MI

CROECONOMI
CSQUESTI
ONS

Thesit
uationinwhi
cht
her
eisnotenoughofsomet
hingt
osat
isf
yal
lthedesi
resf
ort
hat
thi
ngiscalled:
A)abundance.
B)scarci
ty.*
C)demand.
D)plet
hora.

2,Thesituati
oninwhi
chl
i
mit
edr
esour
cesar
ebei
ngusedmostef
fect
ivel
yiscal
l
ed:
A)eff
icient.*
B)economi c.
could
C)abundant .
D)scarce.

3Thest udyofthebehav i
oroff
ir
ms,
indi
vi
dual
mar
ket
s,andhousehol
dsi
scal
l
ed:
A)normat i
veeconomi cs.
B)posi
tiveeconomi cs.
C)macr oeconomics.
D)microeconomics.*

4Thest udyofthebehav i
oroft
heov
eral
leconomyi
scal
l
ed:
A)normat i
veeconomi cs.
B)posi
tiveeconomi cs.
C)macr oeconomics.*
D)microeconomics.

5Ifwebeli
evedt hatev entboccurssi
mpl
ybecausei
tfol
l
owsev
enta,
thenwewoul
dbe
tr
appedbythe:
A)fai
lur
etoholdot herthingsequal
.
B)fal
l
acyofcomposi ti
on.
C)posthocfal
lacy .*
D)Adam Smithsy ndrome.

6Thethreefundamentalquest
ionsofeconomi
cor
gani
zat
ionar
e:
A)when,forwhom, andhow.
B)how,what,andforwhom.*
C)who,how,andwhen.
D)what,who,andwhy .

7Economicquesti
onsthatcanbeanswer
edbyexami
ningdat
aandmaki
ngobser
vat
ions
ar
epartof:
A)normati
veeconomics.
B)posi
ti
veeconomics.*
C)macroeconomics.
D)mi
croeconomics.

8Economi cquestionst hatcanbeanswer

edt
hroughpol
i
ticaldebat
eanddeci
si
onsar
e
par
tof:
A)normat i
veeconomi cs.*
B)posi
tiveeconomi cs.
C)macr oeconomics.
D)microeconomics.

9The_ ______ofadecisi
oni
sthev
alueoft
hegoodorser
vicef
orgone.
A)oppor t
unitycost*
B)eff
iciency
C)economi cs
D)scarcity

10 Productive___
____exist
swhenaneconomycannotpr
oducemor
eofonegood
wit
houtpr oduci
nglessofanothergood.
A)scarcit
y
B)economi cs
C)eff
iciency*
D)oppor t
unit
ycost

11.Ifther
ewer enoscar
cit
y,economi
cswoul
dst
il
lgi
vev
aluabl
einsi
ght
s.
A.True
B.Ambi guous
C.f
alse*
D.Impossible

12.Wheneconomi st
ssay,"
Thereisnosucht
hingasaf
reel
unch,
"theymeant
hatal
l
economi cdeci
si
onsi
nvol
vet
rade-
off
s.
A.Ambi guous
B.False
C.Impossible
D.True*

13.Theexpect edval
ueofavari
abl
eisthesum ofallpossibl
evalueswhicht
hisv
ari
abl
e
cantake,weightedwi
ththepr
obabi
l
ityt
hatthev
ariabletakeseachvalue.
A.Ambi guous
B.False
C.Impossible
D.True*

14.Rat
ionalpeopl
eactonl
ywhen t
hemar
ginalbenef
itoft
heact
ion exceedst
he
marginalcost.
A.Ambi guous
B.False
C.Impossible
D.True*

15.Iftheoppor t
uni
tycostofgoi
ngt
opr
isonf
orsomeper
sonf
all
s,t
hisper
soni
sless
l
ikel
yt ocommi tacr
iminal
act.
A.Ambi guous
B.False*
C.Impossible
D.True

16.Whent herearemorepoli
cemenont hegr
ound,
thepr
obabil
i
tyofget
ti
ngcaughtwhen
commi tt
ingacrimeincr
eases,hencet
heexpect
edcostofcommitt
ingacri
meincreases
aswel l
.
A.Ambi guous
B.False
C.Impossible
D.True*

17.Anuni ntendedconsequenceofpubl
i
csupportf
orhighereducat
ioni
sthatlowtui
ti
on
provi
desani ncent
iveformanypeopletoat
tendstat
euniversi
ti
eseveniftheyhaveno
desi
retol earnanyt
hing.
A.Ambi guous
B.False
C.Impossi bl
e
D.True*

18.Abdullahisbett
eratcleani
ngandusmani sbet
teratcooki
ng.I
twillt
akef
ewerhours
toeatandcl eani
fAbdulahspecial
izesi
ncooki
ngandusmanspeciali
zesincl
eani
ngthan
i
ftheyshar ethehousehol
ddutiesevenl
y.
A.Ambi guous
B.False*
C.Impossible
D.True

