Test Bank for Microeconomics: Theory And Applications With Calculus , 5th Edition

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Microeconomics: Theoryand Applications withCalculusFifth EditionJeffrey M. PerloffTest Bank (Download Only) forMicroeconomics: Theory andApplications with CalculusXin Fang

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1Microeconomic: Theory & Apps w/ Calculus, 5e(Perloff)Chapter 1Introduction1.1Microeconomics: The Allocation of Scarce Resources1) Microeconomics studies the allocation ofA) decision makers.B) scarce resources.C) models.D)unlimited resources.Answer: BTopic: Microeconomics: The Allocation of Scarce ResourcesSkill: Analytical thinkingStatus: Old2) Microeconomics is often calledA) price theory.B) decision science.C) scarcity.D) resource theory.Answer: ATopic:Microeconomics:The Allocation of Scarce ResourcesSkill: Analytical thinkingStatus: Old3) Society faces trade-offs because ofA) government regulations.B) greedy corporations.C) faceless bureaucrats.D) scarcity.Answer: DTopic:Microeconomics: The Allocation of Scarce ResourcesSkill: Analytical thinkingStatus: Old4) A marketA) always involves the personal exchange of goods for money.B) allows interactions between consumers and firms.C) always takes place at a physical location.D) has no influence on prices.Answer: BTopic: Microeconomics: The Allocation of Scarce ResourcesSkill: Analytical thinkingStatus: Old

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25) What links the decisions of consumers and firms in a market?A) the governmentB) pricesC) coordination officialsD) microeconomicsAnswer: BTopic: Microeconomics: The Allocation of Scarce ResourcesSkill: Analytical thinkingStatus: Old6) The price of a good isA) always equal to the cost of producing the good.B) never affected by the number of buyers and sellers.C) usually determined in a market.D) None of the above.Answer: CTopic: Microeconomics: The Allocation of Scarce ResourcesSkill: Analytical thinkingStatus: Old7)The twinkie tax example in Section 1.1 of the textbook is an example of how policies mayaffectA) which goods are produced.B) how goods are produced.C) who gets these goods.D) All of the above.Answer: DTopic: Microeconomics: The Allocation of Scarce ResourcesSkill: Application of knowledgeStatus: New8) Who or what is responsible for the allocation of scarce resources into the production of mostgoods in the U.S.?A) the American governmentB) the UNC) the Federal Reserve BankD) markets andpricesAnswer: DTopic: Microeconomics: The Allocation of Scarce ResourcesSkill: Applicationof knowledgeStatus: Old

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39) Which one of the following isnota key trade-off a society faces?A) Who gets the goods and servicesB)Who produces the goods and servicesC) Which goods and services to produceD) How to produceAnswer: BTopic: Trade-OffsSkill: Analytical thinkingStatus: Old10) An automobile manufacturer is trying to make decisions about using more workers or moreequipment. This belongs to the trade-offA) Which goods and services to produce.B) How to produce.C) Who gets the goods and services.D) Who produces the goods and services.Answer: BTopic: Trade-OffsSkill: Application of knowledgeStatus: Old11) Income tax on the wealthy to finance the welfare for the poor causes income redistribution.This is an example for the trade-offA) Which goods and services to produce.B) How to produce.C) Who gets the goods and services.D) Who produces the goods andservices.Answer: CTopic: Trade-OffsSkill: Application of knowledgeStatus: Old12) In year 2008, 1334 million lbs of milk was produced and sold in U.S. This isA)the decision of the U.S. department of agriculture.B) quantity determined by the interactions in the market.C) the maximum amount the producers could produce.D) what consumers needed.Answer: BTopic:Who Makes the DecisionsSkill: Application of knowledgeStatus: Old

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4For the following, please answer "True" or "False" and explain why.13) Under most circumstances, the application of taxes on goods will only affect who gets thegoods.Answer: False. Taxes will affect which goods are produced, how goods are produced, and whogets the goods.Topic: Microeconomics: The Allocation of Scarce ResourcesSkill: Application of knowledgeStatus: Old14) Most modern financial centers use computers to match buyers and sellers. This absence ofpersonal contact contradicts the definition of a market.Answer: False. Buyers and sellers need not meet during a market transaction since a market isnot tied to a particular location.Topic: How Prices DetermineAllocationsSkill: Application of knowledgeStatus:Old15) Explain how a market helps determine which goods and services will be produced, how toproduce them, and who gets them.Answer: A market promotes interaction between consumers and firms. Thisinteraction willresult in prices that influence thedecisions of consumers and firms.Topic: How Prices Determine AllocationsSkill: Written and oral communicationStatus: Old

