,TESTBANK for Intermediate Microeconomics and
Its Application, 13th Edition Walter Nicholson
Notes
1- The file is chapter after chapter.
2- We have shown you 10 or five pages.
3- The file contains all Appendix and Excel
sheet if it exists.
4- We have all what you need, we make
update at every time. There are many new
editions waiting you.
5- If you think you purchased the wrong file
You can contact us at every time, we can
replace it with true one.
Our email:
,Name: Class: Date:
Ch 1 Two Basic Economic Models
1. The problem of scarcity
a. arises only in poor countries.
b. exists because the price of goods is too high.
c. exists because of limited resources.
d. will eventually be solved by better planning.
ANSWER: c
2. If society is producing a combination of goods on its production possibility frontier,
a. it must be employing all available resources.
b. it must be growing.
c. it is using all the available natural resources but may not be using all available labor resources.
d. it must be producing a combination of goods people want.
ANSWER: a
3. The slope of the production possibility frontier shows
a. how inputs must be changed to keep them fully employed.
b. the technically efficient combinations of the two goods.
c. how demanders are willing to trade one good for another.
d. the opportunity cost of one good in terms of the other.
ANSWER: d
4. An increase in the technology used in the production of only one of the two goods in a society will
a. eliminate scarcity.
b. move the production possibility frontier out in all directions.
c. move the production possibility frontier in all directions.
d. leave one intercept of the production possibility frontier fixed and swing out from the other.
ANSWER: d
5. A typical production possibility frontier is
a. convex because opportunity costs are increasing.
b. convex because opportunity costs are decreasing.
c. concave because opportunity costs are increasing.
d. concave because opportunity costs are decreasing.
ANSWER: c
6. If the prevailing price of shirts is $10 and at this price demanders demand 100 shirts while suppliers are willing to
supply 110 shirts, there is
a. a shortage at the $10 price.
b. a surplus at the $10 price.
c. an equilibrium in this market.
d. a shortage if price were to rise above $10.
ANSWER: b
7. The Ricardian notion of diminishing returns implies that
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Ch 1 Two Basic Economic Models
a. as more input is used more output will be made.
b. as more input is used less output will be made.
c. as more input is used the increase in output will increase.
d. as more input is used the increase in output will decrease.
ANSWER: d
Figure 1-1
In the following figure, demand has shifted outward from D to D' and price has risen from P* to P**.
8. Refer to Figure 1-1. According to the original demand curve (D), how much will be demanded at the new price of
P**?
a. More than Q**
b. Between Q* and Q**
c. Less than Q*
d. An answer cannot be determined from the graph.
ANSWER: c
9. Refer to Figure 1-1. At the old price (P*), how much will be demanded according to the demand curve D'?
a. More than Q**
b. Between Q* and Q**
c. Less than Q*
d. An answer cannot be determined from the graph.
ANSWER: a
10. Refer to Figure 1-1. If price had stayed at P* when demand shifted outward from D to D', there would have been
a. a surplus of Q** – Q*,
b. a shortage of Q** – Q*,
c. a surplus of more than Q** – Q*,
d. a shortage of more than Q** – Q*.
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Ch 1 Two Basic Economic Models
ANSWER: d
Figure 1-2
In the following figure, supply has shifted inward from S to S', causing price to rise from P* to P**.
11. Refer to Figure 1-2. If price had remained at P*, what quantity would have been supplied according to the new
supply curve?
a. More than Q*
b. Between Q* and Q**
c. Less than Q*
d. The amount cannot be determined from the graph.
ANSWER: c
12. Refer to Figure 1-2. If price had remained at P* when supply shifted inward from S to S', there would have been
a. a surplus of Q* – Q**.
b. a shortage Q* – Q**.
c. a shortage of less than Q* – Q**.
d. a shortage of more than Q* – Q**.
ANSWER: d
13. The reason a honeybee does not extract the last drop of nectar from a flower is because
a. the marginal costs of extraction are rising.
b. the bee cannot find the nectar.
c. the last drop does not have as much potential honey in it.
d. the bee may be trapped inside the flower.