19.Acarmanuf actur
ershoul
dcont
inuetoproduceaddi
ti
onalcarsaslongast
hef
ir
mis
prof
itabl
e,eveni
fthecostoft
headdit
ional
unit
sexceedsthepri
cerecei
ved.
A.Ambi guous
B.False*
C.Impossible
D.True
20.Supposeyoufi
nd €20.I
fyouchooset
ouset
he€20t
ogot
oaf
oot
bal
lmat
ch,y
our
opport
unit
ycostofgoi
ngtothegameis

A.not
hing,becauseyoufoundthemoney.
B.€20( becauseyoucouldhaveusedthe€20tobuyotherthings)pl
usthev
alueofy
our
ti
mespentatt hegame.*
C.€20( becauseyoucouldhaveusedthe€20tobuyotherthings)pl
usthev
alueofy
our
ti
mespentatt hegame,plusthecostoft
hedi
nneryoupurchasedatthegame.
D.€20( becauseyoucoul
dhav eusedthe€20tobuyotherthi
ngs).
E.Noneoft heseanswer
s

21.Sincepeopl erespondt oi
ncenti
ves,wewouldexpectthat,i
ftheaveragesal
aryof
accountant
si ncreasesby50% whi l
etheaveragesalar
yofteacher
sincreasesby20%,
then
A.fewerstudentswi llt
akedegreecoursesinaccounti
ngandmor ewil
ltakeeducat
ion
courses.
B.fewerstudentswi llt
akedegreecoursesi
neducat i
onandmor ewil
ltakeaccounti
ng
courses.
*
C.fewerstudentswi l
lat
tenduni
versi
ty.
D.noneoft heseanswer s.

22.Whichoft
hefol
lowingi
snotpar toftheoppor
tuni
tycostofgoi
ngonhol
iday
?
A.themoneyyouspentonatheatreshowt her
e.
B.themoneyyoucoul
dhavemadei fyouhadstayedathomeandworked.
C.themoneyyouspentonfood.*
d.
themoneyyouspentonairl
ineti
ckets.

23.Whichoft hef ol
lowingstat
ementsistrueaboutamar keteconomy ?
A.Wi thal arge enough comput er,centr
alpl anners coul d guide pr
oduct i
on mor e
eff
ici
entl
ythanmar kets.
B.Inamar kett heself-
inter
est
edactionsofmar ketpar t
icipantsareco-or
dinatedi nsuch
awayast obr i
ngaboutanout comef r
om whichev erybodybenef i
ts.*
C.Thestrengthofamar ketsyst
em isthati
ttendst odist r
ibuteresour
cesev enlyacross
consumers.
D.Taxeshelppr icescommuni catecostsandbenef i
tstopr oducersandconsumer s.

24.Youar eplanningt orunahotdogst andduringaf orthcomingfai

r.Youoriginally
esti
matedthaty ouwillgenerat
esalesrevenueof€2000andy ouhavealr
eadyspent€
1000buildi
ngt hehotdogst and.Thehotdogst andi snear lycomplet
edbutnow y ou
esti
matetotalsalestobeonly€800becauset hefairclasheswi thamajormusicfesti
v al
i
nanear bylocation.
.Youcancompl etethehotdogst andf oranother€300.Shouldy ou
completethehotdogst and?(Assumet hatther
ear enoot hercosts-thehotdogsar e
costl
esstoyou.)
a.Therei
snotenoughi
nfor
mat
iont
oanswert
hisquest
ion.
b.Yes.*
c.No.

25.Youar epl anningt orunahotdogst andduringaf ort

hcomi ngfair
.Youor i
ginally
esti
mat edt haty ouwillgener
atesal
esr evenueof€2000andy ouhav ealreadyspent€
1000bui l
dingt hehotdogst and.Thehotdogst andisnear l
ycompl et
edbutnow y ou
esti
mat etot alsalestobeonly€800becauset hef
aircl
asheswithamaj ormusi cf
esti
v al
i
nanear byl ocation.
.Youcancompl etet hehotdogst andf oranother€300.Your
decisi
onr uleshoul dbet ocompletethehotdogst andasl ongast hecostt ocomplete
thestandisl esst han
a.€300
b.€100
c.€500
d.noneoft heseanswer s.
e.€800*

26.I
faneconomyisoperati
ngonit
sproduct
ionpossi
bil
i
tiesf
ront
ier
,itmustpr
oduce
l
essofonegoodi
fitpr
oducesmor
eofanother
.

