Download İMTAHAN SUALLARI Fənn: MICRO-ECONOMICS Müəllim: Aynur

İMTAHAN SUALLARI
Fənn: MICRO-ECONOMICS
Müəllim: Aynur Əfəndiyeva
1. Definition of economics: Microeconomics vs macroeconomics
2. Economist as a scientist and policy adviser. Positive and normative statements (Give an
example of each).
3. Draw and explain production possibilities frontier for and economy that produces cars
and computers. Using PPF explain the idea of “efficiency”. Is it possible to increase the
amount of cars without decreasing quantity of computers? Explain.
4. Draw a circular-flow diagram. Identify the parts of the model that correspond to the flow
of goods and services and the flow of dollars for each of the following activities.
a. Selena is paid $2000 by her boss at the end of month.
b. Stuart pays $300 to get a new furniture.
c. Shanna spends $30 to get a haircut.
d. Sally earns $10,000 from her 10 percent owner ship of Acme Industrial.
e. A confectionery firm pay $5000 rent.
5. Explain demand and law of demand. Why does the demand curve slope downward? How
market demand curve is derived from individual demand curve?
6. What are the determinants of demand? What happens to the demand curve when any of
these determinants change? Distinguish between a change in demand and a movement
along a fixed demand curve, noting the cause(s) of each.
7. Explain the law of supply. Why does the supply curve slope upward? How is the market
supply curve derived from the supply curves of individual producers (Explain using
example)?
8. What are the determinants of supply? What happens to the supply curve when any of
these determinants changes? Distinguish between a change in supply and a change in the
quantity supplied, noting the cause(s) of each.
9. Explain the term “market equilibrium”. When does market fail to reach its equilibrium
and what are the results of such disequilibrium?
10. How will each of the following changes in demand and/or supply affect equilibrium price
and equilibrium quantity in a competitive market; that is, do price and quantity rise, fall,
or remain unchanged, or are the answers indeterminate because they depend on the
magnitudes of the shifts? Use supply and demand curves to verify your answers.
 Supply decreases and demand is constant.
 Demand decreases and supply is constant.
 Supply increases and demand is constant.
 Demand increases and supply increases.
 Demand increases and supply is constant.
 Supply increases and demand decreases.
 Demand increases and supply decreases.
 Demand decreases and supply decreases.
11. Suppose the supply curve for wool is given by Qs=P, where Qs is the quantity offered for
sale when the price is P. Also suppose the demand curve for wool is given by Qd =10P+I, where Qd is the quantity of wool demanded when the price is P and the level of
income is I:
a. Suppose the level of income is I=20. Graph the supply and demand relationships, and
indicate the equilibrium levels of price and quantity on your graph.
b. Explain why the market for wool would not be in equilibrium if the price of wool were
18.
c. Suppose income rises from I1=20 to I2=24.
d. Find the impact of the change in income on the equilibrium price and quantity of wool.
12. The demand schedule for hotel rooms is
Price
Quantity demanded
(dollars per night) (millions of rooms per night)
200
100
250
80
400
50
500
40
800
25
a. What happens to total revenue when the price falls from $400 to $250 a night and from
$250 to $200 a night?
b. Is the demand for hotel rooms elastic, inelastic, or unit elastic?
13. Fill in values for each price-quantity combination listed in the following table. What
relationship have you depicted?
P
Q
Price elasticity
Total revenue
$8
2
7
3
6
4
5
5
4
6
3
7
2
8
14. Define the price elasticity, cross price elasticity and income elasticity of demand.
15. List and explain the four determinants of the price elasticity of demand.
16. Explain perfectly elastic, perfectly inelastic and unit elastic demand.
17. Using following example, explain how price elasticity of demand change along linear
demand curve:
18. Price elasticity and Total Revenue. Using numerical example, explain how price change
affect total revenue for elastic, inelastic and unit elastic demand.
19. If a 12 percent rise in the price of orange juice decreases the quantity of orange juice
demanded by 22 percent and increases the quantity of apple juice demanded by 14
percent, calculate the a. Price elasticity of demand for orange juice. b. Cross elasticity of
demand for apple juice with respect to the price of orange juice.
