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Microeconomic Theory

Directions: Write all your answers in the answer sheet provided at


the last page of this test. Do not forget to accomplish the
information in the answer sheet. Strictly no erasures or
superimpositions. Late submission of this test will render
deductions or worse, will not be credited. Do not use pencil. Write
legibly.
I.

Choose the letter of the correct answer.


1. A situation in which unlimited wants exceed the limited resources
available to fulfill those wants.
A. Scarcity
B. Poverty
C. Recession
D. End of the world
2. The study of the choices people make to attain their goals, given
their scarce resources.
A. Market
B. Marginal analysis
C. Economics
D. Microeconomics
3. A group of buyers and sellers of a good or service and the
institution or arrangement by which they come together to trade.
A. Market
B. Marginal analysis
C. Economics
D. Microeconomics
4. Analysis that involves comparing marginal benefits and marginal
costs.
A. Market
B. Marginal analysis
C. Economics
D. Microeconomics
5. The idea that because of scarcity, producing more of one good or
service means producing less of another good or service
A. Scarcity
B. Trade-of
C. Equity
D. Opportunity cost
6. The highest valued alternative that must be given up to engage
in an activity.
A. Scarcity
B. Trade-of
C. Equity
D. Opportunity cost
7. An economy in which the government decides how economic
resources will be allocated.
A. Market economy
B. Command economy
C. Mixed economy

Microeconomic Theory
D. Traditional economy
8. An economy in which the decisions of households and firms
interacting in markets allocate economic resources.
A. Market economy
B. Command economy
C. Mixed economy
D. Traditional economy
9. Microeconomics focuses on ...................................... .
A. Issues such as economics growth, inflation and unemployment
B. The working of the whole economy
C. Factors that afect the total demand for goods and services
D. The behavior of individuals and organizations towards scarce
resources
10.
The study of how prices are set for certain goods would be
considered asan issue in ......................... .
A. Macroeconomics
B. Microeconomics
C. Descriptive economics
D. Normative economics
11.
Which of the following is concerned with microeconomics?
A. The unemployment rate decrease by 30%.
B. In 1994, the national income of a country is RM23, 400.00
million.
C. The price of chicken increases significantly during Hari Raya
season.
D. The economic growth of the country is expected to be 6% in
1995.
12.
We cannot have all the things we want. The resources
available to satisfyour wants are, at any time, limited in supply.
The above statement reflecs the concepts of:
A. Opportunity cost
B. Choice
C. Scarcity
D. Unemployment
13.
Economics behavior such as choice is the result
of .................................. .
A. Human greed
B. Scarcity
C. Poverty
D. Private ownership of resources
14.
Which of the following cannot be considered as a basic
economic problem?
A. What to produce
B. Why produce
C. How much to produce
D. How to produce

Microeconomic Theory
15.
A.
B.
C.
D.

An extra or additional benefit or cost of a decision


Cost
Revenue
Margin
Incentive

16.
An economy in which most economic decisions result from
the interactions of buyers and sellers in markets, but where the
government plays a significant role in the allocation of resources.
A. Market economy
B. Command economy
C. Mixed economy
D. Traditional economy
17.
A.
B.
C.
D.

Analysis concerned with "what is" describes


Positive analysis
Normative analysis
Economic analysis
Marginal analysis

18.
A.
B.
C.
D.

Analysis concerned with "what ought to be" judges


Positive analysis
Normative analysis
Economic analysis
Marginal analysis

19.
The study of how households and businesses make
choices, how they interact in markets, and how the government
attempts to influence their choices
A. Macroeconomics
B. Microeconomics
C. Economics
D. Social economics
20.
as
A.
B.
C.
D.

The study of the economy as a whole, including topics such


inflation, unemployment, and economic growth
Macroeconomics
Microeconomics
Economics
Social economics

21.
Manufactured goods that are used to produce other goods
and services
A. Land
B. Capital
C. Wealth
D. Labor
22.
Anything that has the condition of scarcity-time, income,
wealth, etc.
A. Consumer goods
B. Capital goods
C. Economic goods
D. Personal goods

Microeconomic Theory
23.
A.
B.
C.
D.

A good for which there is no scarcity


Consumer goods
Capital goods
Economic goods
Free good

24.
as
A.
B.
C.
D.

All natural resources, such as minerals, timber, and water,


well as the land itself
Labor
Entrepreneur
Land
Capital

25.
Goods used to produce other goods--land, labor, and
capital
A. Equitable goods
B. factors of production
C. scarcity
D. production mechanisms
26.
Products such as machinery and equipment that are used
in production
A. Labor
B. Entrepreneur
C. Land
D. Capital
27.
Marginal cost : additional cost; ___________: additional
benefit
A. Opportunity costs
B. Marginal benefit
C. Cost-benefit
D. Increments
28.
Individuals, firms, and nations select the option with the
lowers opportunity costs
A. Marginal benefit
B. Marginal cost
C. Specialization
D. Trade-of
29.
A.
B.
C.
D.

Economics is the study of


Production technology
Assumption decisions
How society decides what, how and for whom to produce
The best way to run society

30.
A.
B.
C.
D.

A resource is scarce if supply exceeds demand at zero price


True
False
I dont know
Who cares

31.
The opportunity cost of a good is
A. The time lost in finding it

Microeconomic Theory
B. The quantity of other goods sacrificed to get another unit of
that good
C. The expenditure on the good
D. The loss of interest in using savings
32.
A command economy decides resource allocation by
government planning
A. True
B. False
C. I dont know
D. Who cares
33.
A.
B.
C.
D.

In a free market _____________


Governments intervene
Governments plan production
Governments interfere
Prices adjust to reconcile scarcity and desires

34.
In a mixed economy
A. Economic problems are solved by the government and market
B. Economic decisions are made by the private sector and free
market
C. Economic allocation is achieved by the invisible hand
D. Economic questions are solved by government departments
35.
A.
B.
C.
D.

II.

Normative economics forms ________ based on _________


Positive statements, facts
Opinions, personal values
Positive statements, values
Opinions, facts

Essay. Answer briefly and comprehensively. (5-10 sentences)

. 1. Explain why labor becomes scarce when there are many people who are
unemployed.

2. What could be the characteristics of resources?

3. Give some factors that affect human wants and explain how each affects
human wants.

Microeconomic Theory

Name: _________________________

Schedule: ______________

Section: _________________

Answer sheet

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38. Test II. You may also write at the back portion of this answer
sheet.