27.Pointsoutsi
det
hepr
oduct
ionpossi
bil
i
tiesf
ront
ierar
eat
tai
nabl
ebuti
nef
fi
ci
ent
.
A.Ambi guous
B.False*
C.Impossible
D.True

28.I fan economy wer

e exper
iencing substanti
alunempl
oyment
,the economy i
s
produci
ngi nsi
det
hepr
oduct
ionpossibil
i
tiesf
rontier
.
A.Ambi guous
B.False
C.Impossible
D.True*

29.The pr oducti
on possi
bil
it
ies f
ront
ieri
s bowed out
war
d because t
he t
rade-
off
s
betweent hepr oduct
ionofanytwogoodsareconst
ant
.
A.Ambi guous
B.False*
C.Impossi ble
D.True

30.Anadvancei
npr
oduct
iont
echnol
ogywoul
dcauset
hepr
oduct
ionpossi
bil
i
tiescur
ve
toshi
ftout
ward.
A.Ambiguous
B.Fal
se
C.I
mpossi
ble
D.Tr
ue*

31.Macr oeconomi
csisconcernedwiththestudyofhow househol
dsandf
ir
msmake
deci
sionsandhowt heyi
nter
actinspeci
fi
cmarkets.
A.Ambi guous
B.False*
C.Impossible
D.True

32.Thest atement
,"Anincr
easei
ninf
lat
iont
endst
ocauseunempl
oymentt
ofal
lint
he
shortrun,
"isnormati
ve.
A.Ambi guous
B.False
C.Impossible
D.True*

33.Wheneconomi
stsmakeposi
ti
vest
atement
s,t
heyar
emor
eli
kel
ytobeact
ingas
sci
entists.
A.Ambi guous
B.False
C.Impossible
D.True*

34.Nor mati
vest
atement
scanber
efut
edwi
thev
idence.
A.Ambi guous
B.False*
C.Impossible
D.True

35.Mosteconomi st
sbel
i
evet
hatt
ari
ff
sand i
mpor
tquot
asusual
l
yreducegener
al
economi cwelf
are.
A.Ambi guous
B.False
C.Impossible
D.True*

36.Thescienti
fi
cmet hodr equiresthat
a.thesci
enti
stbeobjectiv
e.*
b.thesci
enti
stuseprecisi
onequi pment.
c.onlycorr
ecttheori
esaret ested.
d.onlyi
ncorr
ecttheori
esar etested.
e.thesci
enti
stusetesttubesandhav eacleanl
ab.
37.Whi choft hefoll
owi ngismostl i
kelyt
oproducescienti
ficevidenceaboutatheory?
a.Alawy erempl oyedbyRenaul taddressi
ngtheimpactofai rbagsonpassengersaf et
y.
b.Aneconomi stpermanent l
yempl oyedatal eadi
nguni versi
tyanalysi
ngt heimpactof
bankr egulat
ionsonl endingt osmallbusi
nesses.
c.Aneconomi stempl oyedbyt heTradesUnionCongr essdoingr esear
chont heimpact
oftradepol i
cyonwor kers'wages.*
d.Aradiot al
kshowhostcol lecti
ngdatafrom l
ist
enersonhowcapi talmarketsr
espondto
taxati
on.

38.Whi chofthefol
lowingi
snotafact
orofproduct
ion?
a.l
abour
b.l
and
c.money *
d.capit
al
e.Alloftheseanswersaref
act
orsofproduct
ion.

39.Pointsont heproduct
ionpossi
bil
i
tiesf
ront
ierar
e
a.i
neffi
cient.
b.normative.
c.unattainabl
e.
d.eff
ici
ent .
*
e.noneoft heseanswers.

40.Whi choft hef ol

lowingwi l
lnotshi
ftacount
ry'
spr
oduct
ionpossi
bil
i
tiesf
ront
ier
outward?
a.anadvanceintechnology
b.anincr
easeinthelabourforce
c.anincreasei
nt hecapit
alstock
d.areducti
oninunempl oyment*

41.Economicgrowthisdepi ct
edby
a.ashi
ftint
heproductionpossibil
i
tiesf
rontieroutward.
*
b.amov ementfr
om insidethecurvetowardt hecurve.
c.ashif
tintheproducti
onpossi bi
l
iti
esfrontieri
nward.
d.amov emental
ongapr oduct
ionpossibil
i
tiesfront
iert
owar
dcapi
tal
goods.

42.RefertoExhibi
t6.Ift
heeconomyisoper
ati
ngatpoi
ntC,t
heoppor
tuni
tycostof
produci
nganadditi
onal
20uni
tsofbaconi
s
a.40uni
tsofeggs.
b.10uni
tsofeggs.
c.20unit
sofeggs.
d.30uni
tsofeggs.
e.50uni
tsofeggs.
43.RefertoExhibi
t6.Ift
heeconomywer eoper
ati
ngatpointE,
a.theopport
unit
ycostof20additi
onal
unitsofeggsi
s10uni t
sofbacon.
b.theopport
unit
ycostof20additi
onaluni
tsofeggsi
s20uni t
sofbacon.
c.theopportuni
tycostof20addi
ti
onalunit
sofeggsis30unitsofbacon.
d.20addit
ionaluni
tsofeggscanbeproducedwithnoimpactonbaconproduct
ion.

