the Latin phrase "ceteris paribus" mean?
A. "all other things being equal"
B. "the higher the better"
C. "first come, first served"
D. "the one with the most votes wins"
19: What does ceteris paribus mean?
A. Holding all other things the same when one or more variables are changed
B. A Latin phrase meaning
C. Holding all other things the same when two or more variables are changed
D. Holding all other variables constant or keeping all other things the same when one variable is changed.
20: What is the definition of "choice"?
A. A synonym for the word
B. A selection among alternative goods, services, or actions
C. A method of picking something
D. The act of choosing something
21: What was the Clayton Antitrust Act passed in the United States?
A. To increase the powers of the Federal Trade Commission
B. To provide antitrust law
C. For the regulation of gemstone marketing
D. To prevent monopolies from forming through mergers.
22: What does deadweight loss refer to?
A. The loss in producer surplus due to an inefficient level of production.
B. The loss in producer and consumer surplus due to an inefficient level of production.
C. The loss in producer and consumer surplus due to a efficient level of production.
D. The loss in consumer surplus due to an inefficient level of production.
23: A debt contract is a contract in which the lender provides funds today in exchange for _____.
A. A promise from the borrower to repay that amount at some point in the future
B. A promise from the borrower to repay a different amount plus interest at some point in the future
C. A promise from the borrower to repay that amount plus interest at some point in the future
D. A promise from the borrower to repay that amount plus interest today
24: In a deferred payment contract, when is the worker paid more than the marginal revenue product?
A. When the worker dies
B. When the worker is old
C. When the worker is of retirement age
D. When the worker is young
25: What is the term used to describe the relationship between price and quantity demanded?
A. Price elasticity of demand
B. Law of demand
C. Supply and demand
D. Demand
26: What is the definition of demand?
A. A relationship between price and quantity demanded.
B. The amount of a good or service remaining after consumers' demand is satisfied
27: What is a demand curve?
A. A graph of quantity supplied and price
B. A graph of supply and price
C. A graph of quantity demanded and price
D. A graph of demand showing the downward-sloping relationship between price and quantity demanded.
28: What is the earned income tax credit?
A. A payment from the government to people with high income who work
B. A tax on people with low income
C. A payment from the government to people with low income who work
D. A rebate on taxes for people with high income who work
29: What does earnings refer to?
A. The amount of money a firm owes.
B. The accounting profits of a firm.
C. The value of a firm's assets
D. The wages of employees
30: What are economic interactions?
A. Interaction between economic agents
B. Economic activity
C. Exchanges of goods and services between people.
D. Interaction between economies
31: What is an economic model?
A. An explanation of how the economy or part of the economy works.
B. A diagram of the economy
C. A mathematical model of the economy
D. A physical model of the economy
32: What is economic profit?
A. A situation in which total revenue is less than total cost
B. The ability to produce more output with the same inputs
C. The difference between the market price and the equilibrium price
D. Total revenue minus total costs, where total costs include opportunity costs, whether implicit or explicit.
33: Factor-price equalization is the equalization of the price of what across countries when they are engaging in free trade?
A. Wages and benefits
B. Labor and capital
C. Tariffs and quotas
D. Supply and demand
34: What is the Federal Trade Commission?
A. The government agency established to help enforce tax legislation in the United States
B. The government agency established to help enforce environmental legislation in the United States
C. The government agency established to help enforce antitrust legislation in the United States
D. The government agency established to help enforce trade legislation in the United States
35: What is a firm?
A. An organization that produces goods or services.
B. A tightly woven fabric
C. A small, flat-bottomed boat
D. A person who makes or sells sweets
36: What is meant by the gains from trade?
A. The payment made to engage in trade
B. Improvements in income, production, or satisfaction owing to the exchange of goods or services.
C. The benefits received from trade
D. The losses incurred from trade
37: What is game theory?
A. A programming language
B. A branch of applied mathematics with many uses in economics
C. A branch of sociology
D. A theory in psychology
38: What is the Head Start program?
A. A government transfer program that provides day care and nursery school training for poor children.
B. A government program that provides food assistance for poor families
C. A government program that provides financial aid for students to attend college
D. A government program that helps small businesses get started
39: What does Head Start provide?
A. Day care and nursery school training for poor children
B. Training for early childhood educators
C. School-age child care
D. Grants for education
40: What is the range of the Herfindahl-Hirschman index?
A. -500 to 10,500
B. 0 to 100,000
C. 500 to 11,000
D. 0 to 10,000
41: What is an incentive?
A. A device that decreases economic efficiency
B. A device that is not used to increase economic efficiency.
C. A device that does not motivate people to take action
D. A device that motivates people to take action, usually so as to increase economic efficiency.
42: What does incentive regulation allow firms to do?
A. Set their own prices
B. Operate for several years
C. Keep additional profits or suffer losses
D. Only operate during the year
43: What is the income effect?
A. The amount by which the quantity demanded falls because of the decline in real income from a price decrease.
B. The amount by which the quantity demanded rises because of the increase in real income from a price decrease.
C. The amount by which the quantity demanded falls because of the decline in real income from a price increase.
D. The amount by which the quantity demanded rises because of the increase in real income from a price increase.
44: What does "labor abundant" mean?
A. A lower level of capital per worker in one country relative to another
B. More workers in one country relative to another
C. Higher wages in one country relative to another
D. A lower level of labor per worker in one country relative to another
45: What is the labor demand?
A. The amount of labor that a firm requires.
B. The quantity of labor supplied.
C. The price of labor.
D. The relationship between the quantity of labor demanded by firms and the wage.
46: What does the term "labor intensive production" mean?
A. A production that requires a lot of manual labor.
B. A production that uses a relatively low level of capital per worker.
C. A production that is very easy to automate.
D. A production that requires very little labor.
47: What is Macroeconomics?
A. The branch of economics that focuses on the behavior of individuals and businesses
B. The branch of economics that examines the workings and problems of the economy as a whole—GDP growth and unemployment.
C. The study of money and its effects on the economy
D. The study of how scarcity and choice affect the allocation of resources
48: What are mandated benefits?
A. Benefits that a firm is required by law to provide to its shareholders
B. Benefits that a firm is not required by law to provide to its employees
C. Benefits that a firm is required by law to provide to the general public
D. Benefits that a firm is required by law to provide to its employees
49: What does "marginal benefit" refer to?
A. The increase in the benefit from one more unit of a good.
B. The increase in the cost of one more unit of a good.
C. The total benefit from consuming all units of a good.
D. The benefit from consuming one more unit of a good.
50: What is the marginal benefit?
A. There is no benefit from, or the willingness to pay for, one more unit of a good.
B. The benefit from, or the willingness to pay for, one more unit of a good.
C. The increase in the benefit from, or the willingness to pay for, one more unit of a good.
D. The decreased in the benefit from, or the willingness to pay for, one more unit of a good.
Principles of Microeconomics for Applied Engineering MCQs
