Economics

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Economics
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Economics practice questions
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  1. In Constructing models, economists:
    A. Make Simplified assumption
    B. Must use mathematical equations
    C. Attempt to duplicate the real world
    D. Include all available information
    A. Make simplified assumptions.
    (this multiple choice question has been scrambled)
  2. Which of the following is a microeconomic stattement?
    A. The real domestic output increased b 2.5% last year
    B Unemployment was 6.% of the labourforce last year
    C The price of wheat declined last year
    D The general price level increased by 4% last year
    C - The price of wheat declined last year.
  3. A hypothesis is:
    A. A fundamental truth which all economists accept
    B. a tentative, untested principle
    C. the same sa a normative statement
    D. Always athe result of induction
    B. A tentative untested principle
    (this multiple choice question has been scrambled)
  4. Microeconomics is concerned with:
    A. The establishment of an overall view of the operation of the economic system.
    B. The concealment of detailed information about specific segments of the economy.
    C. aggregate or total levels of income, employment and output.
    D. A detailed examination of specific economic units which comprise the economic system.
    D. A detailed examination of specific economic units which comprise the economic system.
    (this multiple choice question has been scrambled)
  5. Macroeconomics approaches the study of economics from the view point of
    A. The entire economy
    B. Governmental units
    C. The operation of specific product and resource markets
    D. Individual firms
    A. The entire economy
    (this multiple choice question has been scrambled)
  6. Generally speaking, it may be said that the inductive method:
    A. Begins with hypotheses that are tested against real world facts.
    B. Confuses correlation with cause and effect.
    C. Moves from facts to generalisations or theory
    D. Cannot be applied to economic analysis
    C Moves from facts to generalisations or theory
  7. The study of economics is primarily concerned with:
    A. Keeping private businesses from losing money
    B. Demonstrating that capitalistic economies are superior to socialistic economies.
    C Choices that are made in seeking to use scares resources efficiently.
    D. Determining the most equitable distribution of society's output.
    C. Choices that are made in seeking to use scarce resources efficiently.
  8. Economic Theories:
    A are useless becuase they are not based on laboratory experimentation.
    B. That are true for individual economic units are never true for the economic units are never true for the economy as a whole.
    C. are generalisations based upon a careful observations of facts.
    D. Are abstractions and therefore have no application to real situations.
    C. are generalisation based upon a careful observation of facts.
  9. Which of the following is a correct statement?
    A. Economic concepts or laws that are valid during depression are necessarily valid during prosperity
    B. Thought not quantitatively exact, economic laws are useful becuase they allow us to make predictions that are meaningful and useful.
    C. Economics is as scientific as physics and chemistry becuase economic laws are as quantitatively precise as the laws of physics or chemistry.
    D. Since economics is concerned with questions of 'ought', it is a branch of applied ethics and is not scientific.
    B Though not quantitatively exact, economic laws are useful because they allow us to make predicitions that are meaningful and useful.
  10. Economics may best be defined as:
    A. The empirical testing of value judgements through the use of induction and deduction.
    B. the interaction between macro and micro considerations.
    C. The study of behaviour of people and institutions in the production distribution and consumption of scarce goods.
    D. The use of policy to refute facts and hypotheses.
    C. The study of the behaviour of people and institutions in the production, distribution and consumption of scarce goods.
    (this multiple choice question has been scrambled)
  11. The term ceteris parbus means that:
    A. When variable X increases, so does the related variable.
    B. A number of relevant variables are assumed to be constant.
    C. the associated statement is normative.
    D. Many variables affect the variable under consideration.
    B. A number of relevant variables are assumed to be constant.
    (this multiple choice question has been scrambled)
  12. The deductive method:
    A. Confuses correlation with cause and effect.
    B. Begins with hypotheses that are tested against real world facts
    C. Applies to the physical sciences but not to social sciences.
    D. Begins with facts and moves to generalisations or theory.
    B. Begins with hypotheses that are tested against real world facts.
    (this multiple choice question has been scrambled)
  13. The term ceteris parbus means:
    A. If event A precedes event B, A has caused B.
    B. Other things being equal.
    C. Economics deals with facts, not values.
    D. Prosperity inevitably follows recession.
    B. Other things being equal.
    (this multiple choice question has been scrambled)