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51.2Models1)The purpose of making assumptions in economic model building is toA) force the model to yield the correct answer.B) minimize the amount of work an economist must do.C) simplify the model while keeping important details.D) express the relationship mathematically.Answer: CTopic: Simplifications by AssumptionsSkill: Analytical thinkingStatus: Old2) Einstein was quoted saying "Everything should be made as simple as possible, but notsimpler." When it comes to economic models this means thatA) models shouldn't be too complex.B) models shouldn't be toosimple.C) models should have a level of abstraction appropriate to the topic investigated.D) All of the above.Answer: DTopic: ModelsSkill: Analytical thinkingStatus: Old3) If a model's predictions are correct, thenA) its assumptions must havebeen correct.B) it is proven to be correct.C) Both A and B above.D) None of the above.Answer: DTopic: ModelsSkill: Analytical thinkingStatus: Old4) Economiststend to judge a model based uponA) the reality of its assumptions.B) the accuracyof its predictions.C) its simplicity.D) its complexity.Answer: BTopic: Testing TheoriesSkill: Analytical thinkingStatus: Old

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65) Which of the following is an example of a normative statement?A) A higher price for a good causes people to want tobuy less of that good.B) A lower price for a good causes people to want to buy more of that good.C) To make the good available to more people, a lower price should be set.D) If you consume this good, you will be better off.Answer: CTopic: PositiveVersus NormativeSkill: Application of knowledgeStatus: Old6) Every economic model should include money as a variable. This statement isA) true, because every transaction in the economy uses money.B) true, because the federal reserve is very important.C) false, because some transactions in the economy are transacted without money.D) false, because a model can get unnecessarily complex if it includes money.Answer:DTopic: ModelsSkill: Analytical thinkingStatus: Old7) Which of the followingis an example of a normative statement?A) Since this good is bad for you, you should not consume it.B) This good has bad health effects.C)If you consume this good, you will get sick.D) People usually get sick after consuming this good.Answer: ATopic: Positive Versus NormativeSkill: Application of knowledgeStatus: Old8) Which of the following is an example of a positive statement?A) Since this good is bad for you, you should not consume it.B) If this good is bad for you, you should not consume it.C) If you consume this good, you will get sick.D) None of the above.Answer: CTopic: Positive Versus NormativeSkill: Applicationof knowledgeStatus: Old

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79) A theory stating that individuals make purchasing decisions based on tastes whichchangerandomly at random intervals is not useful becauseA) it is not possible to test the predictions of the model.B) tastes are not the onlyfactor influencing behavior.C) the model is too simplistic.D) the predictions of such a model would be incorrect.Answer: ATopic: Testing TheoriesSkill: Analytical thinkingStatus: Old10)"If fines for speeding when driving increase, fewer accidents will occur" is an example ofa(n)A) positive statement.B) normative statement.C) negative statement.D)inverse statement.Answer: ATopic: Positive Versus NormativeSkill: Application ofknowledgeStatus: Old11) "Government should impose stricter regulations on oil drilling" is an example of aA) normative statement.B) positive statement.C) negativestatement.D) normal statement.Answer: ATopic: Positive Versus NormativeSkill: Application of knowledgeStatus: Old12) In the supply-demand models to analyze the wheat market, we assume that wheat sold bydifferent sellers is largely the same. Wemake this assumptionA) to test the model.B) to easily predict the market price.C) to simplify the model while keeping important details.D) to avoid the complexities in the real world.Answer: CTopic: Simplifications by AssumptionsSkill: Application of knowledgeStatus: Old

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813) Consumers choose their cellphone plans according to their needs and package features. Thisis an example ofA) importance of information to consumers' choices.B) importance of making personal budget.C) maximizing an objective that is subject to a constraint.D) minimize the cost of cellphone usage.Answer: CTopic: Maximizing Subject to ConstraintsSkill: Application of knowledgeStatus: Old14) Which of the following statements is a normative statement?A) Minimumwage reduces employment.B) Minimum wages causes surplus inlabor market.C) Minimum wage will improve the living of junior works more than senior workers.D) Minimum wage should be welcomed by the low income class.Answer: DTopic: Positive Versus NormativeSkill: Application of knowledgeStatus: Old15) Increase in price of a good will increase consumers' demand. This is a(n)A) positive statement.B) true statement.C) inverse statement.D) normative statement.Answer: ATopic: Positive Versus NormativeSkill:Application of knowledgeStatus: Old16) Trade barriers should be removed to promote the welfare of the country. This is a(n)A) positive statement.B) negative statement.C) inverse statement.D) normative statement.Answer: DTopic: Positive Versus NormativeSkill: Application of knowledgeStatus: Old