ANSWER: a
14. The person generally considered to be the first true economist was
a. John Stuart Mill.
b. Plato.
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Ch 1 Two Basic Economic Models
c. Augustin Cournot.
d. Adam Smith.
ANSWER: d
15. Positive economic analysis
a. involves the study of firms with positive profits.
b. involves how resources are actually used in an economy.
c. involves judgments on how resources should be used in an economy.
d. is usually thought to be a waste of time.
ANSWER: b
16. Normative economic analysis
a. involves the study of what comprises a normal firm.
b. involves how resources are actually used in an economy.
c. involves judgments on how resources should be used in an economy.
d. is usually thought to be a waste of time.
ANSWER: c
17. A major problem that may occur with models that predict the values of economic variables in the future is that
a. researchers are pessimistic about the future.
b. the model may fail to acknowledge that economic actors will change their behavior in response to changing
situations.
c. the model may make predictions that conflict with widely held opinions.
d. no one cares about these predictions.
ANSWER: b
18. Economists typically use ____ analysis, whereas moral philosophers typically use ____ analysis.
a. positive; positive
b. normative; normative
c. positive; normative
d. normative; positive
ANSWER: c
19. All of the following are important difficulties in trying to verify an economic model by testing its assumptions except:
a. People may disagree about the assumptions.
b. Data on the assumptions may be difficult to interpret.
c. The assumptions may be simple.
d. Real world data may be consistent with many different assumptions.
ANSWER: c
20. Milton Friedman's "pool player analogy" is useful in explaining the role of economic models because
a. studying economics is like playing pool.
b. a theoretical model of pool playing may predict the player's shots.
c. pool, like economics, is subject to uncertainties.
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Ch 1 Two Basic Economic Models
d. pool players, like firms, seek maximum profits.
ANSWER: b
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Ch 2 Some Useful Math
1. In the equation Y = 13X + 38, where Y is a function of X,
a. Y is the independent variable.
b. 38 is a variable.
c. the slope of the line is 38.
d. 38 is a constant.
ANSWER: d
2. The Y-intercept of Y = 3X + 8 is
a. 3/8.
b. 3.
c. 8.
d. –8/3.
ANSWER: c
3. The X-intercept of Y = 4X + 12 is
a. −3.
b. 3.
c. −1/3
d. 12.
ANSWER: a
4. If the vertical intercept of a linear function increases while the slope remains unchanged,
a. the graph must shift down in a parallel way.
b. the graph must rotate to the left about the horizontal intercept.
c. the graph must shift up in a parallel way.
d. the graph remains unchanged.
ANSWER: c
5. If the slope of a linear function changes with no change in the vertical intercept,
a. the graph shifts either up or down in a parallel way.
b. the graph remains unchanged.
c. the graph rotates about its horizontal intercept.
d. the graph rotates about its vertical intercept.
ANSWER: d
Scenario 2-1
Consider the linear equation Y = 3X – 7.
6. Refer to Scenario 2-1. If one wished to shift this line by changing its Y-intercept so that the new line passes through
the point X = 5, Y = 10, the Y-intercept would need to be changed to
a. 5.
b. –5.
c. –10.
d. –25.
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ANSWER: b
7. Refer to Scenario 2-1. If one wished to change the slope, but not the Y-intercept, of this equation so that the new line
passes through the point X = 2, Y = 3, the slope would need to be changed from 3 to
a. 1.
b. 2.
c. 4.
d. 5.
ANSWER: d
Scenario 2-2
Suppose the demand for party cakes is given by Q = 10P – 3, where P is measured in dollars per cake and Q is measured
in cakes sold per week.
8. Refer to Scenario 2-2. How would this equation change if P were measured in cents?
a. The Q-intercept would not change, and the slope would change to 1,000.
b. The Q-intercept would not change, and the slope would change to 0.1.
c. The slope would not change, and the Q-intercept would change to –300.
d. The slope would not change, and the Q-intercept would change to –0.03.
ANSWER: b
9. Refer to Scenario 2-2. How would this equation change if Q were instead measured in slices of cake and each cake
contains 10 slices?
a. The Q-intercept would not change, but the slope would change from 10 to 100.
b. The slope would not change, but the Q-intercept would change to –30.
c. The slope would change from 10 to 100, and the Q-intercept would change to –30.
d. The slope would change from 10 to 1, and the Q-intercept would change to –0.3.