  14. The basic purpose of the ceteris paribus assumption is to:
    A. Determine whether X causes Y or vice versa
    B. Allow one to focus upon micro variables by ignoring macro variables.
    C. Allow one to reason about the relationship between two variables, without the intrusion of other variables.
    D. Allow one to focus upon macro variables by ignoring micro variables.
    C. Allow one to reason about the relationship between two variables, without the intrusion of other variables.
    (this multiple choice question has been scrambled)
  15. Economic models:
    A. Are limited to variables that are directly related to one another.
    B. Are of limited use because they cannot be tested empirically.
    C. Emphasise basic economic relationships by abstracting from the complexitites of the real world.
    D. Are unrealistic and therfore are of no practical consequence.
    C. Emphasise basic economic relationship by abstracting from the complexities of the real world.
    (this multiple choice question has been scrambled)
  16. The production possibilities curve illustrates the basic principle that:
    A. The larger production of a particular good, in time, will require smaller and smaller sacrifices from other goods.
    B. If all the resources of an economy are in use, more of one good can be produced if less of another good is produced.
    C. An economy will automatically seek a level of output so that all of its resources are employed.
    D. An economy has the capacity to produce increases in proportion to its population size.
    B. If all the resources of an economy are in use, more of one good can be produced if less of another good is produced.
    (this multiple choice question has been scrambled)
  17. The economising problem is essentially one of deciding how to make the best use of:
    A. Limited resources, to satisfy limited wants
    B. Unlimited resources, to satisfy limited wants.
    C. Virtually unlimited resources, to satisfy virtually unlimited wants.
    D. Limited resources, to satisfy virtually unlimited wants.
    D. Limited resources, to satisfy virtually unlimited wants.
    (this multiple choice question has been scrambled)
  18. The scarcity problem:
    A. Has been eliminated in affluent societies such as Austrlia
    B. Persists because material wants exceed available productive resources.
    C. Has been solved in all industrialised nation.
    D. Persists only because countries have failed to achieve continuous full employment.
    B. Persists because material wants exceed available productive resources.
    (this multiple choice question has been scrambled)
  19. The idea of 'allocative efficiency' refers to:
    A. Production, at some point, inside of the production possibilities curve.
    B. The production of the product-mix most wanted by society.
    C. The full employment of all available resources.
    D. The use of least-cost method of production.
    B. The production of the product-mix most wanted by society.
    (this multiple choice question has been scrambled)
  20. A fundamental problem of economics is:
    A. The establishment of prices that accurately reflect the relative scarcities of products and resources.
    B. The scarcity of productive resources relative to material wants.
    C. To establish an equitable system of personal and business taxation.
    D. To establish a democratic political framework for the provision of social goods and services.
    B. The scarcity of productive resources relative to material wants.
    (this multiple choice question has been scrambled)
  21. Productive efficiency refers to:
    A. The full employment of all available resources
    B. Production, at some point inside of the production possibilities curve.
    C. The production of the product-mix most wanted by society.
    D. The use of the least-cost method of production.
    D. The use of the least-cost method of production
    (this multiple choice question has been scrambled)
  22. An 'increase in efficiency' suggests that an economy:
    A. Has decided to produce more consumer goods and fewer capital goods.
    B. Is able to obtain more goods and services from a given amount of resources.
    C. Is using more costly production techniques.
    D. Is able to obtain to obtain fewer goods and services from a given amount of resources.
    B. Is able to obtain more goods and services from a given amount of resources.
    (this multiple choice question has been scrambled)
  23. Economic resources are also called:
    A. units of money capital.
    B. Free girts of nature.
    C. Factors of production
    D. Consumption goods.
    C. Factors of production.
    (this multiple choice question has been scrambled)
  24. The concept of economic efficiency is primarily concerned with:
    A. Obtaining the maximum output from available resources.
    B. Considerations of equity in the distribution of wealth
    C. The conservation of irreplaceable natural resources.
    D. The limited wants and unlimited resources dilemma
    A. Obtaining the maximum output from available resources.
    (this multiple choice question has been scrambled)
  25. Which of the following will not entail an outward shift of the production possibilities curve?
    A. An upgrading of the quality of a nation's human resources.
    B. The improvement of a society's technological knowledge
    C. An increase in the quantity of a society's labour force.
    D. The reduction of employment.
    D. The reduction of unemployment
    (this multiple choice question has been scrambled)