44.Ref ertoExhibi
t6.PointFrepresent
s
a.noneoft heseanswers.
b.acombi nationofproducti
ont hatcanber
eachedifwereducetheproducti
onofeggs
by20uni t
s.
c.acombi nationofproducti
ont hatcanbereachedi
fthereisasuff
icientadvancein
technology.
d.a combi nation ofproducti
on t hatisi
neff
ici
entbecause t
here are unemployed
resources.

45.Refert
oExhibit6.Aswemov efrom poi
ntAtopointD,
a.t
heopportuni
tycostofeggsinter msofbaconfal
ls.
b.t
heopportuni
tycostofeggsinter msofbaconri
ses.
c.theopport
uni
tycostofeggsi ntermsofbaconisconstant
.
d.t
heeconomybecomesl esseffi
cient.
e.t
heeconomybecomesmor eeff
icient
.

46.Whichoft
hefollowingstatementsisnor
mat
ive?
a.Lar
gegover
nmentdef ici
tscauseaneconomytogrowmor
esl
owl
y.
b.Peopl
eworkharderifthewageishigher.
c.Theunemploy
mentr ateshouldbelower.*
d.Pri
nti
ngt
oomuchmoneycausesi nfl
ati
on.

47.Positi
vestat
ement sare
a.macroeconomi c.
b.micr
oeconomi c.
c.stat
ement sofdescri
pti
onthatcanbetest
ed.
*
d.st
atementsofpr escr
ipt
iont
hatinv
olv
ev al
uej
udgment
s.

48Thel aw ofdemandstat
est
hatani
ncr
easei
nthepr
iceofagooddecr
easest
he
demandf orthatgood.
A.Ambi guous
B.False*
C.Impossible
D.True

49.I
fapplesandor
angesar
esubst
it
utes,
ani
ncr
easei
nthepr
iceofappl
eswi
l
ldecr
ease
thedemandforor
anges.
A.Ambiguous
B.False*
C.Impossibl
e
D.True

50Ifgolfclubsandgol
fball
sarecompl
ement
s,ani
ncr
easei
nthepr
iceofgol
fcl
ubswi
l
l
decreasethedemandforgol
fball
s.
A.Ambi guous
B.False
C.Impossible
D.True*

51.Ifconsumer sexpectt
hepr
iceofshoest
ori
se,t
her
ewi
l
lbeani
ncr
easei
nthe
demandf orshoest
oday.
A.Ambi guous
B.False
C.Impossible
D.True*

52.Thel awofsupplyst
atest
hatani
ncreaseint
hepr
iceofagoodi
ncr
easest
hequant
it
y
suppli
edoft hatgoodal
ongit
ssuppl
ycurve.
A.Ambi guous
B.False
C.Impossible
D.True*

53.Ani ncr
easei
nthepr
iceofst
eel
wil
lshi
ftt
hesuppl
yofcar
stot
her
ight
.
A.Ambi guous
B.False*
C.Impossible
D.True

54.Whent hepri
ceofagoodisbel
owt
heequi
l
ibr
ium pr
ice,i
tcausesasur
plus(
i.
e.an
excesssupply)ofthi
sgood.
A.Ambi guous
B.False*
C.Impossible
D.True

55.Themar ketsuppl
ycur
vei
sthehor
izont
alsummat
ionoft
hei
ndi
vi
dual
suppl
ycur
ves.
A.Ambi guous
B.False
C.Impossible
D.True*
56.Ifthereisashor
tage(
i.
e.anexcessdemand)ofagood,t
hent
hepr
iceoft
hatgood
tendstofall
.
A.Ambi guous
B.False*
C.Impossible
D.True

56.Ifpencil
sandpaperarecomplements,ani
ncreasei
nthepr
iceofpenci
l
scausest
he
demandf orpapert
odecreaseorshi
ftt
ot hel
eft
.
A.Ambi guous
B.False
C.Impossible
D.True*

57.IfCokeandPepsiar esubsti
tut
es,anincr
easeinthepri
ceofCokewi
l
lcausean
i
ncreaseintheequi
l
ibr
ium pr
iceandquant
it
yinthemarketf
orPepsi
.
A.Ambi guous
B.False
C.Impossible
D.True*

58.Anadv anceinthetechnol
ogyemployedtomanuf
actur
eroll
erbladeswil
lresul
tina
decreaseintheequi
li
bri
um pri
ceandanincr
easei
ntheequi
li
bri
um quanti
tyi
nthemar ket
forr
ollerbl
ades.
A.Ambi guous
B.False
C.Impossible
D.True*

59.Ifthereisanincr
easeinsuppl
yaccompani
edbyadecr easei
ndemandf
orcof
fee,
thentherewillbeadecr
easei
nboththeequi
li
bri
um pr
iceandquant
it
yint
hemar
ketfor
coff
ee.
A.Ambi guous
B.False*
C.Impossible
D.True

60.Aper fectl
ycompet i
ti
v emar kethas
a.fi
rmsthatsett hei
rownpr ices.
b.onlyonesel l
er.
c.atleastaf ewsell
ers.
d.manybuy er
sandsel l
ers.*
e.noneoft heseanswers.
61.Ifanincreaseinthepriceofbl
uejeansl
eadst
oani
ncr
easei
nthedemandf
or
tennisshoes, t
henbl
uej eansandtenni
sshoesar
e
a.complement s.*
b.inf
eri
orgoods.
c.normal goods.
d.noneoft heseanswers.
e.substi
tutes.

