University of HawaiiECON 130Microeconomics

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PART 1 A MICROECONOMICS 193 QUESTIONS [1] Source: CMA 1285 1-15 In the short run, a purely competitive firm operating at a loss will A. Shut down. B. Continue to operate as long as price exceed... s average variable costs. C. Raise the price of its product. D. Reduce the size of its plant to lower fixed costs. [2] Source: CMA 1285 1-16 In an analysis of economic costs of Production, long run means A. More than 1 year but less than 5 years. B. Five or more years. C. A period of time long enough to turn over top management. D. A period of time long enough for the firm to make all resource costs variable in nature. [3] Source: CMA 1285 1-17 The marginal utility of a good refers to A. The point at which the consumer's total utility is maximized. B. The point at which the consumer's total utility is minimized. C. The change in the amount of the good consumed that increases total utility by one unit. D. The change in total utility when consumption of the good increases by one unit. [4] Source: CMA 1286 1-4 Economies and diseconomies of scale are important determinants of the A. Type of product demand faced by individual firms. B. Market demand curve. C. Pattern of costs in the long run. D. Law of diminishing returns. [5] Source: CMA 1286 1-7 If a rent control law in a competitive housing market establishes a maximum or ceiling rent that is above the market or equilibrium rent, A. The law has no effect on the rental market. B. A surplus of rental housing units will result. C. Supply will decrease as price increases. D. Demand will increase as price increases. [6] Source: CMA 0687 1-1 The distribution of income among households in the United States is primarily determined by A. Transfer payments to households. B. Household purchases of goods and services. C. The ownership of factors of production. D. Government taxes. [7] Source: CMA 0687 1-12 Local electric utilities are considered to be natural monopolies because for these firms A. Supply curves are upward sloping. B. Demand curves are upward sloping. C. Average total costs never fall. D. Significant economies of scale are present. [8] Source: CMA 1287 1-2 If the demand for cigarettes in New York is relatively elastic, and New York imposes high taxes on cigarettes that result in higher cigarette prices, then in New York A. The quantity of cigarettes demanded would increase. B. The demand for cigarettes would increase. C. The demand curve for cigarettes would become vertical. D. Expenditures on cigarettes would fall. [9] Source: CMA 1287 1-5 The quantity of output a competitive firm can supply at any price is determined in part by A. Average household income. B. Consumer tastes and preferences. C. Input prices. D. The distribution of income among households. [10] Source: CMA 1287 1-10 In the economic theory of production and cost, the short run is defined to be a production process A. Which spans a time period of less than one year in length. B. In which both fixed and variable inputs are employed. C. That is subject to economies of scale [Show More]

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