  26. An increase in the price of a product will reduce the amount purchased because:
    A. Consumers substitute relatively high-priced products for relatively low-priced products.
    B. Consumers will substitute other products for the one whose price has risen.
    C. Supply curves are up-sloping.
    D. The higher price means that real incomes have risen.
    B. Consumers will substitute other products for the one whose price has risen.
    (this multiple choice question has been scrambled)
  27. Economists use the term 'demand' to refer to:
    A. An up-sloping line on a graph that relates consumer purchases and product price.
    B. The total amount spent on a particular commodity over a stipulated time period.
    C. A particular price-quantity combination on a stable demand curve.
    D. A schedule of various combinations of market prices and quantities demanded.
    D. A scheduel of various combinations of market prices and quantities demanded.
    (this multiple choice question has been scrambled)
  28. Alyssa rents 5 movies per month when the price is $3.00 each and 7 movies per month when the price is $2.50. Alyssahas demonstrated the:
    A. Law of supply
    B. Law of demand.
    C. Law of price.
    D. Actions of an irrational consumer.
    B. Law of demand
    (this multiple choice question has been scrambled)
  29. If the number of buyers in the market decreases, the:
    A. Supply in the market will decrease.
    B. Demand in the market will decrease.
    C. Supply in the market will increase.
    D. Demand in the market will increase.
    B. Demand in the market will decrease.
    (this multiple choice question has been scrambled)
  30. A market:
    A. Reflects up-sloping demand and down-sloping supply curves.
    B. Entails the exchange of goods, but not services.
    C. Is an institution that brings together buyers and sellers.
    D. Always entails face-to-face contact between buyer and seller.
    C. Is an institution that brings together buyers and sellers.
    (this multiple choice question has been scrambled)
  31. Represented graphically, the market demand curve is:
    A. Greater than the sum of the individual demand curves.
    B. The vertical sum of individual demand curves
    C. Steeper than any individual demand curve that comprises it.
    D. The horizontal sum of individual demand curves.
    D. The horizontal sum of individual demand curves.
    (this multiple choice question has been scrambled)
  32. The law of demand states that:
    A. The larger the number of buyers in the market, the lower the product price.
    B. Price and quantity demanded are directly related.
    C. Price and quantity demanded are inversely related.
    D. Consumers will buy more of a given product at high prices than they will at low prices.
    C. Price and quantity demanded are inversely related.
    (this multiple choice question has been scrambled)
  33. A higher price for batteries would tend to:
    A. Increase the demand for flashlights.
    B. Increase the demand for electricity
    C. Decrease the demand for electricity.
    D. S: increase the demand for batteries.
    B. Increase the demand for electricity.
    (this multiple choice question has been scrambled)
  34. The construction of demand and suppl curves assumes that the primary variable that influences decisions to produce and purchase goods is:
    A. Expectations.
    B. Preferences.
    C. Incomes.
    D. Price
    D. Price.
    (this multiple choice question has been scrambled)
  35. When the price of a product increases, a consumer is able to buy less of it with a given money income. This describes:
    A. The income effect.
    B. The substitution effect.
    C. The inflationary effect
    D. The cost effect
    A. The income effect.
    (this multiple choice question has been scrambled)
  36. A demand curve is:
    A. The upward  sloping line relating price to quantity supplied.
    B. Showing the same relationship between two goods as a production possibilities frontier.
    C. The downward sloping line relating the price of the good to the quantity demanded.
    D. The curve that relates income to quantity demanded.
    C. The downward sloping line relating the price of the good to the quantity demanded.
    (this multiple choice question has been scrambled)
  37. If the price of product L increases, the demand curve for close-substitute product J will:
    A. Remain unchanged.
    B. Shift to the left
    C. Shift downward toward the horizontal axis.
    D. Shift to the right.
    D. Shift to the right
    (this multiple choice question has been scrambled)
  38. A market demand is:
    A. Not responsive to change in tastes and preferences.
    B. A vertical summation of individual demand curves.
    C. A horizontal summation of individual demand curves.
    D. Determined solely by the number of the buyers and sellers in the market.
    C. A horizontal summation of individual demand curves
    (this multiple choice question has been scrambled)
  39. Which of the following will not cause the demand for product K to change?
    A. A change in the price of close-substitue product J.
    B. An increase in consumer incomes.
    C. A change in consumer tastes.
    D. A change in the price of K.
    D. A change in the price of K.
    (this multiple choice question has been scrambled)
  40. Which of the following would not shift the demand curve for beef?
    A. An effective advertising campaign by pork producers.
    B. A reduction in the price of cattle feed.
    C. A change in the incomes of beef consumers.
    D. A widely publicised study that indicates beef increases one's cholesterol.
    B. A reduction in the price of cattle feed.
    (this multiple choice question has been scrambled)
  41. Normal Profits are:
    A. Not a cost, because a firm can avoid these payments by temporarily closing down.
    B. Not a cost of production, because they need not be realised, in order for a firm to retain entrepreneurial ability.
    C. A cost, because they represent payments made for the resources that the businessperson owns and supplies in his or her own enterprise.