62.Thel awofdemandst atesthatanincreasei

nthepr i
ceofagood
a.i
ncreasest hesupplyofthatgood.
b.decreasest hequanti
tydemandedf orthatgoodalongitsdemandcurv
e.*
c.decreasest hedemandf orthatgood.
d.i
ncreasest hequantit
ysuppliedofthatgoodalongitssupplycur
ve.
e.noneoft heseanswer s.

63.Thel awofsuppl ystat

esthatanincr
easeinthepriceofagood
a.noneoft heseanswers.
b.i
ncreasest hequanti
tysuppli
edofthatgoodalongitssuppl
ycur
ve.
*
c.incr
easest hesupplyofthatgood.
d.decreasest hedemandforthatgood.
e.decreasesthequantit
ydemandedf orthatgoodalongit
sdemandcurv
e.

64.Ifanincreaseinconsumerincomesl
eadst
oadecr
easei
nthedemandf
orcampi
ng
equipment,thencampingequi
pmentis
a.anormal good.
b.noneoftheseanswers.
c.aninfer
iorgood.*
d.asubsti
tutegood.
e.acomplement ar
ygood.

65.Thatt hesuppl ycurveofi

cecream conesi supwardslopingindicat
esthat
a.themar ginal
costofpr ovi
dingi
cecr eam conesincr
easesasmor econesareproduced.
*
b.ast hepri
ceofi cecream conesi
ncreases,theproducti
ont echnologyi
supgraded.
c.ast hepriceincreases,t
heopportunit
ycostofmaki ngicecream conesdecreases.
d.alloftheabov e.
e.noneoft heabov e.

66.Whi choft hefol

l
owingshi
ftst
hedemandf orwatchestotheri
ght?
a.
ani ncreaseinthepri
ceofwatches
b.noneoft heseanswers
c.a decr ease inthe pri
ce ofwatch bat
teri
es i
fwat ch bat
ter
ies and wat
ches ar
e
compl ement s*
d.adecreasei nconsumeri
ncomesifwatchesareanormal good
e.
adecr
easei
nthepr
iceofwat
ches

67.Allofthefollowingshiftthesupplyofwatchestotherightexcept
a.anadvancei nthet echnologyusedtomanuf act
urewatches.
b.ani
ncreasei nt hepriceofwatches.*
c.Alloftheseanswer scauseani ncr
easeinthesupplyofwat ches.
d.adecreaseint hewageofwor kersemployedtomanuf actur
ewat ches.
e.manufacturers'expectati
onoflowerwatchpr i
cesinthefuture.

68.Ift
hepri
ceofagoodi sabovetheequil
ibr
ium pri
ce,
a.t
hereisasurpl
us(i.
e.anexcesssupply)andthepricewill
rise.
b.t
hereisashort
age(i.
e.anexcessdemand)andt hepri
cewi llf
all
.
c.ther
eisashortage(i
.e.anexcessdemand)andt hepricewi l
lri
se.
d.t
he quanti
tydemanded i s equaltot he quanti
tysupplied and t
he pr
ice r
emai
ns
unchanged.
e.t
hereisasurpl
us(i.
e.anexcesssupply)andthepricewil
lfall
.*

69.Ift
hepri
ceofagoodi sbel
owt heequil
ibr
ium pri
ce,
a.t
hereisashort
age(i.
e.anexcessdemand)andt hepri
cewi llr
ise.
*
b.t
he quanti
tydemanded i s equaltot he quanti
tysupplied and t
he pr
ice r
emai
ns
unchanged.
c.ther
eisashortage(i
.e.anexcessdemand)andt hepricewi l
lfal
l.
d.t
hereisasurpl
us(i.
e.anexcesssupply)andthepr i
cewill
rise.
e.t
hereisasurpl
us(i.
e.anexcesssupply)andthepricewil
lfall
.

70.Ift
hepri
ceofagoodi sequaltotheequi
li
bri
um price,
a.t
hereisashort
age(i.
e.anexcessdemand)andt hepricewil
lfal
l.
b.t
he quanti
tydemanded is equaltot he quanti
tysupplied and t
he pr
ice r
emai
ns
unchanged.
*
c.ther
eisasurpl
us(i
.e.anexcesssupply
)andt hepri
cewi l
lri
se.
d.t
hereisashort
age(i.
e.anexcessdemand)andt hepricewil
lri
se.
e.t
hereisasurpl
us(i
.e.anexcesssuppl
y)andthepricewill
fall
.