20. If a 5 percent rise in the price of sushi increases the quantity of soy sauce demanded by 2
percent and decreases the quantity of sushi demanded by 1 percent, calculate the a. Price
elasticity of demand for sushi; b. Cross elasticity of demand for soy sauce with respect to
the price of sushi.
21. Price elasticity of supply.
22. What is price ceiling? Using graphical analysis, show how binding price ceiling affect
market efficiency?
23. What is price floor? Using graphical analysis, explain how binding price floor affect
market efficiency?
24. Suppose demand and supply for bread in your town is like in the following table:
Quantity
Quantity
Price of bread
demanded
supplied
(millions)
(millions)
$11
0
15
10
2
12
9
4
9
8
6
6
7
8
3
6
10
0
a) Draw supply and demand curves for bread
b) Show equilibrium price and quantity, producer and consumer surplus on your graph.
c) Suppose, in order to protect buyer, government impose $7 price ceiling on bread.
How producer, consumer and total efficiency will change as a result of this policy?
25. Explain why economists oppose to price controls?
26. Show and explain on graph the identity of tax on buyers and tax on sellers.
27. What is the relationship between elasticity and tax incidence? When does tax burden falls
mainly on buyer; on sellers? Explain.
28. In order to reduce air pollution government decide to decrease the use of gasoline. They
impose a $0.50 tax on each gallon of gasoline sold.
 Should they impose this tax on producers or consumers? Explain carefully using a
supply-and demand diagram.
 If the demand for gasoline were more elastic, would this tax be more effective or
less effective in reducing the quantity of gasoline consumed? Explain with both
words and a diagram.
 Are consumers of gasoline helped or hurt by this tax? Why?
 Are workers in the oil industry helped or hurt by this tax? Why?
29. Draw supply and demand curve for apple in your town. Using your graph show and
explain what is consumer surplus, producer surplus and total market surplus. How price
change affect consumer and producer surpluses? Explain when market reaches its
maximum efficiency (surplus). When does market fail to reach maximum efficiency?
30. You are considering to use cell phone service of one two providers: Provider ABC and
Provider XYZ. First provider has $120 monthly fee regardless of the amounts of phone calls.
Second provider does not charge monthly fee. But you have to pay $1 for each minute of
calls. Your demand for cell phone calls is given by the following formula: Qd=150-50P,
where P is the price of service per minute.
a. What is your cost for an extra phone call with each service provider?
b. How many minutes with each provider you’ll talk?
c. How much will you pay to each provider each month?
d. What is the amount of you consumer surplus with each provider?
e. Which provider will you choose? Why?
31. Using numerical example explain how taxation creates deadweight loss? Show on graph the
effect of taxation on market outcome (market outcome before and after taxation).
32. What is the determinant of deadweight loss from taxation?
33. Using graphs explain how deadweight loss changes when tax rate vary.
34. Supply side economics and Laffer curve.
35. Suppose the price of computers in your country is greater than the price in the world market.
If your country will engage in free trade, how trade will affect total efficiency of your
economy. Who will be winners and losers from trade? Explain your answers using graphical
analysis.
36. Suppose the price of computers in your country is less than the price in the world market. If
your country will engage in free trade, how trade will affect total efficiency of your
economy. Who will be winners and losers from trade? Explain your answers using graphical
analysis.
37. Explain tariff tax. Describe on graph the economic effects of tariff tax.
38. List and explain the arguments for trade restrictions.
39. Consider a country that imports a good from abroad. Explain your answers for each of the
following statements.
 “The greater the elasticity of demand, the greater the gains from trade.”
 “If demand is perfectly inelastic, there are no gains from trade.”
 “If demand is perfectly inelastic, consumers do not benefit from trade.”
40. Explain market equilibrium in the presence of negative externality? How government
provide optimal level of output in the presence of negative externality?
41. Explain market equilibrium in the presence of positive externality? How government provide
optimal level of output in the presence of positive externality?
42. List and explain public policies and private solutions toward externalities.
43. What are the characteristics of public goods? Why private markets fail to provide public
goods? Explain how government solve this problem.