    D. A cost, because any excess of total receipts over total costs will accrue to the business person.
    C. A cost, because they represent payments made for the resources that the businessperson owns and supplies in his or her own expertise.
    (this multiple choice question has been scrambled)
  42. The most efficient combination of resources producing any output is the combination that:
    A. Uses the smallest total quantity of all resources.
    B. Comes closest to using the same quantities of land, labour, capital, and entrepreneurial ability.
    C. Conserves most on the use of labour.
    D. Can be obtained for the smallest money outlay.
    D. Can be obtained for the smallest money outlay.
    (this multiple choice question has been scrambled)
  43. For whom is a given mix of goods and services to be produced? In other words, how is the product to be distributed among people when such commodities and services are available? In a market economy, this problem is primarily resolved in the:
    A. Public sector, through the mechanism of central planning.
    B. Private sector, through the earning and spending of income.
    C. Business sector, through the mechanism of advertising.
    D. Money market, through borrowing and saving by households and businesses.
    B. Private sector, through the earning and spending of income.
    (this multiple choice question has been scrambled)
  44. Economic profits are:
    A. A cost, because they accrue to the entrepreneur.
    B. Not a cost, because they cannot be calculated.
    C. A cost, because they are really a part of wage costs.
    D. Not an economic cost, because they need not be realised, in order for a business to acquire and retain entrepreneurial ability.
    D. Not an economic cost, because they need not be realised, in order for a business to acquire and retain entrepreneurial ability.
    (this multiple choice question has been scrambled)
  45. Which of the following best describes the 'guiding function' of competitive prices?
    A. The market system can negotiate reallocations of resources that are appropriate to changes in consumer tastes, technology and resource supplies.
    B. The market system will always generate economic profits for firms that use the least costly production technology.
    C. Profitable industries tend to contract and unprofitable industries tend to expand.
    D. When prices are in equilibrium, product shortages or surpluses cannot occur.
    A. The market system can negotiate reallocations of resources that are appropriate to changes in consumer tastes, technology, and resource supplies.
    (this multiple choice question has been scrambled)
  46. "Consumer sovereignty" refers to the:
    A. Fact that resource prices tend to be high relative to product prices, in capitalistic economies.
    B. Fact that a federal authority exists to protect consumers from harmful and defective products.
    C. Notion that the decision of producers and resource suppliers, with repsect to the kinds and amounts of goods produced, must be appropriate to consumer demands.
    D. Idea that the pursuit of self-interests will prove, ultimately, to be in the public's interest.
    C. Notion that the decision of producers and resource suppliers, with respect to the kinds and amounts of goods produced, must be appropriate to consumer demands.
    (this multiple choice question has been scrambled)
  47. The presence of economic profits in an industry suggests that the industry:
    A. Has excess productive capacity.
    B. Will attract more firms.
    C. Is the size that consumers want it to be.
    D. Can earn more profits by increasing product price.
    B. Will attract more firms.
    (this multiple choice question has been scrambled)
  48. Assume the demand for product Y increases and the subsequent market system response results the production of more Y. This illustrates:
    A. The directing or guiding function of prices.
    B. That consumer sovereignty is inoperative in this economy.
    C. That the concept of derived demand is applicable.
    D. The scarcity function of prices.
    A. The directing or guiding function of prices.
    (this multiple choice question has been scrambled)
  49. In a competitive market economy, firms will select the least-cost production technique because:
    A. Such choices will result in the full employment of available resources.
    B. This will prevent new firms from entering the industry.
    C. To do so will maximise a firm's profit.
    D. 'Dollar voting' by consumers mandates such a choice.
    C. To do so will maximise a firm's profit.
    (this multiple choice question has been scrambled)