71.Ani ncrease(ri
ghtwardshift
)inthedemandforagoodwill
tendtocause
a.anincreaseintheequili
brium pr
iceandquant
ity.
*
b.noneoft heseanswers.
c.anincreasei ntheequi
libr
ium pri
ceandadecreasei
ntheequil
ibr
ium quant
it
y.
d.adecreasei ntheequil
ibri
um pri
ceandanincreasei
ntheequil
i
bri
um quanti
ty.
e.adecreasei ntheequil
i
br i
um pri
ceandquanti
ty.

72.Adecrease(l
eft
wardshi
ft)i
nthesuppl
yforagoodwil
ltendt
ocause
a.ani
ncreaseint
heequil
i
bri
um pri
ceandquanti
ty.
b.adecr
easeintheequi
li
bri
um pri
ceandanincr
easei
ntheequil
i
bri
um quant
it
y.
c.noneoftheseanswer
s.
d.
adecr
easeintheequi
l
ibr
ium pr
iceandquant
it
y.
e.
ani
ncreasei
ntheequi
li
bri
um pri
ceandadecreasei
ntheequi
l
ibr
ium quant
it
y.*

73.Supposethereisani ncreaseinbot hthesupplyanddemandf orpersonalcomputers.

Inthemarketforpersonalcomput er
s,wewouldexpect
a.t
heequil
ibri
um quantit
ytor i
seandt heequi
li
bri
um pricet
or i
se.
b.t
heequil
ibri
um quantit
yt oriseandt heequi
li
bri
um pricet
of all
.
c.theequi
li
bri
um quant i
tytoriseandt heequil
ibr
ium pri
cetoremai nconstant.
d.t
hechangeint heequil
ibri
um quant i
tytobeambi guousandt heequili
bri
um pricet
orise.
e.t
he equil
ibr
ium quant i
tyt or ise and the change int he equil
ibri
um pr i
ce to be
ambiguous.*

74.Supposet her
eisani ncreaseinbot hthesupplyanddemandf orpersonalcomputers.
Further,supposet hesuppl yofper sonalcomput ersincreasesmor et handemandf or
personalcomput ers.I
nthemar ketforpersonalcomputers,wewoul dexpect
a.
thechangei ntheequil
ibri
um quant i
tytobeambi guousandt heequili
brium pr
icetofal
l.
b.
theequi l
ibr
ium quantit
yt oriseandt heequil
ibr
ium pr
icetor ise.
c.t he equil
ibri
um quant i
tyt orise and the change int he equi l
i
brium price t
o be
ambi guous.
d.
theequi l
ibr
ium quantit
yt oriseandt heequil
ibr
ium pr
icetof all.
*
e.
theequi l
ibr
ium quantit
ytor i
seandt heequi l
ibr
ium pr
icetor emai nconstant.

75.Whi chofthefoll
owi ngstat
ement sistrueaboutthei
mpactofani ncreasei
nthepri
ce
oflett
uce?
a.Botht hedemandf orlet
tucewilldecreaseandt heequili
brium pr
iceandquanti
tyof
saladdressingwil
lfall.
b.Thesupplyoflett
ucewi ll
decrease.
c.Thedemandf orl
et t
ucewi l
ldecrease.
d.Theequili
bri
um priceandquant i
tyofsaladdressi
ngwillf
all.
*
e.Theequili
bri
um pri
ceandquant i
tyofsaladdressi
ngwil
lrise.

76.Supposeaf rostdest roysmuchoft heFloridaorangecrop.Atthesamet i

me,
supposeconsumert astesshi f
ttowar dorangejuice.Whatwouldweexpectt
ohappento
theequil
i
brium priceandquant i
tyinthemar ketfororangej
uice?
a.Pri
cewil
ldecr ease;quantityi
sambi guous.
b.Theimpactonbot hpriceandquant ityisambiguous.
c.Pri
cewillincr
ease; quanti
tywi l
lincrease.
d.Pri
cewill
increase;quant i
tywilldecrease.
e.Pri
cewil
lincrease;quant i
tyisambi guous.*

77.Supposeconsumertast
esshifttowardtheconsumpt
ionofapples.Whi
choft he
foll
owingstat
ement
sisanaccur
atedescr
ipt
ionoft
heimpactoft
hisev
entonthemarket
forapples?
a.Ther
ei sani
ncr
easei
nthequanti
tydemandedofappl
esal
ongthedemandcurveandin
thesupplyforapples.
b.Ther
eisani ncr
easeinthedemandandsuppl yofapples.
c.Thereisanincreaseinthedemandf orappl
esandadecr easeinthesuppl
yofapples.
d.Ther
eisadecr easeinthequanti
tydemandedofapplesal ongt
hedemandcur veandan
i
ncreaseinthesuppl yf
orapples.
e.Ther
eisani ncreaseinthedemandf orappl
esandani ncreaseinthequanti
tysuppli
ed
ofapplesalongthesupplycurve.
*