ANSWER: c
10. The slope of a nonlinear function at a particular point
a. is the slope of the straight line that is tangent to the function at that point.
b. is the slope of the straight line connecting the origin and the point.
c. cannot be determined.
d. is constant for the entire function.
ANSWER: a
Scenario 2-3
Suppose T = 0.02I α, where T represents taxes owed and I represents income.
11. Refer to Scenario 2-3. If taxes are progressive, which of the following is true?
a. α > 1
b. 0 < α < 1
c. α = 1
d. α = 0
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ANSWER: a
12. Refer to Scenario 2-3. If taxes are regressive which of the following is true?
a. α > 1
b. 0 < α < 1
c. α = 1
d. α = 0
ANSWER: b
13. Refer to Scenario 2-3. If taxes are proportional which of the following is true?
a. α > 1
b. 0 < α < 1
c. α = 1
d. α = 0
ANSWER: c
14. Given Y = f (X, Z) which of the following are necessarily true?
a. Y is a linear function.
b. X, Z are dependent variables.
c. A contour line of this function would keep Y constant.
d. An increase in X would increase Y.
ANSWER: c
15. For the function Y = XZ, the equation XZ = 10 represents
a. the X-intercept.
b. the Y-intercept.
c. a contour line.
d. a tangent line.
ANSWER: c
16. For the equation Y = X2 + Z2, which of the following points lie on the Y = 25 contour line?
a. X = 2, Z = 4
b. X = 3, Z = 5
c. X = 4, Z = 3
d. X = 3, Z = 3
ANSWER: c
17. For the equation Y = X1/2Z1/2, the point X = 20, Z = 5
a. yields a value of Y = 10.
b. lies above the contour line that includes the point X = 15, Z = 7.
c. lies on the same contour line as the point X = 12, Z = 6.
d. lies below the contour line that includes the point X = 9, Z = 10.
ANSWER: a
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Its Application, 13th Edition Walter Nicholson
Notes
1- The file is chapter after chapter.
2- We have shown you 10 or five pages.
3- The file contains all Appendix and Excel
sheet if it exists.
4- We have all what you need, we make
update at every time. There are many new
editions waiting you.
5- If you think you purchased the wrong file
You can contact us at every time, we can
replace it with true one.
Our email:
,Name: Class: Date:
Ch 1 Two Basic Economic Models
1. The problem of scarcity
a. arises only in poor countries.
b. exists because the price of goods is too high.
c. exists because of limited resources.
d. will eventually be solved by better planning.
ANSWER: c
2. If society is producing a combination of goods on its production possibility frontier,
a. it must be employing all available resources.
b. it must be growing.
c. it is using all the available natural resources but may not be using all available labor resources.
d. it must be producing a combination of goods people want.
ANSWER: a
3. The slope of the production possibility frontier shows
a. how inputs must be changed to keep them fully employed.
b. the technically efficient combinations of the two goods.
c. how demanders are willing to trade one good for another.
d. the opportunity cost of one good in terms of the other.
ANSWER: d
4. An increase in the technology used in the production of only one of the two goods in a society will
a. eliminate scarcity.
b. move the production possibility frontier out in all directions.
c. move the production possibility frontier in all directions.
d. leave one intercept of the production possibility frontier fixed and swing out from the other.
ANSWER: d
5. A typical production possibility frontier is
a. convex because opportunity costs are increasing.
b. convex because opportunity costs are decreasing.
c. concave because opportunity costs are increasing.
d. concave because opportunity costs are decreasing.
ANSWER: c
6. If the prevailing price of shirts is $10 and at this price demanders demand 100 shirts while suppliers are willing to
supply 110 shirts, there is
a. a shortage at the $10 price.
b. a surplus at the $10 price.
c. an equilibrium in this market.
d. a shortage if price were to rise above $10.
