Multiple Choice Questions

This guide organizes advice from past students who got 4s and 5s on their exams. We hope it gives you some new ideas and tools for your study sessions. But remember, everyone's different—what works for one student might not work for you. If you've got a study method that's doing the trick, stick with it. Think of this as extra help, not a must-do overhaul.

📌 Overview

• Students are to define and identify economic principles and models, explain given economic outcomes, and determine the outcomes of specific economic situations.
• 67% of Exam Score
• 60 questions
• 70 min, or 1 min 10 sec per question

💭 General Advice

Tips on mindset, strategy, structure, time management, and any other high-level things to know

• Graphing different economic scenarios can help you understand what a question is asking you. If you have doubts about the question, create a visual for yourself!
• Models are a very big part of Microeconomics, and there are a lot of them. Make sure you understand how each model works and how to draw one.
• Create mnemonic devices to remember economic principles.
• Don’t let numbers overwhelm you. Your first goal should be to understand the underlying concepts behind Microeconomic situations. Math will be easier if you understand why things are happening the way they are.
• Using abbreviations for vocabulary can save you time. For example, you can write marginal benefit as “MB.”

🫧 Before you Bubble

What should a student do in the first few minutes, before they start answering?

• Try to answer the question yourself without looking at the answer choices.
• Make sure you understand what the question is asking. For example, a monopoly and a natural monopoly are not the same thing so don’t confuse them with each other.
• Please, please double check. Some of the questions are designed to trick you by presenting answers of different questions with the same information, so make sure you understand the question.
• Be sure to bubble the questions by batches. Answer 5 questions and then bubble them in rather than flipping to the bubbling sheet every question. This saves time and keeps your focus on the concepts.

🧠 Understanding the Sources

• Make sure you understand the differences between total, average, and marginal. You should also know how to solve for each.
• Create a study guide for each of the different types of markets (e.g. perfectly competitive, monopoly, oligopoly, monopolistic competition, etc).
  • You should include what their graphs look like, market entry barriers, limitations, examples of markets.
• Understand the variances between short-run markets and long-run markets.
  • What do graphs look like in short-run vs. long-run?
  • What changes to a market might be necessary to achieve short-run or long-run goals?
• Review the different price elasticities. Don’t forget that the slopes for the demand and supply curves can be misleading, so always calculate the elasticities using their formulas.
• Please remember the graphs. Graphs and mapping them to concepts are so important - missing that is like missing water in a water bottle; everything else is useless. Understand how each graph world in relation to each other, how each concept works in relation to the other. Knowing that will greatly impact how you deal with questions, especially curveball questions where you might not be too strong with.

🤔 Choosing the Best Answer

• There is almost always an answer that is obviously wrong in the multiple choice section. Use this to narrow down answers if you aren’t sure about a question.
• If you don’t know the answer, use the process of elimination. The solution is either right or wrong - no in between.

🔝 Most Commonly Tested Topics

• Definitions, definitions, definitions. Know your definitions! This is extremely important. There are a lot of terms/phrases that have similar names but are very different! At a fundamental level, it’s important to make sure that you understand what the question is asking and what the answer choices mean.
• They are most likely going to begin with questions related to scarcity, opportunity cost, and the production possibilities curve. You should be able to list all of the factors of production.
• You should be ready to explain all things market failures. A lot of the models you study are not perfect, so questions may ask you about things like externalities, public goods, asymmetric information, income inequality, etc.
• You should know how to address market surpluses and shortages, whether it be graphing a solution or explaining one. Related topics include price floors, price ceilings, taxation, subsidization, etc.
• Review absolute vs. comparative advantage, and why firms may choose to produce one good over another. This includes accounting for opportunity costs.
• Know how to calculate different types of costs, such as total cost, variable cost, and fixed cost. You should also be familiar with calculating revenue and profit
  • Two types of profit exist–accounting profit and economic profit. You may be asked to calculate each of them and/or explain their differences.