1. Suppose that, as the price of product X falls from $1.00 to $0.90, the demand
ID: 1156371 • Letter: 1
Question
1. Suppose that, as the price of product X falls from $1.00 to $0.90, the demanded quantity of product Y increases from 100 to 110. It can be concluded that goods X and Y are:
A. complements
B. substitutes
C. unrelated
D. complements and substitutes at the same time
2. In which of the following cases will total revenue decrease?
A. Price falls and demand is inelastic.
B. Price falls and supply is elastic.
C. Price rises and demand is inelastic.
D. Price rises and demand is elastic.
3. Any point outside the production possibilities curve indicates that:
A. the resources of an economy are fully employed, and productive efficiency is achieved.
B. as the production of one good increases, larger and larger sacrifices of other goods will be required.
C. least-cost production has been realised.
D. none of the above.
4. An increase in the price of a product will increase the amount sold because:
A. supply curves are upward-sloping.
B. the higher price means that real incomes have risen.
C. consumers will substitute other products for the one whose price has risen.
D. consumers substitute relatively high-priced products for relatively lowpriced products.
5. The law of supply states that:
A. price and quantity supplied are positively related.
B. the larger the number of sellers in a market, the lower the product price.
C. price and quantity supplied are inversely related.
D. consumers will buy more of a given product at high prices than they will at low prices.
6. Which of the following would shift the demand curve for beef? A
. A widely publicised study that indicates beef increases one's cholesterol.
b A reduction in the price of cattle feed.
C. More firms entering the beef market.
D. A change in the expectations of beef producers.
7. Economic profits are usually:
A. equal to the accounting profits.
B. larger than the accounting profits.
C. smaller than accounting profits.
D. none of the above.
8. The demand schedule, or curve, confronted by a monopolistically competitive firm is:
A. relatively elastic;
B. perfectly elastic.
C. relatively inelastic;
D. perfectly inelastic.
9. Under oligopoly, entry to the industry is:
A. completely free of barriers.
B. more difficult than under pure competition, but not nearly as difficult as under pure monopoly.
C. more difficult than under pure monopoly.
D. blocked.
10. Suppose the economy is operating within the Keynesian range of the short-run aggregate supply curve, and government increases expenditures by $20 billion. We would expect:
A. no change in domestic output or the price level.
B. both the domestic output and the price level to rise.
C. the domestic output to fall, but the price level to rise.
D. the domestic output to rise, but no change in the price level.
Explanation / Answer
Answer:
1) A. Complements
2) D. Price rises and demand is elastic.
3) D. None of the above.
Explanation: Any point outside the ppf indicates that it is unattainable.
4) A. Supply curves are upward sloping.
5) A. Price and quantity supplied are positively related.
6) B. Reduction in price of cattle feed.
7) C. Smaller than accounting profits.
8) A. relatively elastic.
9) B. More difficult than under pure competition, but not nearly as difficult as pure monopoly.
10) B. Both domestic output and the price level to rise.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.