Economics Questions In Tutorial Library

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TITLE: Economics Questions

CLASS / COURSE: Principle of Economics


If a 20% decrease in the price of long distance phone calls leads to a 35% increase in the quantity of calls demanded, you may conclude that the demand for phone calls is

      A)   elastic.
      B)   inelastic.
      C)   unit elastic.
      D)   stretchy elastic.

      2. Which of the following pairs are examples of substitutes?

      A)   Popcorn and Soda
      B)   Automobiles and bicycles
      C)   Boats and fishing tackle
      D)   Wine and cheese

      3. If a price in a competitive market is �too high to clear the market,�what does this usually mean? Assume upward-sloping supply curves.

      A)   No producer can cover the costs of production at that price
      B)   Quantity supplied exceeds quantity demanded at that price
      C)   Producers are leaving the industry.
      D)   Consumers are willing to buy all the units produced at that price.

      4. Which of the following statements is incorrect? Assume upward-sloping supply curves.

      A)   If the supply curve shifts left and the demand remains constant, equilibrium price will rise.
      B)   If the demand curve shifts left and the supply increase, equilibrium price will rise.
      C)   If the supply curve shifts right and the demand curve shifts left, equilibrium price will fall.
      D)   If the demand curve shifts right and the supply curve shifts left, price will rise.

      5. If CD's and MP3's are substitute goods and the price of MP3's rises (be careful because we don't know why the price of MP3's rises):

      A)   the demand for CD's will fall and their price fall
      B)   the demand curve for CD's will shift to the right and their price rise
      C)   the supply curve for CD's will shift to the left and their price fall
      D)   the quantity supplied of CD's will fall and their price rise

      6. Which of the following will not shift the demand curve of a normal good to the right?

      A)   an decrease in incomes
      B)   an increase in the price of a substitute good
      C)   a decrease in the price of a complement good
      D)   a population increase

      7.               Price per ear of corn                             Quantity of corn per week

                        $          .50                                                              10
                                    .75                                                              20
                                    .90                                                              35

      The above table represents:

      A)   Demand
      B)   Quantity demanded only
      C)   Supply
      D)   The market for corn

      8. Utility measures:

      A)   How much what you buy will cost you
      B)   How much consumer surplus you that you pay for
      C)   How much your electric bill will be in winter
      D)   How much happiness you get from what you buy

      9. If you increase price by 45% and quantity increases by 53%:

      A)   the price elasticity of supply is 1.18 and is elastic
      B)   the price elasticity of supply is .85 and is inelastic
      C)   the price elasticity of demand is 1.18 and is inelastic
      D)   the price elasticity of demand is .85 and is inelastic

      10. Even with unlimited funds we would eventually stop buying more of a specific product because of:

      A)   Increasing marginal cost
      B)   Diminishing marginal utility
      C)   Diminishing marginal product
      D)   The alpha principle


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