Quiz
Quiz #2/3 [MCQ | Chapter 4-6]
Questions in this quiz (60)
1A perfectly competitive market has
- Afirms that set their own prices.
- Bonly one seller.
- Cat least a few sellers.
- Dmany buyers and sellers.
- Enone of these answers.
2If an increase in the price of blue jeans leads to an increase in the demand for
tennis shoes, then blue jeans and tennis shoes are:- Acomplements.
- Binferior goods.
- Cnormal goods.
- Dnone of these answers.
- Esubstitutes.
3The law of demand states that an increase in the price of a good
- Aincreases the supply of that good.
- Bdecreases the quantity demanded for that good.
- Cdecreases the demand for that good.
- Dincreases the quantity supplied of that good.
- Enone of these answers.
4The law of supply states that an increase in the price of a good
- Anone of these answers.
- Bincreases the quantity supplied of that good.
- Cincreases the supply of that good.
- Ddecreases the demand for that good.
- Edecreases the quantity demanded for that good.
5If an increase in consumer incomes leads to a decrease in the demand for camping equipment, then camping equipment is
- Aa normal good.
- Bnone of these answers.
- Can inferior good.
- Da substitute good.
- Ea complementary good.
6A monopolistic market has
- Amany buyers and sellers.
- Bnone of these answers.
- Cfirms that are price takers.
- Donly one seller.
- Eat least a few sellers.
7Which of the following shifts the demand for watches to the right?
- Aan increase in the price of watches
- Bnone of these answers
- Ca decrease in the price of watch batteries if watch batteries and watches are complements
- Da decrease in consumer incomes if watches are a normal good
- Ea decrease in the price of watches
8All of the following shift the supply of watches to the right except
- Aan advance in the technology used to manufacture watches.
- Ban increase in the price of watches.
- CAll of these answers cause an increase in the supply of watches.
- Da decrease in the wage of workers employed to manufacture watches.
- Emanufacturers' expectation of lower watch prices in the future.
9If the price of a good is above the equilibrium price,
- Athere is a surplus and the price will rise.
- Bthere is a shortage and the price will fall.
- Cthere is a shortage and the price will rise.
- Dthe quantity demanded is equal to the quantity supplied and the price remains unchanged.
- Ethere is a surplus and the price will fall.
10If the price of a good is below the equilibrium price,
- Athere is a shortage and the price will rise.
- Bthe quantity demanded is equal to the quantity supplied and the price remains unchanged.
- Cthere is a shortage and the price will fall.
- Dthere is a surplus and the price will rise.
- Ethere is a surplus and the price will fall.
11If the price of a good is equal to the equilibrium price,
- Athere is a shortage and the price will fall.
- Bthe quantity demanded is equal to the quantity supplied and the price remains unchanged.
- Cthere is a surplus and the price will rise.
- Dthere is a shortage and the price will rise.
- Ethere is a surplus and the price will fall.
12An increase (rightward shift) in the demand for a good will tend to cause
- Aan increase in the equilibrium price and quantity.
- Bnone of these answers.
- Can increase in the equilibrium price and a decrease in the equilibrium quantity.
- Da decrease in the equilibrium price and an increase in the equilibrium quantity.
- Ea decrease in the equilibrium price and quantity.
13A decrease (leftward shift) in the supply for a good will tend to cause
- Aan increase in the equilibrium price and quantity.
- Ba decrease in the equilibrium price and an increase in the equilibrium quantity.
- Cnone of these answers.
- Da decrease in the equilibrium price and quantity.
- Ean increase in the equilibrium price and a decrease in the equilibrium quantity.
14Suppose there is an increase in both the supply and demand for personal computers. In the market for personal computers, we would expect
- Athe equilibrium quantity to rise and the equilibrium price to rise.
- Bthe equilibrium quantity to rise and the equilibrium price to fall.
- Cthe equilibrium quantity to rise and the equilibrium price to remain constant.
- Dthe change in the equilibrium quantity to be ambiguous and the equilibrium price to rise.
- Ethe equilibrium quantity to rise and the change in the equilibrium price to be ambiguous.
15Suppose there is an increase in both the supply and demand for personal computers. Further, suppose the supply of personal computers increases more than demand for personal computers. In the market for personal computers, we would expect
- Athe change in the equilibrium quantity to be ambiguous and the equilibrium price to fall.
