CLEP Microeconomics | CollegePlus

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1. Gordon can produce either 6 birdhouses and 3 porch swings in an hour or 3 birdhouses and 4 porch swings in an hour. What is Gordon’s opportunity cost of a birdhouse?
An hour of time
1/5 of a porch swing
1/3 of a porch swing
1 porch swing
3 porch swings

2. Using equal amounts of resources, Oz can produce either 30 tons of yellow bricks or 10 tons of emerald bricks, and Munchkinland can produce either 10 tons of yellow bricks or 6 tons of emerald bricks. Which of the following relationships is consistent with the information above?
Oz has a comparative advantage in the production of yellow bricks while Munchkinland has a comparative advantage in the production of emerald bricks
Oz has a comparative advantage in the production of emerald bricks while Munchkinland has a comparative advantage in the production of yellow bricks
Oz has an absolute advantage in the production of yellow bricks while Munchkinland has an absolute advantage in the production of emerald bricks
Oz has an absolute advantage in the production of emerald bricks while Munchkinland has an absolute advantage in the production of yellow bricks
Oz has a comparative disadvantage in the production of yellow bricks while Munchkinland has a comparative disadvantage in the production of emerald bricks

3. Consider the following illustration. Producer surplus would be defined as:

EGC
EFC
ECA
DCA
CGB

4. Determine from the table below how many units a monopoly would produce to maximize its profit:

1
2
3
4
5

5. At which point on this graph would a firm need to consider temporarily shutting down?

A
B
C
D
E

6. Suppose the price of bicycle frames increases. In the market for bicycles, we should expect what effect?
The demand curve will shift to the left, and the price of bicycles will increase.
The demand curve will shift to the left, and the price of bicycles will decrease.
The supply curve will shift upwards, and the price of bicycles will decrease.
The supply curve will shift upwards, and the price of bicycles will increase.
The supply and demand curves will remain unchanged, and the price of bicycles will increase.

7. What is the marginal cost of producing the fifth unit of output?

$55
$37
$11
$7
$6

8. The local newspaper hires additional labor such that the MRC of the last worker is $32 and the MRP is $48. Based on this information, we can say that:
Hiring additional workers will increase profits
Hiring fewer workers will increase profits
The Daily Times is maximizing profits
Marginal revenue product must exceed average revenue product
The Daily Times is operating below minimum AVC

9. Consider a perfectly competitive market. If the firms in this market were to form a cartel, what would happen to the market price and quantity?
The price would increase, and quantity would not change.
The price would increase, and quantity would decrease.
The price would increase, and quantity would increase.
The price would decrease, and quantity would increase.
The price would decrease, and quantity would decrease.

10. What concept assumes the following notion: "Employers can get greater effort from workers by paying them a relatively high, above-equilibrium wage"?
Profit sharing
Efficiency wages
Piece rate wages
Bonus or commissions
Inflated wages