ECO401 MCQs3 from Quiz1 (chapter 1-12)

ECO401 MCQs from Quiz (chapter 1-12) The substitution effect of a price decrease for a good with a normal indifference curve pattern:

Select correct option:

Is always inversely related to the price change.   Measures the change in consumption of the good that is due to the consumer's feeling of being richer.   Is measured by the horizontal distance between the original and the new indifference curves.   Is sufficient information to plot an ordinary demand curve for the commodity being considered.

  

A schedule which shows the various amounts of a product consumers are willing and able to purchase at each price in a series of possible prices during a specified period of time is called:
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Supply   Demand   Quantity supplied   Quantity demanded

 

A "Giffen good" is defined as one for which:
Select correct option:
Marginal utility is zero.   The demand curve is perfectly elastic.   The substitution effect is positive.   The demand curve is positively sloped.

 

 

When the price of petrol rises 10%, the quantity of petrol purchased falls by 8%. The demand for petrol is:
Select correct option:
Perfectly elastic   Unit elastic   Elastic   Inelastic

 

 

An individual whose attitude toward risk is illustrated:
Select correct option:
Risk averse.   Risk loving.   Risk neutral.   None of the given is necessarily correct.

 

 

If marginal product is above the average product:
Select correct option:
The total product will fall   The average product will rise   Average variable costs will fall   Total revenue will fall   Ref: A mathematical connection between average product and marginal product stating that the change in the average product depends on a comparison between the average product and marginal product. If marginal product is less than average product, then average product declines. If marginal product is greater than average product, then average product rises. If marginal product is equal to average product, then average product does not change.

 

Other things equal, expected income can be used as a direct measure of well-being:
Select correct option:
No matter what a person's preference to risk.   If and only if individuals are not risk-loving.   If and only if individuals are risk averse.   If and only if individuals are risk neutral.

 

 

If a sales tax on beer leads to reduced tax revenue, this means:
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Elasticity of demand is < 1.   Elasticity of demand is > 1.   Demand is upward-sloping.   Demand is perfectly inelastic.

 

 

Price floor results in:
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Equilibrium   Excess demand   Excess supply   All of the given options

 

 

A schedule which shows the various amounts of a product consumers are willing and able to purchase at each price in a series of possible prices during a specified period of time is called:
Select correct option:
Supply   Demand   Quantity supplied   Quantity demanded

 

 

It measures the percentage change in demand given a percentage change in consumer's income.
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Price elasticity of demand   Income elasticity of demand   Supply price elasticity   Cross price elasticity

 

Demand is elastic when the elasticity of demand is:
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Greater than 0   Greater than 1   Less than 1   Less than 0

 

 

 

 

 

 

Due to capacity constraints, the price elasticity of supply for most products is:

Select correct option:

The same in the long run and the short run.   Greater in the long run than in the short run.   Greater in the short run than in the long run.   Too uncertain to be estimated.

 

 

You observe that the price of houses and the number of houses purchased both rise over the course of the year. You conclude that:
Select correct option:
The demand for houses has increased   The demand curve for houses must be upward-sloping   The supply of houses has increased   Housing construction costs must be decreasing

 

 

If there is a price ceiling, there will be:
Select correct option:
Shortages   Surpluses   Equilibrium   None of the given options.