This study guide prepares you for the Final Examination you complete in the last week of the course. It contains practice questions, which are related to each week’s objectives. Highlight the correct response, and then refer to the answer key at the end of this Study Guide to check your answers.
Use each week’s questions as a self-test at the start of a new week to reflect on the previous week’s concepts. When you come across concepts that you are unfamiliar with, refer to the Student Guide for that particular week.
Week One: Fundamentals of Microeconomics
Objective: Differentiate between macroeconomics and microeconomics.
1. Macroeconomics is
a. the study of individual choice and how that choice is influenced by economic forces
b. the study of the pricing policies of firms and the purchasing decisions of households
c. the study of aggregate economic relationships
d. an analysis of economic reality that proceeds from the parts to the whole
2. The invisible hand theorem comes from
d. political science
Objective: Analyze the effect of changes in supply and demand on the equilibrium price and quantity.
3. The law of demand states that the quantity demanded of a good is inversely related to the price of that good. Therefore, as the price of a good goes
a. up, the quantity demanded goes up
b. up, the quantity demanded goes down
c. down, the quantity demanded goes down
d. down, the quantity demanded stays the same
4. Which of the following situations best demonstrates the law of demand?
a. Moviegoers react to an increase in the price of a ticket by seeing fewer movies per year.
b. Moviegoers see fewer movies per year due to an overall decrease in the quality of newly released motion pictures.
c. A drought causes a decrease in the availability of pumpkins, resulting in fewer jack-o-lanterns displayed on Halloween.
d. An increase in the