econ 208 midterm and final demo questions || A+
GUARANTEED!!
Refer to Figure 6-2. Suppose the price of X is $2, the price of Y is $1, and the consumer's
income is $10. The consumer is currently buying 4 units of good X and 2 units of good Y. In
order to maximize his utility, he should:
a. buy more of X and less Y
b. buy the same amount of X but less Y
c. buy more Y and less X.
d. buy more of X but the same amount Y
e. make no changes - he is already maximizing his total utility. correct answers c. buy more Y
and less X.
If the price elasticity of demand is 0.5, then a 10% increase in price results in a:
a. 0.5% decrease in quantity demanded
b. 5% decrease in total revenues
c. 50% reduction in quantity demanded
d. 5% increase in quantity demanded
e. 5% decrease in quantity demanded correct answers e. 5% decrease in quantity demanded
The elasticity of supply for some product will tend to be larger:
a. the harder it is for firms to shift from the production of this product to another.
b. the less time firms have to adjust to price changes.
c. the lower is the elasticity of demand for the product.
d. the easier it is for firms to shift from the production of this product to another.
e. the higher is the elasticity of demand for the product. correct answers d. the easier it is for
firms to shift from the production of this product to another.
The "law of demand" hypothesizes that, other things being equal,
a. price and demand vary inversely.
b. price and quantity demanded are positively related.
c. the higher the income, the higher the quantity demanded.
d. the lower the price, the greater the demand.
e. the higher the price, the lower the quantity demanded. correct answers e. the higher the
price, the lower the quantity demanded.
Which of the following is a normative statement?
a. Queen Elizabeth Il is the wealthiest woman in the world.
b. Reducing unemployment is more important than reducing inflation.
c. The sun rises in the west and sets in the east.
d. An increase in the price of lumber is followed by a decrease in the construction of new
houses.
e. A government deficit will reduce unemployment and cause an increase in prices. correct
answers c. The sun rises in the west and sets in the east.
Society's resources are often divided into broad categories. They are
goods and services.
land, labour, and capital.
population and natural resources.
, factors of consumption.
tangible commodities and intangible commodities. correct answers land, labour, and capital.
When the percentage change in quantity demanded is greater than the percentage change in
price that brought it about, demand is said to be:
unelastic.
zero elastic.
elastic.
inelastic.
unit elastic. correct answers Elastic
Which of the following best describes a binding price floor?
a minimum price, below equilibrium, below which price is not allowed to fall
a maximum price, below equilibrium, which price is not allowed to exceed
a minimum price, above equilibrium, below which price is not allowed to fall
a maximum price, above equilibrium, which price is not allowed to exceed
any minimum price below which price is not allowed to fall correct answers a minimum
price, above equilibrium, below which price is not allowed to fall
As the price for some product increases from $4.00 to $5.00 per unit, quantity demanded
decreases from 400 to 300 units per month. For this segment of the demand curve, the price
elasticity of demand is
1
7/9
9/7.
7.
9 correct answers 9/7.
When a consumer's marginal rate of substitution between X and Y is equal to the ratio of
prices for X and Y, and when the consumer is spending all available income, then
the budget line is tangent to an indifference curve
the consumer is not maximizing his utility
the budget line is tangent to the indifference curve at all quantities of X and Y
a higher indifference curve can be reached given the existing budget line
all budget lines are tangent to all indifference curves. correct answers the budget line must be
tangent to the indifference curve.
Refer to Figure 6-10. In general, the absolute value of the slope of the budget lines is equal to
Question 10 options:
$15/value of all other goods.
the relative price ratio (Pcappuccino/Pall other goods).t
he relative price ratio (Pall other goods/Pcappuccino).
the dollar value of all other goods divided by the number of cappuccinos consumed per week.
the quantity of all other goods consumed divided by the quantity of cappuccinos consumed.
correct answers the relative price ratio (Pcappuccino/Pall other goods).
Refer to Table 7-1. To an accountant, this family-owned catering company is earning
________. To an economist, the same firm is earning ________.
GUARANTEED!!
