EXERCISE - MICROECONOMICS

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1. A decrease in the price of oil should lead to:
a) An increase in the demand for cars.
b) An increase in the quantity of cars demanded.
c) An increase in the quantity of oil supplied.
d) An increase in the demand for oil.
c) Cars are a normal good for Berta.
d) Bicycles and cars are substitutes for Berta.
6. If a price increase of good 1 increases the
quantity demanded of good 2, then good 2 is a

a) Substitute good.
2. An increase in consumer income will increase b) Complementary good.
the demand for a _______ and decrease the c) Bargain.
demand for a _________ d) Inferior good.

a) substitute good, inferior good

b) normal good, inferior good 7. What are competitive markets and why are they
c) inferior good, normal good so important in economics?
d) normal good, complementary good
a) Competitive markets are markets with many
buyers and sellers who trade a homogeneous
3. A change in the price of a good causes a shift of good. Although these markets do not exist in
the demand curve of the good. reality, they could appear in some places in the
future and we have to be prepared for this
a) TRUE circumstance.
b) FALSE b) Competitive markets are markets with many
buyers and sellers who trade a homogeneous
good. These markets are important because
4. A demand curve can shift because of changing they are the only kind of market that we observe
in reality.
a) Incomes c) Competitive markets are markets with many
b) Prices of related goods buyers and sellers who trade a homogeneous
c) Tastes good. These markets are important because
d) All of the above they are easy to analyze and because they
represent a good approximation of many
markets that we observe in reality.
5. Berta just graduated from college. During d) Competitive markets are markets with many
college, Berta earned 3000 euros a year working buyers and few sellers who trade slightly
part time. After graduation, Berta has obtained a different products. These markets are important
job that will pay 30,000 euros per year. After because they are easy to analyze and because
receiving her first paycheck, Berta bought a car they represent a good approximation of many
and gave away the bike that she had used before markets that we observe in reality.
as a gift to a friend. Therefore,

a) Bicycles are a normal good for Berta. 8. Suppose that in the world demand for Coca Cola
b) Cars are an inferior good for Berta. in 2000 is given by the equation: P = 3 − 2Q,
 where P is the price and Q the quantity. If it is
discovered in 2015 that Coca Cola is bad for your
health and this is the only change affecting the
demand, which is a plausible demand for Coca
Cola in 2015?
a) P = 5 − 2Q.
b) P = 1 − 2Q.
c) None of the other options are a plausibly.
d) All options are a plausibly
a) Companies decide whom to hire and what to
produce.
b) There is no agent who is responsible for
improving the welfare of society as a whole.
c) Individuals decide what companies to work for
and what goods to buy with their income.
d) Government policies are the main forces that
guide the decisions of companies and
individuals.

9. An increase in the consume's income has
produced an increase in the sales of a clothing
company. Which of the following corresponds to
this situation according to the model of perfect
competition:
a) Sales increased because of a movement along
the demand curve.
b) Sales increased because a drop in wages.
c) None of the other options is correct.
d) Sales increased because of the law of
decreasing marginal utility.
13. The marginal cost of a tennis school only
depends on the wage of its instructors. The
tennis instructors’ labour union negotiates a 7%
increase in instructors’ wages. This means that:
a) The supply curve shifts towards the left.
b) The supply curve shifts towards the right.
c) The supply curve changes its slope from positive
to negative, because of the reduction in the
number of clients due to the higher cost.
d) None of the above.

14. Suppose the supply of Coke is given by P=2Q. A

10. The sum of the quantities of a good demanded technological improvement in the production of
by all the potential buyers in the market at each Coke
possible price is:
a) Shifts the supply curve.
a) The supply curve b) Reduces the marginal cost of production.
b) The market demand curve c) Decreases the price consumers pay in
c) The demand curve equilibrium, assuming that the demand is not
d) The market supply curve perfectly elastic.
d) All of the above are correct

11. How do we call the object that summarizes the

quantity of a product that buyers wish to
purchase under any possible circumstances that
affect this decision?

a) The demand.
b) The supply.
c) The excess demand.
d) The excess supply.

12. Which of the following statements is NOT

applicable to a market economy?