- Bthe equilibrium quantity to rise and the equilibrium price to rise.
- Cthe equilibrium quantity to rise and the change in the equilibrium price to be ambiguous.
- Dthe equilibrium quantity to rise and the equilibrium price to fall.
- Ethe equilibrium quantity to rise and the equilibrium price to remain constant.
16Which of the following statements is true about the impact of an increase in the price of lettuce?
- ABoth the demand for lettuce will decrease and the equilibrium price and quantity of salad dressing will fall.
- BThe supply of lettuce will decrease.
- CThe demand for lettuce will decrease.
- DThe equilibrium price and quantity of salad dressing will fall.
- EThe equilibrium price and quantity of salad dressing will rise.
17Suppose a frost destroys much of the Florida orange crop. At the same time, suppose consumer tastes shift toward orange juice. What would we expect to happen to the equilibrium price and quantity in the market for orange juice?
- APrice will decrease; quantity is ambiguous.
- BThe impact on both price and quantity is ambiguous.
- CPrice will increase; quantity will increase.
- DPrice will increase; quantity will decrease.
- EPrice will increase; quantity is ambiguous.
18Suppose consumer tastes shift toward the consumption of apples. Which of the following statements is an accurate description of the impact of this event on the market for apples?
- AThere is an increase in the quantity demanded of apples and in the supply for apples.
- BThere is an increase in the demand and supply of apples.
- CThere is an increase in the demand for apples and a decrease in the supply of apples.
- DThere is a decrease in the quantity demanded of apples and an increase in the supply for apples.
- EThere is an increase in the demand for apples and an increase in the quantity supplied of apples.
19Suppose both buyers and sellers of wheat expect the price of wheat to rise in the near future. What would we expect to happen to the equilibrium price and quantity in the market for wheat today?
- AThe impact on both price and quantity is ambiguous.
- BPrice will decrease; quantity is ambiguous.
- CPrice will increase; quantity will decrease.
- DPrice will increase; quantity is ambiguous.
- EPrice will increase; quantity will increase.
20An inferior good is one for which an increase in income causes a(n)
- Adecrease in supply.
- Bincrease in demand.
- Cincrease in supply.
- Ddecrease in demand.
21If a small percentage increase in the price of a good greatly reduces the quantity demanded for that good, the demand for that good is
- Aincome inelastic.
- Bprice inelastic.
- Cprice elastic.
- Dunit price elastic.
- Eincome elastic.
22The price elasticity of demand is defined as
- Athe percentage change in the quantity demanded divided by the percentage change in income.
- Bthe percentage change in income divided by the percentage change in the quantity demanded.
- Cthe percentage change in the quantity demanded of a good divided by the percentage change in the price of that good.
- Dnone of these answers.
- Ethe percentage change in price of a good divided by the percentage change in the quantity demanded of that good.
23In general, a flatter demand curve is more likely to be
- Aprice elastic.
- Bunit price elastic.
- Cnone of these answers.
- Dprice inelastic.
24In general, a steeper supply curve is more likely to be
- Aprice elastic.
- Bnone of these answers.
- Cunit price elastic.
- Dprice inelastic.
25Which of the following would cause a demand curve for a good to be price inelastic?
- AThe good is a luxury.
- BThere are a great number of substitutes for the good.
- CThe good is a necessity.
- DThe good is an inferior good.
26The demand for which of the following is likely to be the most price inelastic?
- Atransportation
- Btaxi rides
- Cbus tickets
- Dairline tickets
27If the cross-price elasticity between two goods is negative, the two goods are likely to be
- Asubstitutes.
- Bcomplements.
- Cnecessities.
- Dluxuries.
28If a supply curve for a good is price elastic, then
- Athe quantity supplied is sensitive to changes in the price of that good.
- Bthe quantity demanded is insensitive to changes in the price of that good.
- Cthe quantity demanded is sensitive to changes in the price of that good.
- Dthe quantity supplied is insensitive to changes in the price of that good.
- Enone of these answers.
29If a fisherman must sell all of his daily catch before it spoils for whatever price he is offered, once the fish are caught the fisherman's price elasticity of supply for fresh fish is
- Azero.
- Binfinite.
- Cone.
- Dunable to be determined from this information.
30A decrease in supply (shift to the left) will increase total revenue in that market if
- Ademand is price inelastic.
- Bsupply is price elastic.
- Csupply is price inelastic.
