VEE Microeconomics Exam Questions With 100% Verified
Solutions | a Updated
1. The function for market demand of smart phones for Answer: A (Having an ex-
a given year is given by the following function: cess supply of 500 smart
phones)
Qsp^D = 1000 - Psp + 0.025I
Qsp^D = 1000 - 500 +
Where Psp is the price of smart phones and I is the 0.025*40,000 = 1500
average consumer's annual income (in $). 2000 - 1500 = 500 excess
supply
Over the past year, 2,000 smart phones have been
produced at a price of $500 apiece. If the average
income is $40,000, the market can most accurately be
described as:
A. Having an excess supply of 500 smart phones
B. Being in equilibrium
C. Having an excess demand of 500 smart phones
2. At market equilibrium, total consumer surplus is most Answer: A (Positive)
likely:
A. Positive
B. Negative
C. Zero
3. The function for market demand of smart phones for Answer: A (0.2)
a given year is given by the following function:
Qsp^D = 1 - 0.001(300) +
Qsp^D = 1 - 0.001Psp + 0.000025I 0.000025(30,000) = 1.45
Qsp^D = 1 - 0.001(500) +
Where Psp is the price of smart phones and I is the 0.000025(30,000) = 1.25
average consumer's annual income. 1.45 - 1.25 = 0.2
Keisha has an annual income of $30,000. If the smart
, VEE Microeconomics Exam Questions With 100% Verified
Solutions | a Updated
phone price increases from $300 to $500, how many
fewer smart phones per year would Keisha purchase?
A. 0.2
B. 0.4
C. 0
D. 0.6
4. The market for personal computers would most accu- Answer: C (Goods market)
rately be considered a:
A. Factor market
B. Intermediate market
C. Goods market
5. The market for labor would most accurately be con- Answer: A (Factor market)
sidered a:
A. Factor market
B. Intermediate market
C. Goods market
6. During which auction do bidders learn the most infor- Answer: A (Ascending
mation about each other's preferences? price)
A. Ascending price
B. Sealed bid
C. Dutch auction
7. Equilibrium stability most typically refers to an equi- Answer: A (Prices change)
librium not changing if:
A. Prices change
, VEE Microeconomics Exam Questions With 100% Verified
Solutions | a Updated
B. The product changes
C. Demand functions change
8. The function for market demand of smart phones for Answer: A (1,750)
a given year is given by the following function:
Qsp^D = 1 - 0.001Psp +
Qsp^D = 1 - 0.001Psp + 0.000025I 0.000025(30,000) = 1.75 -
0.01 Psp
Where Psp is the price of smart phones and I is the => Psp = 1,750 -
average consumer's annual income. 1000Qsp^D
If Keisha has an annual income of $30,000, the vertical
intercept of the demand curve is closest to?
A. 1,750
B. 1,500
C. 1,215
9. Unic Technology is a mainframe computer retailer. In Answer: B (Stable equilib-
an effort to increase profit, Unic increases the price on rium)
their computers by 10%. Unfortunately, their market
analysis was incorrect, and more customers left than
they expected. As a result, Unic decided its best option
was to lower the prices back to the original value.
Upon doing so, all the customers returned.
This situation most accurately represents which eco-
nomic principle:
A. Unstable equilibrium
B. Stable equilibrium
C. Partial equilibrium
, VEE Microeconomics Exam Questions With 100% Verified
Solutions | a Updated
10. The demand curve tends to have what type of slope? Answer: B (Downward)
A. Upward
B. Downward
C. Level
11. What typically happens when there is excess supply? Answer: A (Prices de-
crease)
A. Prices decrease
B. Prices increase
C. Prices remain level
12. Under which of the following auction styles would the Answer: A (I)
highest bidder most likely fall prey to the "winner's
curse" by overpaying for the value of the asset?
I. First price sealed bid
II. Second price sealed bid
A. I
B. II
C. Neither I nor II
13. The market for newspapers is homogeneous (all con- Answer: A (0)
sumers have the same demand function). One of the
consumers, Hector, will purchase 1 newspaper per day
at a price of $0.50, 0.5 newspapers per day at a price
of $0.75 (one paper every other day), 1/7 newspapers
per day at a price of $1.00 (one paper per week), and
0 newspapers per day at a price of $1.25.