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917) Most microeconomic models assume that decision makers wish toA) make themselves as well off as possible.B) act selfishly.C) make others as well off as possible.D) None of the above.Answer: ATopic: Maximizing Subject to ConstraintsSkill: Analytical thinkingStatus: Revised18) Which of the following isnotan example of disruptive innovation that lead to thedevelopment of new theories?A) brick-and-mortar retailing.B)online payment system.C) social media.D) internet.Answer: ATopic: New TheoriesSkill: Application of knowledgeStatus: NewFor the following, please answer "True" or "False" and explain why.19) Normative analysis offers decision makers the mostvaluable information when choosingamong alternatives.Answer: False. Normative analysis states subjective goals but not how those goals can beachieved. To choose among alternatives, decision makers use positive analysis.Topic: Positive Versus NormativeSkill: Analytical thinkingStatus: Old20) If a model fits reality but doesn't generate testable predictions, it is of little value toeconomists.Answer: True. If the model doesn't deliver testable predictions, it cannot be tested againstcompetingmodels.Topic: Testing TheoriesSkill: Analytical thinkingStatus: Old21)If actual experience supports two competing theories, then both theories are proven to betrue.Answer: False. Neither theory can be rejected, but if they are competing, then the test wasinconclusive.Topic: Testing TheoriesSkill: Analytical thinkingStatus: Old

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1022) Legislators argue that a minimum wage law is instituted to help poor people. Economists canattack the minimum wage law on two fronts. First, some argue that government should not helpthe poor. Second, some argue that minimum wage laws actually hurt the poor because it createsunemployment. Which argument is normative and which is positive?Answer:An opinion about the role of government is a normative statement. An observationabout the impact of a law is a positive statement.Topic: Positive Versus NormativeSkill: Application of knowledgeStatus: Old1.3Uses of Microeconomic Models in YourLife and Career1) Economic policy of the government is oftenbased onA) microeconomic models.B) educated guessing.C) intuitive reasoning.D) hints.Answer: ATopic: Uses of Microeconomic Models in Your Life and CareerSkill: Analytical thinkingStatus: Old2) Microeconomic models are used toA) make predictions.B) explain real-life phenomena.C) evaluate policy alternatives.D) All of the above.Answer: DTopic: Uses of Microeconomic Models in Your Life and CareerSkill: Analytical thinkingStatus: Old3) A microeconomic modelcannotbe used toA) evaluate the impact of a price change on a firm's revenue.B) predict the impact on a rise of the minimum wage on unemployment.C)evaluate the fairness of the proposal to nationalize health insurance.D) evaluate the effect of an increase in stadium size on the price of a sport team's tickets.Answer: CTopic: Uses of Microeconomic Models in Your Life and CareerSkill: Applicationof knowledgeStatus: Old

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114) The analysis of the competition between Apple and Samsung in the smartphone market isbased onA)microeconomic model.B) educated guessing.C) intuitive reasoning.D) consumer surveys.Answer: ATopic: Uses of Microeconomic Models in Your Life and CareerSkill: Application of knowledgeStatus: OldFor the following, please answer "True" or "False" and explain why.5) Microeconomics can be used by governments to predict the impacts of a policy and suggestsolutions to problems.Answer: True. Microeconomics models can be used to examine the effects of a policy, and canprovide insight into possible solutions to economics problems.Topic: Uses of Microeconomic Models in Your Life and CareerSkill: Analytical thinkingStatus: Old6) One model in economics is the permanent income hypothesis, which basically states that ahousehold's expenditureswill not react to a change in income unless that change in income isviewed as being permanent. How would you use this model topredict the expenditure patternsover the course of a year of a real estate agent who only sells homes during the months of Aprilthrough July?Answer: The agent will not consume all of her income when it is earned. She knows that herpaychecks will not be coming during August through March. As a result, some of her summerincome will be saved for use during those months.Topic:Uses of Microeconomic Models in Your Life and CareerSkill: Application of knowledgeStatus: Old7)One million automobiles have a defect that could cause the car to explode; however, only oneof those cars will actually explode. Nobody knows which onecar it is. When the car doesexplode, the victim's family will sue the automaker for $1 million and win. The defect costs $2per car to repair. What does economics predict about the automaker's decision to repair thedefect?Answer: Correcting the defectwill cost $2 million. Not correcting the defect will only cost $1million. Economics predicts that theautomaker will not correct the defect.Topic: Uses of Microeconomic Models in Your Life and CareerSkill: Application of knowledgeStatus: Old