ANSWER: b
7. The Ricardian notion of diminishing returns implies that
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,Name: Class: Date:
Ch 1 Two Basic Economic Models
a. as more input is used more output will be made.
b. as more input is used less output will be made.
c. as more input is used the increase in output will increase.
d. as more input is used the increase in output will decrease.
ANSWER: d
Figure 1-1
In the following figure, demand has shifted outward from D to D' and price has risen from P* to P**.
8. Refer to Figure 1-1. According to the original demand curve (D), how much will be demanded at the new price of
P**?
a. More than Q**
b. Between Q* and Q**
c. Less than Q*
d. An answer cannot be determined from the graph.
ANSWER: c
9. Refer to Figure 1-1. At the old price (P*), how much will be demanded according to the demand curve D'?
a. More than Q**
b. Between Q* and Q**
c. Less than Q*
d. An answer cannot be determined from the graph.
ANSWER: a
10. Refer to Figure 1-1. If price had stayed at P* when demand shifted outward from D to D', there would have been
a. a surplus of Q** – Q*,
b. a shortage of Q** – Q*,
c. a surplus of more than Q** – Q*,
d. a shortage of more than Q** – Q*.
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ANSWER: d
Figure 1-2
In the following figure, supply has shifted inward from S to S', causing price to rise from P* to P**.
11. Refer to Figure 1-2. If price had remained at P*, what quantity would have been supplied according to the new
supply curve?
a. More than Q*
b. Between Q* and Q**
c. Less than Q*
d. The amount cannot be determined from the graph.
ANSWER: c
12. Refer to Figure 1-2. If price had remained at P* when supply shifted inward from S to S', there would have been
a. a surplus of Q* – Q**.
b. a shortage Q* – Q**.
c. a shortage of less than Q* – Q**.
d. a shortage of more than Q* – Q**.
ANSWER: d
13. The reason a honeybee does not extract the last drop of nectar from a flower is because
a. the marginal costs of extraction are rising.
b. the bee cannot find the nectar.
c. the last drop does not have as much potential honey in it.
d. the bee may be trapped inside the flower.
ANSWER: a
14. The person generally considered to be the first true economist was
a. John Stuart Mill.
b. Plato.
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Ch 1 Two Basic Economic Models
c. Augustin Cournot.
d. Adam Smith.
ANSWER: d
15. Positive economic analysis
a. involves the study of firms with positive profits.
b. involves how resources are actually used in an economy.
c. involves judgments on how resources should be used in an economy.
d. is usually thought to be a waste of time.
ANSWER: b
16. Normative economic analysis
a. involves the study of what comprises a normal firm.
b. involves how resources are actually used in an economy.
c. involves judgments on how resources should be used in an economy.
d. is usually thought to be a waste of time.
ANSWER: c
17. A major problem that may occur with models that predict the values of economic variables in the future is that
a. researchers are pessimistic about the future.
b. the model may fail to acknowledge that economic actors will change their behavior in response to changing
situations.
c. the model may make predictions that conflict with widely held opinions.
d. no one cares about these predictions.
ANSWER: b
18. Economists typically use ____ analysis, whereas moral philosophers typically use ____ analysis.
a. positive; positive
b. normative; normative
c. positive; normative
d. normative; positive
ANSWER: c
19. All of the following are important difficulties in trying to verify an economic model by testing its assumptions except:
a. People may disagree about the assumptions.
b. Data on the assumptions may be difficult to interpret.
c. The assumptions may be simple.
d. Real world data may be consistent with many different assumptions.
ANSWER: c
20. Milton Friedman's "pool player analogy" is useful in explaining the role of economic models because
a. studying economics is like playing pool.
b. a theoretical model of pool playing may predict the player's shots.
c. pool, like economics, is subject to uncertainties.
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d. pool players, like firms, seek maximum profits.
ANSWER: b
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,Name: Class: Date:
Ch 2 Some Useful Math
1. In the equation Y = 13X + 38, where Y is a function of X,
a. Y is the independent variable.
b. 38 is a variable.
c. the slope of the line is 38.
d. 38 is a constant.
ANSWER: d
2. The Y-intercept of Y = 3X + 8 is
a. 3/8.
b. 3.
c. 8.
d. –8/3.
