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Microeconomics Practice Test
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Microeconomics Practice Test
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25 Questions

1. Which of the following is the best example of a negative externality and the appropriate plan for eliminating it?
2. If a monopsony labor market suddenly were transformed into a perfectly competitive labor market, how would the wage and employment change?
3. If a market for a good is producing a negative externality,
4. Using the diagram above, which of the following might have caused the outward movement of the production possibility frontier?
5. A monopsony employer hires labor up to the point where
6. The United States is trading salmon to Peru in exchange for anchovies. If these nations are trading based upon relative opportunity costs, what must be the case?
7. Nancy has the choice to spend one hour studying for an exam, mowing the lawn for one hour at a wage of $6, or babysitting her niece for one hour at a wage of $8. If we know that Nancy has chosen to study for the exam, which of the following is true?
8. An industry described as an oligopoly would most likely have
9. When a firm is earning a normal profit from the production of a good, it is true that
10. Which of the following is a fundamental aspect of the free market system?
11. Which of the following is true of the perfectly competitive firm in the short run?
12. A minimum wage in the market for fast-food workers is likely to produce
13. Suppose the market for roses is currently in equilibrium. If the supply of roses falls, while at the same time the demand for roses rises, what can you say about the price and quantity of roses in the market?
14. The market for Cincinnati Reds baseball tickets is currently in equilibrium. Which of the following events would most likely increase the consumer surplus received by Reds fans?
15. If total product of labor is rising at an increasing rate,
16. Which of the following is the best example of the free-rider effect?
17. A competitive market for coffee, a normal good, is currently in equilibrium. Which of the following would most likely result in an increase in the demand for coffee?
18. If Matt’s total utility from consuming bratwurst increased at a constant rate, no matter how many bratwurst Matt consumed, what would Matt’s demand curve for bratwurst look like?
19. Two competing firms are deciding whether to enter a new market or maintain the status quo. Use the following profit matrix to respond to this question.If these firms do not collude, the outcome will be
20. The figure above shows the production possibility frontiers (PPFs) for two nations that produce crabs and cakes. If these nations specialize and trade based on the principle of comparative advantage, which of the following trade agreements benefit both nations?
21. Jason cleans swimming pools in a perfectly competitive local market. A profit maximizer, he can charge $10 per pool to clean 9 pools per day, incurring total variable costs of $80 and total fixed costs of $20. Which of the following is true?
22. The market for good X is currently in equilibrium. Which of the following choices would not cause both a decrease in the equilibrium price of good X and a decrease in the equilibrium quantity of good X?
23. Deadweight loss in industries with market power is a result of
24. The top six firms in an oligopolistic industry have market shares of 25%, 25%, 15%, 10%, 6%, and 3%. Many smaller firms split the rest of the market. What is the value of the four-firm concentration ratio?
25. Which of the following is an example of a long-run adjustment for the owners of a small café?

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