- Ddemand is price elastic.
31If an increase in the price of a good has no impact on the total revenue in that market, demand must be
- Aall of these answers.
- Bprice inelastic.
- Cunit price elastic.
- Dprice elastic.
32If consumers always spend 15 percent of their income on food, then the income elasticity of demand for food is
- A1.50.
- B1.15.
- Cnone of these answers.
- D0.15.
- E1.00.
33Technological improvements in agriculture that shift the supply of agricultural commodities to the right tend to
- Aincrease total revenue to farmers as a whole because the demand for food is elastic.
- Bincrease total revenue to farmers as a whole because the demand for food is inelastic.
- Creduce total revenue to farmers as a whole because the demand for food is elastic.
- Dreduce total revenue to farmers as a whole because the demand for food is inelastic.
34If supply is price inelastic, the value of the price elasticity of supply must be
- Ainfinite.
- Bzero.
- Cless than 1.
- Dnone of these answers.
- Egreater than 1.
35If there is excess capacity in a production facility, it is likely that the firm's supply curve is
- Aprice inelastic.
- Bnone of these answers.
- Cunit price elastic.
- Dprice elastic.
36Suppose that at a price of €30 per month, there are 30,000 subscribers to cable television in Small Town. If Small Town Cablevision raises its price to €40 per month, the number of subscribers will fall to 20,000. Using the midpoint method for calculating the elasticity, what is the price elasticity of demand for cable TV in Small Town?
- A1.4
- B0.66
- C0.75
- D2.0
- E1.0
37Suppose that at a price of €30 per month, there are 30,000 subscribers to cable television in Small Town. If Small Town Cablevision raises its price to €40 per month, the number of subscribers will fall to 20,000. At which of the following prices does Small Town Cablevision earn the greatest total revenue?
- A€0 per month
- B€30 per month
- C€40 per month
- DEither €30 or €40 per month because the price elasticity of demand is 1.0.
38If demand is linear (a straight line), then price elasticity of demand is
- Aelastic in the upper portion and inelastic in the lower portion.
- Binelastic in the upper portion and elastic in the lower portion.
- Cinelastic throughout.
- Dconstant along the demand curve.
- Eelastic throughout.
39If the income elasticity of demand for a good is negative, it must be
- Aan elastic good.
- Ban inferior good.
- Ca normal good.
- Da luxury good.
40If consumers think that there are very few substitutes for a good, then
- Asupply would tend to be price elastic.
- Bnone of these answers.
- Cdemand would tend to be price inelastic.
- Ddemand would tend to be price elastic.
- Esupply would tend to be price inelastic.
41For a price ceiling to be a binding constraint on the market, the government must set it
- Aabove the equilibrium price.
- Bbelow the equilibrium price.
- Cprecisely at the equilibrium price.
- Dat any price because all price ceilings are binding constraints.
42A binding price ceiling creates
- Aa shortage or a surplus depending on whether the price ceiling is set above or below the equilibrium price.
- Ba surplus.
- Ca shortage.
- Dan equilibrium.
43Suppose the equilibrium price for apartments is €500 per month and the government imposes rent controls of €250. Which of the following is unlikely to occur as a result of the rent controls?
- AThere may be long lines of buyers waiting for apartments.
- BLandlords may discriminate among apartment renters.
- CLandlords may be offered bribes to rent apartments.
- DThere will be a shortage of housing.
- EThe quality of apartments will improve.
44A price floor
- Aalways determines the price at which a good must be sold.
- Bsets a legal maximum on the price at which a good can be sold.
- Cis not a binding constraint if it is set above the equilibrium price.
- Dsets a legal minimum on the price at which a good can be sold.
45Which of the following statements about a binding price ceiling is true?
- AThe shortage created by the price ceiling is greater in the short run than in the long run.
- BThe surplus created by the price ceiling is greater in the short run than in the long run.
- CThe surplus created by the price ceiling is greater in the long run than in the short run.
- DThe shortage created by the price ceiling is greater in the long run than in the short run.
46Which side of the market is more likely to lobby government for a price floor?
- Athe buyers
- BNeither buyers nor sellers desire a price floor.
- Cthe sellers
- DBoth buyers and sellers desire a price floor.
47The surplus caused by a binding price floor will be greatest if
- Ademand is inelastic and supply is elastic.
- Bsupply is inelastic and demand is elastic.
- Cboth supply and demand are elastic.
