Goods X and Y are complements while goods X and Z are substitutes. If the supply of good X increases:
Select correct option:
The demand for both Y and Z will increase
The demand for Y will increase while the demand for Z will decrease
The demand for Y will decrease while the demand for Z will increase
The demand for both Y and Z will decrease
A normative economic statement:
Select correct option:
Is a statement of fact.
Is a hypothesis used to test economic theory.
Is a statement of what ought to be, not what is.
Is a statement of what will occur if certain assumptions are true.
when the price of petrol rises 10%, the quantity of petrol purchased falls by 8%. The demand for petrol is:
Select correct option:
Perfectly elastic
Unit elastic
Elastic
Inelastic
The law of diminishing marginal utility states:
Select correct option:
The supply curve slopes upward.
Your utility grows at a slower and slower rate as you consume more and more units of a good.
The elasticity of demand is infinite.
None of the given options.
Assume Leisure is a normal good. If income effect equals substitution effect then a wage rate increase will lead a person to:
Select correct option:
Increase hours of work
Decrease hours of work
Not change hours of work
None of the given options
The burden of a tax is shifted toward buyers if:
Select correct option:
Demand is perfectly elastic.
Demand is relatively more elastic than supply.
Demand is relatively more inelastic than supply.
Demand and supply have equal elasticities.
Assume that the government sets a ceiling on the interest rate that banks charge on loans. If the ceiling is set below the market equilibrium interest rate, the result will be:
Select correct option:
A surplus of credit.
A shortage of credit.
Greater profits for banks issuing credit.
A perfectly inelastic supply of credit in the market place.
You observe that the price of houses and the number of houses purchased both rise over the course of the year. You conclude that:
Select correct option:
The demand for houses has increased
The demand curve for houses must be upward-sloping
The supply of houses has increased
Housing construction costs must be decreasing
When drawing demand and supply curves, economists are assuming that the primary influence on production and purchasing decisions is:
Select correct option:
Price
Cost of production
The overall state of the economy
Consumer incomes
the ____________________ is a graph of the ____________________ of a good and the ____________________.
Select correct option:
Supply curve, price, quantity supplied
Demand curve, price, quantity supplied
Supply curve, price, quantity demanded
Supply curve, quantity supplied, income of consumers
Microeconomics is the branch of economics that deals with which of the following topics?
Select correct option:
The behavior of individual consumers
Unemployment and interest rates
The behavior of individual firms and investors
The behavior of individual consumers and behavior of individual firms and investors.
It is calculated as the percentage change in quantity demanded of a given good, with respect to the percentage change in the price of “another” good.
Select correct option:
Price elasticity of demand
Income elasticity of demand
rice elasticity of demandCross p
Supply price elasticity
The concept of a risk premium applies to a person that is:
Select correct option:
Risk averse
Risk neutral
Risk loving
All of the given options
Demand is elastic when the elasticity of demand is:
Select correct option:
Greater than 0
Greater than 1
Less than 1
Less than 0
A "Giffen good" is defined as one for which:
Select correct option:
Marginal utility is zero.
The demand curve is perfectly elastic.
The substitution effect is positive.
The demand curve is positively sloped.
Goods X and Y are complements while goods X and Z are substitutes. If the supply of good X increases:
Select correct option:
The demand for both Y and Z will increase
The demand for Y will increase while the demand for Z will decrease
The demand for Y will decrease while the demand for Z will increase
The demand for both Y and Z will decrease
A normative economic statement:
Select correct option:
Is a statement of fact.
Is a hypothesis used to test economic theory.
Is a statement of what ought to be, not what is.
Is a statement of what will occur if certain assumptions are true.
when the price of petrol rises 10%, the quantity of petrol purchased falls by 8%. The demand for petrol is:
Select correct option:
Perfectly elastic
Unit elastic
Elastic
Inelastic
The law of diminishing marginal utility states:
Select correct option:
The supply curve slopes upward.
Your utility grows at a slower and slower rate as you consume more and more units of a good.
The elasticity of demand is infinite.
None of the given options.
Assume Leisure is a normal good. If income effect equals substitution effect then a wage rate increase will lead a person to:
Select correct option:
Increase hours of work
Decrease hours of work
Not change hours of work
None of the given options
The burden of a tax is shifted toward buyers if:
Select correct option:
Demand is perfectly elastic.
Demand is relatively more elastic than supply.
Demand is relatively more inelastic than supply.
Demand and supply have equal elasticities.
Assume that the government sets a ceiling on the interest rate that banks charge on loans. If the ceiling is set below the market equilibrium interest rate, the result will be:
Select correct option:
A surplus of credit.
A shortage of credit.
Greater profits for banks issuing credit.
A perfectly inelastic supply of credit in the market place.
You observe that the price of houses and the number of houses purchased both rise over the course of the year. You conclude that:
Select correct option:
The demand for houses has increased
The demand curve for houses must be upward-sloping
The supply of houses has increased
Housing construction costs must be decreasing
When drawing demand and supply curves, economists are assuming that the primary influence on production and purchasing decisions is:
Select correct option:
Price
Cost of production
The overall state of the economy
Consumer incomes
the ____________________ is a graph of the ____________________ of a good and the ____________________.
