Microeconomics Practice Questions

1. Jordan works for the state of Georgia as a probation officer 1. Jordan works for the state of Georgia as a probation officer. His labor provides the government with a much needed service. In return, the state pays Jordan a salary. With his salary, Jordan purchases the goods he needs/wants from private firms. He also pays taxes that allow the government to continue to provide protection and government services. Jordan’s economic interdependence with the government and private businesses is referred to as The money flow The monetary cycle Circular flow of economic activity Economic independence

2. “If the public wants this football team to remain in this city, then they will buy season tickets. If they do not, the tickets will not sell. If this city does not appreciate what they have, then we are prepared to move to another city where the fans are waiting and anxious to pay to see the product we put on the field.” The above quote is an indirect reference to A factors market Law of supply and demand Disagreement over equilibrium price The security encouraged by a free-market

3. Byron has just received an annual bonus at work for $2000 3. Byron has just received an annual bonus at work for $2000. Currently, interest rates are very high. The year before, Byron received a bonus for $1200 when interest rates were very low. Which of the following statements is MOST LIKELY true? Byron spent his bonus last year and will spend it again this year. Byron saved his bonus last year and will save this year’s check too. Byron spent his bonus last year, but this year will save it. Byron saved his bonus last year, but this year will spend it.

4. Money can BEST be defined as which of the following? Currency A medium of exchange Something that transfers risk from one party to another Interest

5. Frank has owned the same Italian bistro in the heart of Atlanta for nearly 23 years. Although it’s small, it’s known for the best lasagna in the city. What kind of business does Frank operate? Sole proprietorship Partnership Cooperative Corporation

6. Barry and two associates have been operating a business that is not going well. Barry is stressed because the company is over $200,000 in debt and he knows that if it goes under, he and his two associates will have to pay it out of their own pockets. In sounds like Barry and his associates have a Sole proprietorship Partnership Stock Corporation

7. A market structure in which only one producer supplies a good that is in demand, thereby permitting them to set the price by how much they supply is called Competition Oligopoly Monopoly Conglomerate

8. A business that manufactures ice-skates buys steel for their blades in a Product market Resource market Demand curve Elastic price variation

9. Examine the diagram: What point represents the equilibrium price? W Demand What point represents the equilibrium price? W Y Z X W X Y Z Supply QUANTITY

10. Albert is the CEO of a company that provides sugar to much of the U.S. Unfortunately, a huge hurricane swept through the Gulf Coast and wiped out much of this year’s sugarcane crop. Albert’s company will likely take what action? Close their business Raise sugar prices Lower sugar prices Ask the government to impose a price ceiling

11. The following year, Albert’s company benefits from an abundant sugarcane crop. However, due to recent scientific evidence that declares sugar to be bad for people’s health, there is not nearly as much demand for sugar as there is supply. Which of the following actions will lead sugar farmers to continue to grow sugar despite the lack of demand? A government imposed price floor on sugar A government imposed price ceiling on sugar Free-market competition The law of supply and demand