- Dboth supply and demand are inelastic.
48Which of the following is an example of a price floor?
- Athe minimum wage
- Brent controls
- Crestricting petrol prices to €1.00 per litre when the equilibrium price is €1.50 per litre
- DAll of these answers are price floors.
49Which of the following statements is true if the government places a price ceiling on petrol at €1.50 per litre and the equilibrium price is €1.00 per litre?
- AA significant increase in the demand for petrol could cause the price ceiling to become a binding constraint.
- BA significant increase in the supply of petrol could cause the price ceiling to become a binding constraint.
- CThere will be a shortage of petrol.
- DThere will be a surplus of petrol.
50Which of the following workers would be most likely to find it more difficult to get a job after a rise in the minimum wage rate?
- AA teenage worker with few qualifications.
- BA manual worker with fifteen years of work experience.
- CA professional worker with a university degree.
- DAll three are equally likely to find it difficult to get a job.
51Within the supply and demand model, a tax collected from the buyers of a good shifts the
- Asupply curve downward by the size of the tax per unit.
- Bsupply curve upward by the size of the tax per unit.
- Cdemand curve upward by the size of the tax per unit.
- Ddemand curve downward by the size of the tax per unit.
52Within the supply and demand model, a tax collected from the sellers of a good shifts the
- Ademand curve downward by the size of the tax per unit.
- Bsupply curve downward by the size of the tax per unit.
- Cdemand curve upward by the size of the tax per unit.
- Dsupply curve upward by the size of the tax per unit.
53Which of the following takes place when a tax is placed a good?
- Aa decrease in the price buyers pay, an increase in the price sellers receive, and a decrease in the quantity sold
- Ban increase in the price buyers pay, a decrease in the price sellers receive, and an increase in the quantity sold
- Ca decrease in the price buyers pay, an increase in the price sellers receive, and an increase in the quantity sold
- Dan increase in the price buyers pay, a decrease in the price sellers receive, and a decrease in the quantity sold
54When a tax is collected from the buyers in a market,
- Athe tax burden falls most heavily on the buyers.
- Bthe buyers bear the burden of the tax.
- Cthe sellers bear the burden of the tax.
- Dthe tax burden on the buyers and sellers is the same as an equivalent tax collected from the sellers.
55A tax of €1.00 per litre on petrol
- Aplaces a tax wedge of €1.00 between the price the buyers pay and the price the sellers receive.
- Bdecreases the price the sellers receive by €1.00 per litre.
- Cincreases the price the buyers pay by €1.00 per litre.
- Dincreases the price the buyers pay by precisely €0.50 and reduces the price received by sellers by precisely €0.50.
56The burden of a tax falls more heavily on the sellers in a market when
- Aboth supply and demand are elastic.
- Bboth supply and demand are inelastic.
- Cdemand is inelastic and supply is elastic.
- Ddemand is elastic and supply is inelastic.
57A tax placed on a good that is a necessity for consumers will likely generate a tax burden that
- Afalls more heavily on sellers.
- Bfalls entirely on sellers.
- Cfalls more heavily on buyers.
- Dis evenly distributed between buyers and sellers.
58The burden of a tax falls more heavily on the buyers in a market when
- Aboth supply and demand are inelastic.
- Bdemand is elastic and supply is inelastic.
- Cboth supply and demand are elastic.
- Ddemand is inelastic and supply is elastic.
59Which of the following statements about the burden of a tax is correct?
- AThe tax burden generated from a tax placed on a good consumers perceive to be a necessity will fall most heavily on the sellers of the good.
- BThe burden of a tax falls on the side of the market (buyers or sellers) from which it is collected.
- CThe distribution of the burden of a tax is determined by the relative elasticities of supply and demand and is not determined by legislation.
- DThe tax burden falls most heavily on the side of the market (buyers or sellers) that is most willing to leave the market when price movements are unfavourable to them.
60For which of the following products would the burden of a tax likely fall more heavily on the sellers?
- Aclothing
- Bfood
- Chousing
- Dentertainment
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- Hell on Earth Economics [Teacher: Abdinova Makpal ; Final Exam + Quizzes] ▼ (Quizzes #2 & #3 [Chapters 1-3, 4-6, 13-17-18, 23-24]) Quiz on Quiz #2/3 [MCQ | Chapter 4-6], created by Good Guy Beket on 02/12/2018.
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