REVISION

MICROECONOMICS
A1.

Which of the following would be studied in microeconomics?

(A)
(B)
(C)
(D)
(E)

A2.

The total number of workers employed in a country.

The total concealing of detailed information about certain segments of the
economy.
The output of the entire economy.
The general level of prices in the Malaysian economy.
The output and price of meat in Malaysia.

Where do economics agents such as individuals, firms and nations, interact with each
other?
(A)
(B)
(C)
(D)
(E)

In any arena that brings together buyers and sellers.

In public locations monitored by the government.
In the share market.
In any physical location where people can get together selling goods, such
as shopping malls.
In any location where transactions can be monitored by consumer groups
and taxed by the government.

A3. In economics, when we speak of scarcity, we are referring to

(A)
(B)
(C)
(D)
(E)

the ability of society to employ all of its resources.

the inability of society to consume all that it produces.
the ability of society to produce more than needed.
the ability of society to continuously make technological breakthroughs.
the inability of society to satisfy all human wants because of limited resources.

A4. Which one of the following will NOT produce an outward shift of the production possibilities
curve
?
(A)
(B)
(C)
(D)
(E)

An upgrading of the quality of nation's human resources.

The reduction of unemployment.
An increase in quantity of a society's labor force.
The improvement of a society's technological knowledge.
An increase in number of capital goods.

A5. Which of the following is expected to shift the demand curve for laser printers rightward?
(A)
(B)
(C)

A fall in the cost of producing laser printers.

A fall in the price of personal computers.
A fall in the price of laser printers.
1

(D)

A fall in the price of bubble jet printers.

A6. Assuming that the demand curve is given, an increase in supply will cause
(A)
(B)
(C)
(D)
(E)

a shift of the demand curve.

an increase in equilibrium price.
a decrease in quantity demanded.
an increase in the quantity exchanged.
a shortage.

A7. Income elasticity of demand for an inferior good is

(A)
(B)
(C)
(D)
(E)

A8.

A fall in the price of commodity X leads to an increase in the demand for commodity Y
and a fall in the demand for commodity Z. what is the relationship of X, Y and Z?
(A)
(B)
(C)
(D)
(E)

A9.

negative.
positive.
unpredictable.
zero.
equals 1.

X is a complement for both Y and Z.

X is a substitute for both Y and Z.
X is a complement for Y and a substitute for Z.
X is a substitute for Y and a complement for Z.
X is a substitute for Y but not related to Z.

A perfectly elastic demand implies that

(A)
(B)
(C)
(D)
(E)

buyers will not respond to any change in price.

any rise in price above that represented by the demand curve will result in no
output demanded.
price and quantity demanded respond proportionally.
price will rise by an infinite amount when there is a change in quantity demanded
the demand curve will be a straight line.

A10
.

The law of diminishing marginal utility states that:

(A)
(B)
(C )
(D)
(E)

total utility is maximized when consumers obtain the same amount of utility
per unit of each product consumed.
Beyond some point additional units of a product will yield less and less extra
satisfaction to a consumer.
price must be lowered to induce firms to supply more of a product
it will take larger and larger amounts of resources beyond some point to produce
successive units of a product.
beyond some point additional units of a product, the extra satisfaction gained will
get larger.

A11. Which of the following statements is TRUE?

(A)
(B)
(C )
(D)
(E)

Both marginal utility and total utility come only from the last unit consumed.
Total utility comes only from the last unit consumed and marginal utility comes
from all units consumed.
Marginal utility comes only from the last unit consumed and total utility comes
from all units consumed.
Marginal utility is the ratio of total utility to the number of units of the good
consumed.
None of the above

A12. Which one of these does reflect consumer behavior theory?

(A)
(B)
(C )
(D)
(E)

Every consumer behave irrationally in that they seek to maximize their

satisfaction.
The consumer has a unlimited income.
The consumer does not know how much marginal utility they obtain from
successive units of various products.
All of the above reflect consumer behavior theory.
None of the above.