44. What are the characteristics of common resources? How government can solve problems
associated with common resources?
45. Explain the principles of equity: The benefit principle and ability to pay principle. Bring
examples.
46. Explain vertical and horizontal equity. Why it is hard to apply horizontal equity?
47. Explain why tax on luxury goods does not provide equity in the society?
48. Explain the terms total revenue, total cost (explicit and implicit) and profit (normal,
economic and accounting profit).
49. Draw and explain the shape of fixed cost, average fixed cost, Marginal cost, Average
variable cost curves. Explain the relationship between marginal and Average total cost
curves.
50. What are the characteristics of perfectly competitive firm? Explain profit maximization of
perfectly competitive firm using graph.
51. Explain why quantity of output where MC=MR brings maximum profit to the firm? What
should the firm do if MC<MR or MC>MR?
52. Short run and Long run equilibrium in perfectly competitive market. Explain why
competitive firm earn zero economic profit in the long run.
53. Explain competitive firm’s short-run decision to shut down and long-run decision to enter
and exit the market.
54. Why do monopolies arise? (List and explain all of 3 reasons)
55. What are the characteristics of monopoly? Explain how monopoly makes production and
pricing decision.
56. How monopoly’s profit is calculated? Show the profit on graph. Explain how monopoly can
earn profit in the long run.
57. Explain why monopolies cause deadweight loss and show the area of DL on your graph
58. What is price discrimination? Explain how welfare changes after price discrimination? Bring
examples to price discrimination.
59. What kind of public policies against monopolies do you know?
60. The accompanying diagram illustrates your local electricity company’s natural monopoly.
The diagram shows the demand curve for kilowatt-hours (kWh) of electricity, the company’s
marginal revenue (MR) curve, its marginal cost (MC) curve, and its average total cost (ATC)
curve. The government wants to regulate the monopolist by imposing a price ceiling
a) If the government does not regulate this monopolist, which price will it charge? How
much revenue will the company gain if it’ll choose profit maximizing quantity?
b) Illustrate the inefficiency this creates by shading and calculate the deadweight loss
from monopoly.
c) If the government imposes a price ceiling equal to the marginal cost, $0.30, will the
monopolist make profits or lose money? Shade the area of profit (or loss) for the
monopolist. If the government does impose this price ceiling, do you think the firm
will continue to produce in the long run?
61. What are the characteristics of monopolistic competitive firm? What are distinctive and
similar characteristics of monopolistic competitive firm with monopoly and competitive
firms?
62. How do monopolistic competitive firms determine production and pricing? Explain your
answer on graph.
63. Short run equilibrium of monopolistic competitive firm. Using graph, explain how
monopolistic competitive firm incur profit or loss?
64. Long run equilibrium of monopolistic competitive firm. Using graph, explain long run profit
of monopolistic competitive firm.
65. Sparkle is one firm of many in the market for toothpaste, which is in long-run equilibrium.
a) Draw a diagram showing Sparkle’s demand curve, marginal-revenue curve, average-totalcost curve, and marginal-cost curve. Label Sparkle’s profit maximizing output and price.
b) What is Sparkle’s profit? Explain.
c) On your diagram, show the consumer surplus derived from the purchase of Sparkle
toothpaste. Also show the deadweight loss relative to the efficient level of output.
d) If the government forced Sparkle to produce the efficient level of output, what would happen
to the firm? What would happen to Sparkle’s customers?
66. Advertising and Brand names: arguments against and for ads and brand name.
67. Public policies toward oligopolies
68. Price and output determination under collusive oligopoly
69. Price and output determination under non-collusive oligopoly
70. Price and output determination under Price leadership model
71. Explain the kinked demand curve of oligopoly.
72. How quantity of labor is determined for a competitive profit-maximizing firm?
73. The production function and the marginal product of labor. Law of diminishing marginal
product.
74. What causes the labor demand curve to shift? Explain through graph, how shift of the
demand curve change wage and quantity of labor.
75. What causes the labor supply curve to shift? Explain through graph, how shift of the supply
curve change wage and quantity of labor.