Select correct option:
Supply curve, price, quantity supplied
Demand curve, price, quantity supplied
Supply curve, price, quantity demanded
Supply curve, quantity supplied, income of consumers
Microeconomics is the branch of economics that deals with which of the following topics?
Select correct option:
The behavior of individual consumers
Unemployment and interest rates
The behavior of individual firms and investors
The behavior of individual consumers and behavior of individual firms and investors.
It is calculated as the percentage change in quantity demanded of a given good, with respect to the percentage change in the price of “another” good.
Select correct option:
Price elasticity of demand
Income elasticity of demand
Cross price elasticity of demand
Supply price elasticity
The concept of a risk premium applies to a person that is:
Select correct option:
Risk averse
Risk neutral
Risk loving
All of the given options
Demand is elastic when the elasticity of demand is:
Select correct option:
Greater than 0
Greater than 1
Less than 1
Less than 0
A "Giffen good" is defined as one for which:
Select correct option:
Marginal utility is zero.
The demand curve is perfectly elastic.
The substitution effect is positive.
The demand curve is positively sloped.
If your demand price for one unit of a good is $100 and the market price is $75, your consumer's surplus is:
Select correct option:
$25
$50
$75
$100
Due to capacity constraints, the price elasticity of supply for most products is:
Select correct option:
The same in the long run and the short run.
Greater in the long run than in the short run.
Greater in the short run than in the long run.
Too uncertain to be estimated.
A schedule which shows the various amounts of a product consumers are willing and able to purchase at each price in a series of possible prices during a specified period of time is called:
Select correct option:
Supply
Demand
Quantity supplied
Quantity demanded
If the cost of computer components falls, then
Select correct option:
The demand curve for computers shifts to the right.
The demand curve for computers shifts to the left.
The supply curve for computers shifts to the right
The supply curve for computers shifts to the left
If a sales tax on beer leads to reduced tax revenue, this means:
Select correct option:
Elasticity of demand is <>
Elasticity of demand is > 1.
Demand is upward-sloping.
Demand is perfectly inelastic.
If there is a price ceiling, there will be:
Select correct option:
Shortages
Surpluses
Equilibrium
None of the given options.
The numerical measurement of a consumer’s preference is called:
Select correct option:
Satisfaction
Use
Pleasure
Utility
If a decrease in price increases total revenue:
Select correct option:
Demand is elastic
Demand is inelastic
Supply is elastic
Supply is inelastic
It is calculated as the percentage change in quantity demanded of a given good, with respect to the percentage change in the price of “another” good.
Select correct option:
Price elasticity of demand
Income elasticity of demand
Cross price elasticity of demand
Supply price elasticity
Assume Leisure is a normal good. If income effect equals substitution effect then a wage rate increase will lead a person to:
Select correct option:
Increase hours of work
Decrease hours of work
Not change hours of work
None of the given options
The price elasticity of supply shows us:
Select correct option:
How steep the supply curve is
How fast supply responds to price
How much supply shifts when income changes
How much quantity supplied responds to price changes
More output could be produced with available resources if:
Select correct option:
Resources are allocated efficiently
Resources are imperfectly shiftable among alternative uses
Prices are reduced
The economy is operating at a point inside the production possibilities curve.
The marginal rate of substitution is equal to the:
Select correct option:
Magnitude of the slope of the indifference curve
Relative price
Marginal cost of each good
Slope of the budget line
Marginal utility is best described as:
Select correct option:
The additional satisfaction gained by consumption of the last good
The per unit satisfaction of the good consumed
The total satisfaction gained from the total consumption of the good
The change in satisfaction from consuming one additional unit of the good
The short run, as economists use the phrase, is characterised by:
Select correct option:
All inputs being variable.
At least one fixed factor of production and firms neither leaving nor entering the industry.
No variable inputs - that is, all of the factors of production are fixed.
A period where the law of diminishing returns does not hold.
If marginal product is above the average product:
Select correct option:
The total product will fall
The average product will rise
Average variable costs will fall
Total revenue will fall
According the law of diminishing returns:
Select correct option:
The marginal product falls as more units of a variable factor are added to a fixed factor.
Marginal utility falls as more units of a product are consumed.
The total product falls as more units of a variable factor are added to a fixed factor.
The marginal product increases as more units of a variable factor are added to a fixed factor.
the substitution effect of a price decrease for a good with a normal indifference curve pattern:
Select correct option:
Is always inversely related to the price change.
Measures the change in consumption of the good that is due to the consumer’s feeling of being richer.
Is measured by the horizontal distance between the original and the new indifference curves.
Is sufficient information to plot an ordinary demand curve for the commodity being considered.
he ____________________ is a graph of the ____________________ of a good and the ____________________.
