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Microeconomics Practice Questions for the Final
Solutions
A. Multiple Choice
1. Assume that you derive $20 worth of benefits from playing a game for 1 hour and $35
from playing for 2 hours and so forth as shown below. The price for each hour of play is
$7.
Hours Total Benefits Total costs
1 20 7
2 35 14
3 45 21
4 50 28
For how many hours would you play the game?
A. 1
B. 2
C. 3 (The benefit from 4th hour is $5 whereas price is $7)
D. 4
2. In the example of Q1, if your parents restrict you to play the game for only 1 hour, what is
the deadweight loss caused by this restriction?
A. 8
B. 3
C. 11 (The loss from 2nd hour = 15 – 7 and third hour = 10 – 7)
D. 13
3. A medical clinic has 10 workers. Each worker can produce a maximum of either 2 units of
medical services or 5 units of secretarial services a day. One day, the firm decides it would
like to produce 10 units of medical services and 30 units of secretarial services. This output
level is
A. Attainable if the firm reduces the number of its workers.
B. Efficient.
C. Unattainable. (10 med services need 5 workers; the remaining 5 workers can produce
25 secretarial services)
D. Inefficient.
4. The price of tomatoes at a local market will fall because of the following event
A. A hailstorm that destroys one half of the tomatoes just ready for harvest.
B. A news report of one medical study suggesting tomatoes cure certain illnesses.
C. A summer of prime tomato-growing weather resulting in a large harvest of tomatoes.
D. A strike by farm workers resulting in higher wages for harvesting tomatoes.
