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Practise Exam

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Practice final exam/guide

PART A: Multiple choice and short answer questions

1) The branch of economics that examines the functioning of individual industries and the behavior of individual decision-making units is a. behavioural economics. b. microeconomics. c. macroeconomics. d. normative economics.

2) You own a DVD of the film 'A Beautiful Mind'. The opportunity cost of watching the DVD the second time a. is zero as you already own the DVD. b. is one-half the cost of the DVD, since this is the second time you have watched it. c. the amount of money you could get from selling the DVD after watching it the first time. d. is the value of the best alternative use of the time you spend watching the DVD on this

3) A new fast-food restaurant offered a free meal (valued at $5) a week for a year to its first 100 customers. Ramona camped out for 48 hours before the opening to be one of the first 100 customers. The cost of the free meal a week for a year for Ramona was: a. zero. b. $260. c. The value of whatever she would have done with those 48 hours. d. The cost is impossible to determine.

4) If the supply curve for a product shifts to the right, which of the following could have caused this shift? a. A rise in wage costs. b. A rise in price of the product. c. An expectation that price will rise in the future. d. An improvement in productivity.

5) The price elasticity of demand for gasoline in the short run has been estimated to be 0.4. If a war in the Middle East causes the price of oil (from which gasoline is made) to increase, how will that affect total revenue from gasoline in the short run, all other things unchanged? a. Quantity demanded will stay the same; total revenue will fall. b. Quantity demanded will decrease; total

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