78.Supposebot hbuy ersandsel l

ersofwheatexpectthepriceofwheatt
or i
seinthe
nearf utur
e.Whatwoul dweexpectt ohappentotheequi
li
bri
um pri
ceandquant
ityi
nthe
mar ketforwheatt oday ?
a.Thei mpactonbot hpr iceandquantityisambi
guous.
b.Pricewilldecrease; quantit
yisambi guous.
c.Pricewillincr
ease; quant i
tywil
ldecr ease.
d.Pricewilli
ncrease; quant i
tyi
sambi guous.*
e.Pri
cewi l
lincrease;quant i
tywil
li
ncrease.

79.Ani nfer
iorgoodi
sonef
orwhi
chani
ncr
easei
nincomecausesa(
n)
a.decreaseinsuppl
y.
b.i
ncreaseindemand.
c.incr
easei nsuppl
y.
d.decreaseindemand.*

Questionsonelast
ici
tyofdemandandsuppl
y
80.Ifthequanti
tydemandedofagoodissensi
ti
vet
oachangei
nthepr
iceoft
hatgood,
demandi ssaidtobepricei
nel
ast
ic.
A.Ambi guous
B.False*
C.Impossible
D.True

81.Ifani ncreasei
nthepriceofpenci
l
sfrom €0.10t
o €0.20reducesthequant
it
y
demandedf rom 1000penci
l
st o500penci
l
s,thent
hedemandforpencil
sisuni
tpri
ce
el
astic.
A.Ambi guous
B.False
C.Impossible
D.True*

82.Thedemandf oraspi
ri
nov
eronemont
hshoul
dbemor
eel
ast
ict
hant
hedemandf
or
aspi
ri
nov eroney
ear.
A.Ambiguous
B.Fal
se*
C.Impossibl
e
D.Tr
ue

83.Thepr iceelast
ici
tyofdemandi
sdef i
nedast hepercent
agechangeint hepr
iceof
thatgooddi v
idedbytheper
cent
agechangeinquanti
tydemandedofthatgood.
A.Ambi guous
B.False*
C.Impossible
D.True

84.Ifthedemandforagoodi
spr
icei
nel
ast
ic,ani
ncr
easei
nit
spr
icewi
l
lincr
easet
otal
rev
enuei nthatmar
ket
.
A.Ambi guous
B.False
C.Impossible
D.True*

85.Thedemandforanecessi
tysuchaspet
rol
tendst
obeel
ast
ic.
A.Ambi guous
B.False*
C.Impossible
D.True

86.Ifademandcur
vei
sli
near
,thepr
iceel
ast
ici
tyofdemandi
sconst
antal
ongi
t.
A.Ambi guous
B.False*
C.Impossible
D.True

87.Thesuppl yofcar
sfort
hisweeki
sli
kel
ytobemor
epr
icei
nel
ast
ict
hant
hesuppl
yof
carsforthi
sy ear
.
A.Ambi guous
B.False
C.Impossible
D.True*

88.Ifthepriceelastici
tyofsupplyforbl
ue
j
eansi s1.3,anincreaseinthepr i
ceof
bluejeansof10per centwouldincrease
thequantitysuppli
edofbl uejeansby13
percent.
A.Ambi guous
B.False
C.Impossible
D.True*
89.Thepr i
ceel
asti
ci
tyofsuppl
yt endst
obemor
einel
ast
icast
hef
ir
m'spr
oduct
ion
faci
li
tyreachesmaxi
mum capaci
ty.
A.Ambi guous
B.False
C.Impossible
D.True*

90.Thepr iceelasti
ci
tyofdemandi sdef
ined
as
a.t hepercentagechangeinthequantit
ydemandeddiv
idedbyt
heper cent
agechangein
i
ncome.
b.thepercentagechangei ni ncomedividedbyt
hepercent
agechangei nthequantit
y
demanded.
c.theper centagechangeinthequantit
ydemandedofagooddividedbythepercent
age
changei nthepr i
ceofthatgood.*
d.noneoft heseanswers.
e.t hepercentagechangei npr i
ceofagooddi v
idedbythepercentagechangeinthe
quant i
tydemandedoft hatgood.

91.Ingeneral
,aflat
terdemandcur
vei
smor
eli
kel
ytobe
a.pri
ceelasti
c.*
b.uni
tpri
ceelasti
c.
c.noneoftheseanswer s.
d.pri
cei
nelasti
c.

