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ECS1500 – Exam Pack (Revision / Q & A) Email:
2
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Multiple Choice
Questions (Section A):
(A)
1. A normal good is one for which the income elasticity is
greater than one.
a. True
✅ b. False
Explanation: A normal good has a positive income elasticity (> 0),
but if income elasticity is greater than 1, it's classified as a luxury
good.
2. The demand for a good, perceived by the consumer to be a
necessity, will tend to be elastic.
a. True
✅ b. False
Explanation: Necessities have inelastic demand—consumers will
buy them even if prices rise.
3. Macroeconomics is concerned with the study of how
households and firms make decisions and how they interact in
specific markets.
3
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, lOMoAR cPSD| 32110785
ECS1500 – Exam Pack (Revision / Q & A) Email:
a. True
✅ b. False
Explanation: This is the focus of microeconomics.
Macroeconomics studies the entire economy, including issues like
inflation, unemployment, and GDP.
4. Price and quantity demanded for most goods are positively
related.
a. True
✅ b. False
Explanation: According to the law of demand, price and quantity
demanded are negatively related—as price rises, demand falls.
5. If three variables are related, one of them must be held
constant when plotting the other two in the by-coordinate
system.
✅ a. True
b. False
Explanation: To analyze the relationship between two variables,
the third must be held constant (ceteris paribus).
6. A 50% increase in price, which results in a 90% decrease in
the quantity demanded, indicates that demand is elastic in this
price range.
✅ a. True
b. False
Explanation: Elastic demand means that the percentage change in
4
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quantity demanded is greater than the percentage change in price.
(90% > 50%)
7. Absolute advantage is a comparison based on productivity.
✅ a. True
b. False
Explanation: Absolute advantage means producing more output
with the same input—it's based on productivity, not opportunity
cost.
8. A decrease in the price of soft drinks will increase their
demand (will shift the curve to the right).
a. True
✅ b. False
Explanation: A decrease in price leads to a movement along the
demand curve, not a shift. A shift happens due to other factors like
income, tastes, etc.
9. If pizza and hamburgers are substitutes, a decrease in the
price of pizza would increase the demand for hamburgers.
a. True
✅ b. False
Explanation: If pizza becomes cheaper, people will buy more
pizza and less hamburgers, so the demand for hamburgers falls.
5
Downloaded by Vincent Cosmas
()
ECS1500 – Exam Pack (Revision / Q & A) Email:
2
Downloaded by Vincent Cosmas ()
, lOMoAR cPSD| 32110785
Multiple Choice
Questions (Section A):
(A)
1. A normal good is one for which the income elasticity is
greater than one.
a. True
✅ b. False
Explanation: A normal good has a positive income elasticity (> 0),
but if income elasticity is greater than 1, it's classified as a luxury
good.
2. The demand for a good, perceived by the consumer to be a
necessity, will tend to be elastic.
a. True
✅ b. False
Explanation: Necessities have inelastic demand—consumers will
buy them even if prices rise.
3. Macroeconomics is concerned with the study of how
households and firms make decisions and how they interact in
specific markets.
3
Downloaded by Vincent Cosmas
()
, lOMoAR cPSD| 32110785
ECS1500 – Exam Pack (Revision / Q & A) Email:
a. True
✅ b. False
Explanation: This is the focus of microeconomics.
Macroeconomics studies the entire economy, including issues like
inflation, unemployment, and GDP.
4. Price and quantity demanded for most goods are positively
related.
a. True
✅ b. False
Explanation: According to the law of demand, price and quantity
demanded are negatively related—as price rises, demand falls.
5. If three variables are related, one of them must be held
constant when plotting the other two in the by-coordinate
system.
✅ a. True
b. False
Explanation: To analyze the relationship between two variables,
the third must be held constant (ceteris paribus).
6. A 50% increase in price, which results in a 90% decrease in
the quantity demanded, indicates that demand is elastic in this
price range.
✅ a. True
b. False
Explanation: Elastic demand means that the percentage change in
4
Downloaded by Vincent Cosmas ()
, lOMoAR cPSD| 32110785
quantity demanded is greater than the percentage change in price.
(90% > 50%)
7. Absolute advantage is a comparison based on productivity.
✅ a. True
b. False
Explanation: Absolute advantage means producing more output
with the same input—it's based on productivity, not opportunity
cost.
8. A decrease in the price of soft drinks will increase their
demand (will shift the curve to the right).
a. True
✅ b. False
Explanation: A decrease in price leads to a movement along the
demand curve, not a shift. A shift happens due to other factors like
income, tastes, etc.
9. If pizza and hamburgers are substitutes, a decrease in the
price of pizza would increase the demand for hamburgers.
a. True
✅ b. False
Explanation: If pizza becomes cheaper, people will buy more
pizza and less hamburgers, so the demand for hamburgers falls.
5
Downloaded by Vincent Cosmas
()