A13. The profit maximizing output level for a perfect competition firm is when
(A)
(B)
(C)
(D)
(E)

marginal cost equals marginal revenue.

marginal costs equals average total cost.
marginal revenue equals average variable cost.
average variable cost is lower than average total cost.
marginal cost is higher than average total costs.

A14)

To earn maximum profit, the firm should produce ______ units when the price is MC3.
(A)
(B)
(C)
(D)
(E)
A15.

The principle of opportunity cost is _____________________ .

(A)
(B)
(C)
(D)
(E)

A16.

Q1
Q2
Q3
Q4
None of the above is correct.

taking advantage of investment opportunities involves cost.

the cost of production varies depending on the opportunity for
technological application.
in a market economy, taking advantage of profitable opportunities involves
some money cost.
a pattern of consumer expenditure.
the economics cost of a type of goods measured in term of the other goods
which must be given up in order to obtain it.

The production possibilities frontier model assumes all of the following EXCEPT
_____________.
(A)
(B)
(C)
(D)
(E)

production of goods requires full employment of all resources.

labor, capital, land and natural resources are fixed quantity.
the economy produces only two products.
the level of technology is fixed and unchanging.
None the above.

A17.

Susan can produce either a combination of 60 silk roses and 80 silk leaves or a
combination of 70 silk roses and 55 silk leaves. If she now produces 60 silk roses
and 80 silk leaves, what is the opportunity cost of producing an additional 10 silk
roses?
(A)
(B)
(C)
(D)
(E)

10 silk leaves.
3.5 silk leaves.
35 silk leaves.
5.5 silk leaves.
55 silk leaves.

A18. When total product is decreasing

(A)
(B)
(C)
(D)
(E)

the average product is decreasing.

the marginal product is decreasing.
the average product is rising.
Both (a) and (b).
None of the above.

A19. Which of the following costs do vary with the amount of output a firm produces?
(A)
(B)
(C)
(D)
(E)

Marginal cost
Average fixed cost
Variable cost
Average variable cost
All of the above

A20. When the marginal product is increasing

(A)
(B)
(C)
(D)
(E)

total product is increasing at an increasing rate.

total product is increasing at a decreasing rate.
total product is equal to zero.
total product is at maximum.
total product is decreasingt

A21. A monopoly firms demand curve is

(A)
(B)
(C)
(D)

the same as the marginal revenue curve.

the same as average revenue curve.
a horizontal line draw at the market price.
downward sloping.
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(E)
A22.

both (b) and (d).

If in response to an increase in the price of chocolate, the quantity demanded of
Chocolate decrease economist would describe this as ___________________ .
(A)
(B)
(C)
(D)
(E)

A23.

The internet has created a new category in the book selling market, namely, the
barely used book. How does the availability of barely used books affect the market
for new book?
(A)
(B)
(C)
(D)
(E)

A24.

An increase in the demand for corn.

An increase in the price of soybeans.
An increase in the price of soy beans seeds.
A decrease in the price of soybeans.
A decrease in the price of corn.

If your total satisfaction increases when you consume another unit, your marginal
utility must be ________________.
(A)
(B)
(C)
(D)
(E)

A26.

The demand curve for new books shifts to the left.

The demand curve for new book shifts to the right.
The supply curve for new books shifts to the right.
The supply curve for new books shifts to the left.
No changes for demand and supply curve.

Farmers can plant either corn or soybeans in their field. Which of the following would
cause the supply of soybeans to increase?
(A)
(B)
(C)
(D)
(E)

A25.

a change in consumers income

a decrease in demand
a decrease in consumers taste for chocolate.
a decrease in quantity demanded.
All of the above.

zero.
negative.
positive.
decreasing.
increasing.

If a consumer receives 22 utils of marginal utility for consuming the first can of soda,
20 utils from consuming the second, and 15 from the third, the total utility of
consuming the three units is _________________.
(A)
(B)
(C)
(D)

10 utils.
15 utils.
35 utils.
57 utils.
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(E)

60 utils .