The CLEP: Principles of Microeconomics examination was developed by the College Board as a way for individuals to demonstrate undergraduate-level knowledge and skills in this area. Almost three thousand American colleges give credit to students who pass a CLEP exam; for this reason, many college-bound students take a CLEP exam in order to skip over introductory courses.
To succeed on the Principles of Microeconomics exam, students will need to master the following topics and skills: significant economic terms and concepts; interpretation and manipulation of economic graphs; interpretation and evaluation of economic data; and the application of simple economic models. The content of the exam is broken down as follows: basic economic concepts (8-14% of the exam); supply and demand (15-20%); theory of consumer choice (5-10%); production and costs (10-15%); firm behavior and market structure (25-35%); factor markets (10-18%); and market failure and the role of government (12-18%). The Principles of Microeconomics exam consists of 80 multiple-choice questions and must be completed within 90 minutes.
After the exam is complete, an unofficial score report will be made available. This score report will include the total score on a scale of 20 to 80; the American Council on Education recommends that students get credit if they score 50 or above. The total score is the raw score (number of correct answers) adjusted according to the difficulty of the exam version. The College Board does not distinguish between unanswered questions and questions answered incorrectly, so test-takers are encouraged to respond to every question. Some of the questions on the exam are pre-test questions, which are used to develop future versions of the exam and do not contribute to the raw score. It is impossible for test-takers to determine which questions are pre-test questions. The CLEP exams are administered in both computer and paper formats at over a thousand locations throughout the world. To register for an exam, visit the College Board website.
CLEP Principles Of Microeconomics Practice Questions
1. On a production possibilities curve, what will be the result of rapid technological advances in the production of one good?
A: an inward shift along both the horizontal and vertical axes
B: an outward shift along the horizontal axis
C: an outward shift along the horizontal axis, and an inward shift along the vertical axis
D: an outward shift along the vertical axis
E: an outward shift along both the horizontal and vertical axes
2. What will be the result of an excessive demand on soybeans?
A: the supply of soybeans will increase quickly
B: the demand for soybeans will decrease quickly
C: the price of soybeans will decrease
D: the price of soybeans will increase
E: the price of soybeans will stay the same
3. What is price discrimination based on?
A: differences in income among consumer groups
B: differences in nominal GDP
C: differences in marginal utility
D: differences in opportunity cost
E: differences in price elasticities of demand among consumer groups
4. If demand is perfectly inelastic, what is the price elasticity of demand?
5. When a minimum price is set, the result will most likely be a surplus for whom?
B: consumer and producer
E: consumer and middlemen
6. What is the root cause of trade?
A: opportunity cost
B: comparative advantage
C: marginal utility
D: nominal utility
7. According to the reality principle, what is the most important aspect of money?
B: nominal value
C: marginal utility
D: purchasing power
E: comparative advantage
8. Josh and his father go to an all-you-can-eat pizza parlor. They find that each piece of pizza is less satisfying than the last. What economic principle does this scenario illustrate?
A: law of diminishing marginal utility
B: increasing opportunity cost
C: law of disappearing satisfaction
D: law of transient advantage
E: law of diminishing comparative advantage
9. What is the name of the extra cost created by a small increase in an activity?
A: nominal cost
B: marginal cost
C: opportunity cost
D: diminishing returns
E: real cost
10. Real salaries have increased while nominal salaries have remained the same. What can be inferred?
A: prices have risen
B: prices have remained stagnant
C: prices have fallen
D: unemployment has decreased
E: the Federal Reserve has purchased securities
CLEP Principles Of Microeconomics Answer Key
1. E. A production possibilities curve is used to demonstrate the most effective quantities of production for two goods.
2. D. When excessive demand exists, sellers will immediately raise the price.
3. E. These differences in price elasticity of demand will lead to differences in profits.
4. C. A prize elasticity of demand of zero indicates perfect inelasticity.
5. B. A minimum price is also known as a price floor.
6. B. Comparative advantage is the ability to produce a good with a lower opportunity cost than a competitor.
7. D. The reality principle of microeconomics is concerned with the actual utility of money.
8. A. The law of diminishing marginal utility states that consumption and satisfaction are inversely proportional.
9. B. As the scale of the activity increases, marginal cost typically declines.
10. C. When real salaries increased as nominal salaries remain the same, the purchasing power of money has increased.