92.Ingeneral
, asteepersuppl
ycur
vei
smor
eli
kel
ytobe
a.pri
ceelasti
c.
b.noneoftheseanswer s.
c.unitpri
ceelasti
c.
d.pri
ceinel
astic.
*

93.Whichofthef ol
lowi
ngwouldcauseademandcur
vef
oragoodt
obepr
icei
nel
ast
ic?
a.Thegoodisal uxury.
b.Ther
eareagr eatnumberof
substi
tut
esforthegood.
c.Thegoodisanecessi ty
.*
d.Noneoftheseanswer s.

94.Thedemandf orwhi
choft
hef
oll
owi
ngi
sli
kel
ytobet
hemostpr
icei
nel
ast
ic?
a.transportat
ion*
b.taxiri
des
c.bust i
ckets
d.airl
i
net i
ckets
95.Ifasuppl
ycurveforagoodispriceelast
ic,
then
a.thequanti
tysuppl
i
edissensit
ivetochangesinthepriceofthatgood.*
b.t
hequantit
ydemandedisinsensit
ivetochangesinthepr i
ceofthatgood.
c.thequanti
tydemandedissensi
tiv
et ochangesinthepriceofthatgood.
d.t
hequantit
ysuppli
edisi
nsensit
ivetochangesinthepr i
ceofthatgood.
e.noneoftheseanswers.

96.Ifaf isher
manmustsellal
lofhisdai
lycatchbefor
eitspoi
lsforwhat
everpri
cehei
s
offer
ed, oncethef
ishar
ecaughtthefi
sherman'spr
iceel
asti
ci
tyofsuppl
yforf
reshfi
shi
s
a.zero.*
b.i
nfini
te.
c.one.
d.unablet obedet
ermi
nedfrom t
his
i
nf or
mat ion.

97.Adecreaseinsuppl y(shi
ftt
othel
eft
)wi
l
lincr
easet
otal
rev
enuei
nthatmar
keti
f
a.demandispriceinelasti
c.
b.suppl
yispri
ceelast i
c.
c.suppl
yispri
ceinel asti
c.
d.demandispri
ceel asti
c.

98.Ifani ncr
easei nthepr
iceofagoodhasnoi
mpactont
het
otal
rev
enuei
nthatmar
ket
,
demandmustbe
a.al
l oftheseanswer s.
b.pr
iceinelastic.
c.unitpri
ceel asti
c.*
d.pr
iceelastic.

99.Technol ogicali mprovement sin agr

icul
turethatshif
tthe supplyofagr i
cultural
commodi ti
est other i
ghttendt o
a.i
ncreasetotal r
ev enuetofarmersasawhol ebecausethedemandf orfoodisel astic.
b.i
ncreasetotalrevenuet ofarmersasawhol ebecausethedemandforfoodi sinelast i
c.
c.reducetotalrevenuetof armersasawhol ebecausethedemandforfoodi selastic.
d.r
educetotal r
ev enuetof ar
mer sasawhol ebecauset
hedemandf orfoodisinelastic.*

100.I fsuppl yi
spricei
nel
asti
c,t
heval
ueoft hepr
iceel
asti
cit
yofsupplymustbe
a.infi
nite.
b.zero.
c.lesst han1. *
d.noneoft heseanswers.
e.great erthan1.
101.I ft her
ei sexcesscapaci
tyinaproducti
onfaci
li
ty,i
tisli
kel
ythatthefi
rm'
ssuppl
y
curvei s
a.pricei nelast
ic.
b.noneoftheseanswer
s.
c.unitpr
iceelasti
c.
d.pri
ceelast
ic.*

102.Supposethatatapr iceof€30permont h,ther

eare30,
000subscri
ber
stocabl
e
tel
evisi
oninSmallTown.IfSmallTownCabl ev
isionrai
sesi
tspr
icet
o€40permonth,t
he
numberofsubscriberswillf
allto20,000.Atwhi chofthefol
l
owingpri
cesdoesSmall
TownCabl ev
isi
onearnthegreatestt
otalrev
enue?
a.€0permont h
b.€30permonth*
c.€40permont h
d.Ei
ther€30or€40permont h
becausethepri
ceelast
ici
tyof
demandi s1.
0.

103.Ifdemandi sli
near(astr
aightli
ne),
thenpri
ceelast
ici
tyofdemandi
s
a.elasti
cintheupperpor ti
onandi nel
asti
cinthelowerpor
tion.
*
b.i
nelasti
cint heupperporti
onandel ast
icint
helowerporti
on.
c.inel
asticthroughout.
d.constantalongthedemandcur v
e.
e.elasti
cthroughout.

104.Ifconsumersthi
nkthatt
herear ev er
yfewsubst
it
utesf
oragood,
then
a.supplywouldtendtobepri
ceelastic.
b.noneoftheseanswers.
c.demandwoul dtendtobepri
ceinel asti
c.*
d.demandwoul dtendtobepri
ceelast i
c.
e.supplywouldtendtobepri
ceinelastic.

MayAl
l
ahputbor
okai
nit(
Aami
n)