With the advancement of electronic media, Nedtandt
has been struggling with revenue. If they have a po-
Solutions | a Updated
1. The function for market demand of smart phones for Answer: A (Having an ex-
a given year is given by the following function: cess supply of 500 smart
phones)
Qsp^D = 1000 - Psp + 0.025I
Qsp^D = 1000 - 500 +
Where Psp is the price of smart phones and I is the 0.025*40,000 = 1500
average consumer's annual income (in $). 2000 - 1500 = 500 excess
supply
Over the past year, 2,000 smart phones have been
produced at a price of $500 apiece. If the average
income is $40,000, the market can most accurately be
described as:
A. Having an excess supply of 500 smart phones
B. Being in equilibrium
C. Having an excess demand of 500 smart phones
2. At market equilibrium, total consumer surplus is most Answer: A (Positive)
likely:
A. Positive
B. Negative
C. Zero
3. The function for market demand of smart phones for Answer: A (0.2)
a given year is given by the following function:
Qsp^D = 1 - 0.001(300) +
Qsp^D = 1 - 0.001Psp + 0.000025I 0.000025(30,000) = 1.45
Qsp^D = 1 - 0.001(500) +
Where Psp is the price of smart phones and I is the 0.000025(30,000) = 1.25
average consumer's annual income. 1.45 - 1.25 = 0.2
Keisha has an annual income of $30,000. If the smart
, VEE Microeconomics Exam Questions With 100% Verified
Solutions | a Updated
phone price increases from $300 to $500, how many
fewer smart phones per year would Keisha purchase?
A. 0.2
B. 0.4
C. 0
D. 0.6
4. The market for personal computers would most accu- Answer: C (Goods market)
rately be considered a:
A. Factor market
B. Intermediate market
C. Goods market
5. The market for labor would most accurately be con- Answer: A (Factor market)
sidered a:
A. Factor market
B. Intermediate market
C. Goods market
6. During which auction do bidders learn the most infor- Answer: A (Ascending
mation about each other's preferences? price)
A. Ascending price
B. Sealed bid
C. Dutch auction
7. Equilibrium stability most typically refers to an equi- Answer: A (Prices change)
librium not changing if:
A. Prices change
, VEE Microeconomics Exam Questions With 100% Verified
Solutions | a Updated
B. The product changes
C. Demand functions change
8. The function for market demand of smart phones for Answer: A (1,750)
a given year is given by the following function:
Qsp^D = 1 - 0.001Psp +
Qsp^D = 1 - 0.001Psp + 0.000025I 0.000025(30,000) = 1.75 -
0.01 Psp
Where Psp is the price of smart phones and I is the => Psp = 1,750 -
average consumer's annual income. 1000Qsp^D
If Keisha has an annual income of $30,000, the vertical
intercept of the demand curve is closest to?
A. 1,750
B. 1,500
C. 1,215
9. Unic Technology is a mainframe computer retailer. In Answer: B (Stable equilib-
an effort to increase profit, Unic increases the price on rium)
their computers by 10%. Unfortunately, their market
analysis was incorrect, and more customers left than
they expected. As a result, Unic decided its best option
was to lower the prices back to the original value.
Upon doing so, all the customers returned.
This situation most accurately represents which eco-
nomic principle:
A. Unstable equilibrium
B. Stable equilibrium
C. Partial equilibrium
, VEE Microeconomics Exam Questions With 100% Verified
Solutions | a Updated
10. The demand curve tends to have what type of slope? Answer: B (Downward)
A. Upward
B. Downward
C. Level
11. What typically happens when there is excess supply? Answer: A (Prices de-
crease)
A. Prices decrease
B. Prices increase
C. Prices remain level
12. Under which of the following auction styles would the Answer: A (I)
highest bidder most likely fall prey to the "winner's
curse" by overpaying for the value of the asset?
I. First price sealed bid
II. Second price sealed bid
A. I
B. II
C. Neither I nor II
13. The market for newspapers is homogeneous (all con- Answer: A (0)
sumers have the same demand function). One of the
consumers, Hector, will purchase 1 newspaper per day
at a price of $0.50, 0.5 newspapers per day at a price
of $0.75 (one paper every other day), 1/7 newspapers
per day at a price of $1.00 (one paper per week), and
0 newspapers per day at a price of $1.25.
With the advancement of electronic media, Nedtandt
has been struggling with revenue. If they have a po-