Select correct option:
Supply curve, price, quantity supplied
Demand curve, price, quantity supplied
Supply curve, price, quantity demanded
Supply curve, quantity supplied, income of consumers
When an industry's raw material costs increase, other things remaining the same:
Select correct option:
The supply curve shifts to the left.
The supply curve shifts to the right.
Output increases regardless of the market price and the supply curve shifts upward.
Output decreases and the market price also decrease.
in a free-market economy the allocation of resources is determined by:
Select correct option:
Votes taken by consumers
A central planning authority
By consumer preferences
The level of profits of firms
Moving from left to right, the typical production possibilities curve:
Select correct option:
Has a constant negative slope
Has a constant positive slope
Illustrates increasing opportunity costs
Illustrates decreasing opportunity costs
it is calculated as the percentage change in quantity demanded of a given good, with respect to the percentage change in the price of “another” good.
Select correct option:
Price elasticity of demand
Income elasticity of demand
Cross price elasticity of demand
Supply price elasticity
If your demand price for one unit of a good is $100 and the market price is $75, your consumer's surplus is:
Select correct option:
$25
$50
$75
$100
Average physical product is equal to:
Select correct option:
TPPF
TPPF/QF
QF / TPPF
TPPF * QF
A partial explanation for the inverse relationship between price and quantity demanded is that a:
Select correct option:
Lower price shifts the supply curve to the left
Higher price shifts the demand curve to the left
Lower price shifts the demand curve to the right
Higher price reduces the real incomes of buyers
Due to capacity constraints, the price elasticity of supply for most products is:
Select correct option:
The same in the long run and the short run.
Greater in the long run than in the short run.
Greater in the short run than in the long run.
Too uncertain to be estimated.
lthough there are many reasons why a market can be non-competitive, the principal economic difference between a competitive and a non-competitive market is:
Select correct option:
The number of firms in the market.
The extent to which any firm can influence the price of the product.
The size of the firms in the market.
The annual sales made by the largest firms in the market.
The law of diminishing marginal utility states:
Select correct option:
The supply curve slopes upward.
Your utility grows at a slower and slower rate as you consume more and more units of a good.
The elasticity of demand is infinite.
None of the given options.
If your demand price for one unit of a good is $100 and the market price is $75, your consumer's surplus is:
Select correct option:
$25
$50
$75
$100
Due to capacity constraints, the price elasticity of supply for most products is:
Select correct option:
The same in the long run and the short run.
Greater in the long run than in the short run.
Greater in the short run than in the long run.
Too uncertain to be estimated.
A schedule which shows the various amounts of a product consumers are willing and able to purchase at each price in a series of possible prices during a specified period of time is called:
Select correct option:
Supply
Demand
Quantity supplied
Quantity demanded
If the cost of computer components falls, then
Select correct option:
The demand curve for computers shifts to the right.
The demand curve for computers shifts to the left.
The supply curve for computers shifts to the right
The supply curve for computers shifts to the left
If a sales tax on beer leads to reduced tax revenue, this means:
Select correct option:
Elasticity of demand is < 1.
Elasticity of demand is > 1.
Demand is upward-sloping.
Demand is perfectly inelastic.
If there is a price ceiling, there will be:
Select correct option:
Shortages
Surpluses
Equilibrium
None of the given options.
The numerical measurement of a consumer’s preference is called:
Select correct option:
Satisfaction
Use
Pleasure
Utility
If a decrease in price increases total revenue:
Select correct option:
Demand is elastic
Demand is inelastic
Supply is elastic
Supply is inelastic
It is calculated as the percentage change in quantity demanded of a given good, with respect to the percentage change in the price of “another” good.
Select correct option:
Price elasticity of demand
Income elasticity of demand
Cross price elasticity of demand
Supply price elasticity
Assume Leisure is a normal good. If income effect equals substitution effect then a wage rate increase will lead a person to:
Select correct option:
Increase hours of work
Decrease hours of work
Not change hours of work
None of the given options
The price elasticity of supply shows us:
Select correct option:
How steep the supply curve is
How fast supply responds to price
How much supply shifts when income changes
How much quantity supplied responds to price changes
More output could be produced with available resources if:
Select correct option:
Resources are allocated efficiently
Resources are imperfectly shiftable among alternative uses
Prices are reduced
The economy is operating at a point inside the production possibilities curve.
The marginal rate of substitution is equal to the:
Select correct option:
Magnitude of the slope of the indifference curve
Relative price
Marginal cost of each good
Slope of the budget line
Marginal utility is best described as:
Select correct option:
The additional satisfaction gained by consumption of the last good
The per unit satisfaction of the good consumed
The total satisfaction gained from the total consumption of the good
The change in satisfaction from consuming one additional unit of the good
The short run, as economists use the phrase, is characterised by:
Select correct option:
All inputs being variable.
At least one fixed factor of production and firms neither leaving nor entering the industry.
No variable inputs - that is, all of the factors of production are fixed.
A period where the law of diminishing returns does not hold.
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