Test Bank for - a. everything has a price. b. prices have impor...

Test Bank for Microeconomics Theory and Applications, 13e Edgar Browning, Mark Zupan (All Chapters) 1 / 4

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2. Microeconomics is also known as price theory because:

• everything has a price.
• prices have important effects on individual and firm decisions.
• prices are the only determinant of economic outcomes.
• prices change constantly.

Answer: B

Difficulty Level: Easy

Section Reference: The Scope of Microeconomic Theory

Learning Objective: Convey the scope of microeconomic theory.

• Which of the following is generally considered a microeconomic question?

• The relationship between the money supply and nominal GDP
• The relationship between the unemployment and inflation
• The impact of a tax cut on public saving
• The effect of anti-discrimination laws on employers’ hiring practices

Answer: D

Difficulty Level: Easy

Section Reference: The Scope of Microeconomic Theory

Learning Objective: Convey the scope of microeconomic theory.

Chapter Number: 1

Question Type:

Multiple Choice 1.Which of the following is generally considered to be a microeconomic question?

• The relationship between the money supply and nominal GDP
• The responsiveness of

aggregate demand to change in government expenditure c.T he relationship between productivity of workers and wages received by them

• The

relationship between inflation and unemployment

Answer:

C

Difficulty Level: Medium

Section Reference:

The Scope of Microeconomic Theory

Learning Objective:

Convey the scope of microeconomic theory. 2 / 4

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• Which of the following economic decisions is not a part of the study of microeconomics?

• A consumer's decision regarding how much of a good to purchase
• A worker's decision concerning which job to take
• A business firm's decision regarding how many machines to purchased.
• The government's decision regarding the use of monetary or fiscal policy to control increasing

prices

Answer: D

Difficulty Level: Medium

Section Reference: The Scope of Microeconomic Theory

Learning Objective: Convey the scope of microeconomic theory.

5. Macroeconomics deals primarily with:

• aggregate economic factors.
• the behavior of rational consumers.
• the role of politics in economics.
• a society’s economic and cultural environment.

Answer: A

Difficulty Level: Easy

Section Reference: The Scope of Microeconomic Theory

Learning Objective: Convey the scope of microeconomic theory.

• Which of the following best describes the difference between micro and macroeconomics?

• Macroeconomics deals with bigger, more important issues, while microeconomics deals with

the smaller, less significant details.

• Macroeconomics studies the actions of large firms while microeconomics studies the behavior

of small firms and individuals.

• Macroeconomics is the study of aggregate factors while microeconomics is the study of

individuals and individual firms.

• Macroeconomics studies long-run behavior (one-year or more) while microeconomics studies

short-run or immediate behavior.

Answer: C

Difficulty Level: Easy

Section Reference: The Scope of Microeconomic Theory

Learning Objective: Convey the scope of microeconomic theory. 3 / 4

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7. Theory A is considered to be better than Theory B if:

• the assumptions of B are more realistic than the assumptions of A.
• A takes into consideration more facts than B.
• A predicts or explains a certain phenomenon better than B.
• A uses more mathematics than B.

Answer: C

Difficulty Level: Medium

Section Reference: The Nature and Role of Theory

Learning Objective: Explain why theory, is essential to understanding and predicting real-world outcomes.

• Consider the following theory: the more one practices for the SAT test, the higher the person

will score. This theory:

• is complete and very useful for high school students.
• is incomplete because it leaves out many other factors that will influence SAT scores.
• is not useful since it is hard to measure practice time.
• is useful because more practice will guarantee higher SAT scores.

Answer: B

Difficulty Level: Medium

Section Reference: The Nature and Role of Theory

Learning Objective: Explain why theory, is essential to understanding and predicting real-world outcomes.

9. The test of a theory is whether:

• its assumptions are realistic.
• it predicts the outcomes well.
• it explains the observed data perfectly.
• it incorporates every relevant factor bearing on the analysis.

Answer: B

Difficulty Level: Easy

Section Reference: The Nature and Role of Theory

Learning Objective: Explain why theory, is essential to understanding and predicting real-world outcomes.

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