Refer to Figure 6-2. Suppose the price of X is $2, the price of Y is $1, and the consumer's
income is $10. The consumer is currently buying 4 units of good X and 2 units of good Y. In
order to maximize his utility, he should:
a. buy more of X and less Y
b. buy the same amount of X but less Y
c. buy more Y and less X.
d. buy more of X but the same amount Y
e. make no changes - he is already maximizing his total utility. correct answers c. buy more Y
and less X.
If the price elasticity of demand is 0.5, then a 10% increase in price results in a:
a. 0.5% decrease in quantity demanded
b. 5% decrease in total revenues
c. 50% reduction in quantity demanded
d. 5% increase in quantity demanded
e. 5% decrease in quantity demanded correct answers e. 5% decrease in quantity demanded
The elasticity of supply for some product will tend to be larger:
a. the harder it is for firms to shift from the production of this product to another.
b. the less time firms have to adjust to price changes.
c. the lower is the elasticity of demand for the product.
d. the easier it is for firms to shift from the production of this product to another.
e. the higher is the elasticity of demand for the product. correct answers d. the easier it is for
firms to shift from the production of this product to another.
The "law of demand" hypothesizes that, other things being equal,
a. price and demand vary inversely.
b. price and quantity demanded are positively related.
c. the higher the income, the higher the quantity demanded.
d. the lower the price, the greater the demand.
e. the higher the price, the lower the quantity demanded. correct answers e. the higher the
price, the lower the quantity demanded.
Which of the following is a normative statement?
a. Queen Elizabeth Il is the wealthiest woman in the world.
b. Reducing unemployment is more important than reducing inflation.
c. The sun rises in the west and sets in the east.
d. An increase in the price of lumber is followed by a decrease in the construction of new
houses.
e. A government deficit will reduce unemployment and cause an increase in prices. correct
answers c. The sun rises in the west and sets in the east.
Society's resources are often divided into broad categories. They are
goods and services.
land, labour, and capital.
population and natural resources.
, factors of consumption.
tangible commodities and intangible commodities. correct answers land, labour, and capital.
When the percentage change in quantity demanded is greater than the percentage change in
price that brought it about, demand is said to be:
unelastic.
zero elastic.
elastic.
inelastic.
unit elastic. correct answers Elastic
Which of the following best describes a binding price floor?
a minimum price, below equilibrium, below which price is not allowed to fall
a maximum price, below equilibrium, which price is not allowed to exceed
a minimum price, above equilibrium, below which price is not allowed to fall
a maximum price, above equilibrium, which price is not allowed to exceed
any minimum price below which price is not allowed to fall correct answers a minimum
price, above equilibrium, below which price is not allowed to fall
As the price for some product increases from $4.00 to $5.00 per unit, quantity demanded
decreases from 400 to 300 units per month. For this segment of the demand curve, the price
elasticity of demand is
1
7/9
9/7.
7.
9 correct answers 9/7.
When a consumer's marginal rate of substitution between X and Y is equal to the ratio of
prices for X and Y, and when the consumer is spending all available income, then
the budget line is tangent to an indifference curve
the consumer is not maximizing his utility
the budget line is tangent to the indifference curve at all quantities of X and Y
a higher indifference curve can be reached given the existing budget line
all budget lines are tangent to all indifference curves. correct answers the budget line must be
tangent to the indifference curve.
Refer to Figure 6-10. In general, the absolute value of the slope of the budget lines is equal to
Question 10 options:
$15/value of all other goods.
the relative price ratio (Pcappuccino/Pall other goods).t
he relative price ratio (Pall other goods/Pcappuccino).
the dollar value of all other goods divided by the number of cappuccinos consumed per week.
the quantity of all other goods consumed divided by the quantity of cappuccinos consumed.
correct answers the relative price ratio (Pcappuccino/Pall other goods).
Refer to Table 7-1. To an accountant, this family-owned catering company is earning
________. To an economist, the same firm is earning ________.