ANSWER: c
3. The X-intercept of Y = 4X + 12 is
a. −3.
b. 3.
c. −1/3
d. 12.
ANSWER: a
4. If the vertical intercept of a linear function increases while the slope remains unchanged,
a. the graph must shift down in a parallel way.
b. the graph must rotate to the left about the horizontal intercept.
c. the graph must shift up in a parallel way.
d. the graph remains unchanged.
ANSWER: c
5. If the slope of a linear function changes with no change in the vertical intercept,
a. the graph shifts either up or down in a parallel way.
b. the graph remains unchanged.
c. the graph rotates about its horizontal intercept.
d. the graph rotates about its vertical intercept.
ANSWER: d
Scenario 2-1
Consider the linear equation Y = 3X – 7.
6. Refer to Scenario 2-1. If one wished to shift this line by changing its Y-intercept so that the new line passes through
the point X = 5, Y = 10, the Y-intercept would need to be changed to
a. 5.
b. –5.
c. –10.
d. –25.
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Ch 2 Some Useful Math
ANSWER: b
7. Refer to Scenario 2-1. If one wished to change the slope, but not the Y-intercept, of this equation so that the new line
passes through the point X = 2, Y = 3, the slope would need to be changed from 3 to
a. 1.
b. 2.
c. 4.
d. 5.
ANSWER: d
Scenario 2-2
Suppose the demand for party cakes is given by Q = 10P – 3, where P is measured in dollars per cake and Q is measured
in cakes sold per week.
8. Refer to Scenario 2-2. How would this equation change if P were measured in cents?
a. The Q-intercept would not change, and the slope would change to 1,000.
b. The Q-intercept would not change, and the slope would change to 0.1.
c. The slope would not change, and the Q-intercept would change to –300.
d. The slope would not change, and the Q-intercept would change to –0.03.
ANSWER: b
9. Refer to Scenario 2-2. How would this equation change if Q were instead measured in slices of cake and each cake
contains 10 slices?
a. The Q-intercept would not change, but the slope would change from 10 to 100.
b. The slope would not change, but the Q-intercept would change to –30.
c. The slope would change from 10 to 100, and the Q-intercept would change to –30.
d. The slope would change from 10 to 1, and the Q-intercept would change to –0.3.
ANSWER: c
10. The slope of a nonlinear function at a particular point
a. is the slope of the straight line that is tangent to the function at that point.
b. is the slope of the straight line connecting the origin and the point.
c. cannot be determined.
d. is constant for the entire function.
ANSWER: a
Scenario 2-3
Suppose T = 0.02I α, where T represents taxes owed and I represents income.
11. Refer to Scenario 2-3. If taxes are progressive, which of the following is true?
a. α > 1
b. 0 < α < 1
c. α = 1
d. α = 0
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ANSWER: a
12. Refer to Scenario 2-3. If taxes are regressive which of the following is true?
a. α > 1
b. 0 < α < 1
c. α = 1
d. α = 0
ANSWER: b
13. Refer to Scenario 2-3. If taxes are proportional which of the following is true?
a. α > 1
b. 0 < α < 1
c. α = 1
d. α = 0
ANSWER: c
14. Given Y = f (X, Z) which of the following are necessarily true?
a. Y is a linear function.
b. X, Z are dependent variables.
c. A contour line of this function would keep Y constant.
d. An increase in X would increase Y.
ANSWER: c
15. For the function Y = XZ, the equation XZ = 10 represents
a. the X-intercept.
b. the Y-intercept.
c. a contour line.
d. a tangent line.
ANSWER: c
16. For the equation Y = X2 + Z2, which of the following points lie on the Y = 25 contour line?
a. X = 2, Z = 4
b. X = 3, Z = 5
c. X = 4, Z = 3
d. X = 3, Z = 3
ANSWER: c
17. For the equation Y = X1/2Z1/2, the point X = 20, Z = 5
a. yields a value of Y = 10.
b. lies above the contour line that includes the point X = 15, Z = 7.
c. lies on the same contour line as the point X = 12, Z = 6.
d. lies below the contour line that includes the point X = 9, Z = 10.
ANSWER: a
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