Orientation of Microeconomics, Quizzes of Economics

Download Orientation of Microeconomics and more Quizzes Economics in PDF only on Docsity! EXERCISE 1 1. In a market economy, supply and demand determine a. both the quantity of each good produced and the price at which it is sold. b. the quantity of each good produced but not the price at which it is sold. c. the price at which each good is sold but not the quantity of each good produced. d. neither the quantity of each good produced nor the price at which it is sold. 2. In a market economy, a. supply determines demand and demand, in turn, determines prices. b. demand determines supply and supply, in turn, determines prices. c. the allocation of scarce resources determines prices and prices, in turn, determine supply and demand. d. supply and demand determine prices and prices, in turn, allocate the economy’s scarce resources. 3. In a competitive market, the price of a product a. is determined by buyers, and the quantity of the product produced is determined by sellers. b. is determined by sellers, and the quantity of the product produced is determined by buyers. c. and the quantity of the product produced are both determined by sellers. d. None of the above is correct. 4. A competitive market is a market in which a. an auctioneer helps set prices and arrange sales. b. there are only a few sellers. c. the forces of supply and demand do not apply. d. no individual buyer or seller has any significant impact on the market price. 5. Assume Diana buys computers in a competitive market. It follows that a. Diana has a limited number of sellers to turn to when she buys a computer. b. Diana will find herself negotiating with sellers whenever she buys a computer. c. if Diana buys a large number of computers, the price of computers will rise noticeably. d. None of the above is correct. 6. An increase in quantity demanded a. results in a movement downward and to the right along a demand curve. b. results in a movement upward and to the left along a demand curve. c. shifts the demand curve to the left. d. shifts the demand curve to the right. 7. When the price of a good or service changes, a. the supply curve shifts in the opposite direction. b. the demand curve shifts in the opposite direction. c. the demand curve shifts in the same direction. d. there is a movement along a given demand curve. 8. The law of demand states that, other things equal, an increase in a. price causes quantity demanded to increase. b. price causes quantity demanded to decrease. c. quantity demanded causes price to increase. d. quantity demanded causes price to decrease. 9. The demand curve for a good is a line that relates a. price and quantity demanded. b. income and quantity demanded. c. quantity demanded and quantity supplied. d. price and income. 10. When quantity demanded increases at every possible price, the demand curve has a. shifted to the left. b. shifted to the right. c. not shifted; rather, we have moved along the demand curve to a new point on the same curve. d. not shifted; rather, the demand curve has become steeper 11. The market demand curve a. is the sum of all individual demand curves. b. is the demand curve for every product in an industry. c. shows the average quantity demanded by individual demanders at each price. d. is always flatter than an individual demand curve. 12. The quantity supplied of a good is the amount that a. buyers are willing and able to purchase. b. sellers are able to produce. c. buyers and sellers agree will be brought to market. d. sellers are willing and able to sell 13. Which of the following would cause a movement along the supply curve for cupcakes? a. an improvement in technology for commercial mixers b. a decrease in the price of cupcakes c. an increase in the price of cake flour d. All of the above are correct. 14. Which of these statements best represents the law of supply? a. When input prices increase, sellers produce less of the good. b. When production technology improves, sellers produce less of the good. c. When the price of a good decreases, sellers produce less of the good. d. When sellers’ supplies of a good increase, the price of the good increases. 29. The supply of oil is likely to be a. inelastic in both the short run and long run. b. elastic in both the short run and long run. c. elastic in the short run and inelastic in the long run. d. inelastic in the short run and elastic in the long run. 1) The price elasticity of demand is a measure of: A) the change in quantity demanded of a good that results from a change in its price. B) how consumers respond to excess demand. C) the change in price of a good that results from a change in its quantity demanded. D) the demand for a good. 2) When calculating price elasticity of demand, if the percentage change in price is negative, then the percentage change in quantity demanded is typically: A) greater than one. B) negative. C) less than one. D) positive. 3) The price elasticity of demand is typically expressed as a positive number because: A) it's convenient to use absolute values. B) both the numerator and the denominator are negative, so the formula yields a positive number. C) price and quantity move in the same direction. D) the demand curve has a positive slope 4) If the price of textbooks increases by one percent and the quantity demanded falls by one-half percent, then demand for textbooks is: A) elastic. B) negative. C) inelastic. D) unit elastic 5) If the absolute value of the price elasticity of demand for tickets to a football game is 2, then if the price increases by 1%, quantity demanded decreases by: A) 1%. B) 2%. C) ½%. D) 4%. 6) If 20% increase in the price of a good leads to a 60% decrease in the quantity demanded, then what is the price elasticity of demand? A) 1/6. B) 1/3. C) 30. D) 3. 7) If the price elasticity of demand for pineapples is 0.75, then a 4% increase in the price of pineapples will lead to a: A) 0.75% increase in the quantity of pineapples demanded. B) 0.75% decrease in the quantity of pineapples demanded. C) 3% decrease in the quantity of pineapples demanded. D) 3% increase in the quantity of pineapples demanded. 8) The demand for a good is elastic if the price elasticity of demand is: A) greater than one. B) less than one. C) equal to one. D) equal to zero 9) The demand for a good is inelastic with respect to price if the price elasticity of demand is: A) less than one. B) equal to one. C) equal to negative one. D) greater than one. 10) If the percentage change in the price of a good is less than the resulting percentage change in the quantity demanded of that good, then the demand for that good is: A) unit elastic. B) perfectly inelastic. C) inelastic. D) elastic. 11) If consumers respond to a 10% price reduction by buying twice as much of a particular good, we would conclude that: A) the price elasticity of demand at the original price was greater than one. B) the price elasticity of demand at the original price was less than one. C) there was excess demand at the original price. D) there was excess supply at the original price. 12) If consumers cannot readily switch to a close substitute when the price of a good increases, the demand for that good is likely to be: A) elastic. B) perfectly elastic. C) unit elastic. D) inelastic. 13) Suppose the price of a Snickers candy bar is $2.00 at both the airport and the grocery store. The price elasticity of demand for a Snickers candy bar at an airport is likely to be ________ the price elasticity of demand for a Snickers candy bar at the grocery store. A) equal to B) greater than C) less than D) the reciprocal of 14) Demand tends to be ________ in the short run than in the long run. A) more variable B) less important C) less elastic D) more elastic 15) Assume the price of gasoline doubles tonight and remains at that price for the next two years. Compared with the long-run price elasticity of demand for gasoline, the short-run price elasticity of demand for gasoline will be ________. A) more variable B) the same C) lower D) higher 16) Economists have found that the price elasticity of demand for water is higher in the summer than in the winter. Why is this likely to be so? A) Winter is longer than summer, and price elasticity is lower over longer time horizons. B) People take more vacations in the summer and so use less water at home. C) Winter water use tends to be for necessities such as cleaning and cooking, and summer water use tends to be for both necessities and non-necessities such as gardening and recreation. D) Summer is longer than winter, and price elasticity is higher over longer time horizons. 17) If demand is ________ with respect to price, a price increase will ________ total revenue. A) elastic; increase B) inelastic; increase C) inelastic; decrease D) unit elastic; decrease