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1Microeconomic: Theory & Apps w/ Calculus, 5e(Perloff)Chapter 2Supply and Demand2.1Demand1) Suppose the demand for Digital Video Recorders (DVRs) is given byQ= 250-.25p+ 4pc,whereQis the quantity of DVRs demanded (in 1000s),pis the price of a DVR, andpcis theprice of cable television. How much does the quantity demanded for DVRs change if theprisesby $40?A) drops by 10,000 DVRsB) increases by 16,000 DVRsC) drops by 2,500DVRsD) increases by 4,000 DVRsAnswer: ATopic: DemandSkill: Application of knowledgeStatus: Old2) Suppose the demand for Digital Video Recorders (DVRs) is given byQ= 250-.25p+ 4pc,whereQis the quantity of DVRs demanded (in 1000s),pis the price of a DVR, andpcis theprice of cable television. How much doesQchange if the price of cable television changesslightly (i.e. the partial derivative of demand with respect topc)?A) 125B) 4.25C) 4D) .25Answer: CTopic: DemandSkill: Application of knowledgeStatus: Old3) Suppose the demandfor Digital Video Recorders (DVRs) is given byQ= 250-.25p+ 4pc,whereQis the quantity of DVRs demanded (in 1000s),pis the price of a DVR, andpcis theprice of cable television. How muchof a change inpmust occur forQto increase by one?A) fall by 25¢B) fall by $4C) increase by 25¢D) fall by $4.25Answer: BTopic: DemandSkill: Application of knowledgeStatus: Old

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24)According to the Law of Demand, the demand curve for a good willA) shift leftward when the price of the good increases.B) shift rightward when the price of the good increases.C) slope downward.D) slope upward.Answer: CTopic: DemandSkill: Analytical thinkingStatus: Old5) An increase in the price of pork will lead toA) a movement up along the demand curve ofpork.B) a movement down along the demand curve of pork.C) a rightward shift of the demand curve of pork.D) a leftward shift of the demand curve of pork.Answer: ATopic: DemandSkill: Analytical thinkingStatus: Revised6) An increase in consumer incomes will lead toA) a rightward shift of the demand curve for plasma TVs.B) a movement upward along the demand curve for plasma TVs.C) a rightward shift of the supply curve for plasma TVs.D) no change of the demand curve for plasma TVs.Answer: ATopic: DemandSkill: Application of knowledgeStatus: Old7) Consider the demand function Qd = 150-2P. The effects of other determinants of Qd isreflected inA) the intercept of the function.B) the slope of the function.C) neither the slope nor the intercept of the function.D) in both the slope and the intercept of the function.Answer: ATopic: DemandSkill: Analytical thinkingStatus: Old

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38) Consider the demand functions:A) Qd = 250-2PB) Qd = 300-3PWhich of the demand functions reflects a higher level of consumer incomes?A) AB) BC) A and B reflect the same consumer incomes.D) More information is needed.Answer:DTopic: DemandSkill: Application of knowledgeStatus: Old9) Holding all other factors constant, consumers demand more of a good theA) higher its price.B) lower its price.C)steeper the downward slope of the demand curve.D) steeper the upward slope of the demand curve.Answer: BTopic: DemandSkill: Analytical thinkingStatus: Old10) The demand curve forWidgets is given byQD= 6000-2y-200p+ 30pG, whereQDis thequantity of widgets demanded,yis the per capita income andpGis the price of Gizmos. Anincrease in per capita income will causeA) demand shifts left.B) demand shifts right.C) demand increases.D) movement along the demand curve.Answer: ATopic: DemandSkill: Application of knowledgeStatus: Old11) As the price of a good increases, the change in the quantity demanded can be shown byA) shifting the demand curve leftward.B) shifting the demand curve rightward.C) moving down along the same demand curve.D) moving up along the same demand curve.Answer: DTopic: DemandSkill: Analytical thinkingStatus: Old

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