  50. When economists say that the demand for a resource is a 'derived demand', they mean that:
    A. Resource demand curves are often up-sloping.
    B. The demand for resources depends upon the demand for the product produced by those resources.
    C. Government demand complements private demand for most foods and services.
    D. producers tend to substitute low-priced resources for high-priced resources.
    B. The demand for resources depends upon the demand for the product produced by those resources.
    (this multiple choice question has been scrambled)
  51. If a company owns plants at various stages of the production process, this is called a:
    A. Monolpoly
    B. Horizontal Combination
    C. Vertical Combination
    D. Conglomerate.
    C. Vertical Combination
    (this multiple choice question has been scrambled)
  52. The three basic legal forms of business enterprises are:
    A. Monopolists, competitors and enterprises.
    B. Proprietorships, partnerships and corporations.
    C. Conglomerates, multinationals and partnerships.
    D. Vertical, horizontal and conglomerate corporations.
    B. Proprietorships, partnerships and corporations
    (this multiple choice question has been scrambled)
  53. An industry is best defined as a group of firms:
    A. That use identical production techniques.
    B. That compete for labour.
    C. Producing identical or similar products.
    D. Located in the same city or geographic area.
    C. Producing identical or similar products.
    (this multiple choice question has been scrambled)
  54. Which of the following statements is correct?
    A. Agriculture provides more income and employment than the wholesale or retail industries.
    B. Manufacturing contributes the largest percentage to GDP and the colume of employment and income.
    C. The public service provides more jobs and a larger proportion of the national income than any other industry classification.
    D. Through relatively small in number manufacturing accounts for roughly a third of the economy's income and employment.
    B. Manufacturing contributes the largest percentage to GDP and the volume of employment and income.
    (this multiple choice question has been scrambled)
  55. The division of Australian businesses into categories of proprietorship, partnership, and corporation is based on:
    A. Generally accepted accounting principles.
    B. An executive order of the prime minister.
    C. Judgements made by the Australian Economics society.
    D. Basic legal considerations.
    D. Basic legal considerations
    (this multiple choice question has been scrambled)
  56. Coles supermarket is part of a:
    A. Sole proprietorship.
    B. Horizontal combination.
    C. Conglomerate
    D. Vertical combination.
    B. Horizontal combination
    (this multiple choice question has been scrambled)
  57. A conglomerate is:
    A. A firm that owns plants at various stages of the production process
    B. An industry in which there is only one firm.
    C. A firm that owns plants in different markets and industries.
    D. A firm with monopoly power.
    C. A firm that owns plants in different markets and industries.
    (this multiple choice question has been scrambled)
  58. A group of three plants owned and operated by a single firm and consisting of a wheat-growing farm, a flour-milling plant and a plant that bakes and sells bread, is an example of a:
    A. Horizontal combination
    B. Trust
    C. Vertical combination
    D. Holding company
    C. Vertical combination
    (this multiple choice question has been scrambled)
  59. A group of chain store operating at the retail level - for example, Woolworths - is an illustration of:
    A. A horizontal combination.
    B. A vertical combination.
    C. A conglomerate combination.
    D. An integrated combination.
    A. A horizontal combination
    (this multiple choice question has been scrambled)
  60. Which of the following is true of partnerships?
    A. All partners are protected b the concept of limited liability.
    B. Each partner must post a bond to guarantee that all business debst will be paid.
    C. Each partner is liable for only his or her share of business debts.
    D. Each partner is responsible for all business debts.
    D. Each partner is responsible for all business debts.
    (this multiple choice question has been scrambled)
  61. The advantages of the 'company form of business' include:
    A. The fact that owners are subject only to limited liability.
    B. All of the answers given
    C. The ability to realise production advantages associated with a large scale of operations.
    D. The ability to raise money capital by selling stocks and bonds.
    B. All of the answers given
    (this multiple choice question has been scrambled)
  62. Which form of business enterprise accounts for the largest proportion of total output?
    A. Partnership
    B. Proprietorship
    C. Company
    D. Cooperative
    C. Company
    (this multiple choice question has been scrambled)
  63. one of the major advantages of a sole proprietorship is that:
    A. There is little red tape and expense in organising such a business.
    B. It is easier to borrow money because lenders have to deal with only one person.
    C. There are tax advantages for firms that are highly profitable.
    D. The owner is protected by the concept of limited liability.
    A. There is little red tape and expense in organising such a business.
    (this multiple choice question has been scrambled)
  64. Which of the following is numberically the dominant type of business in Australia?
    A. Cooperative
    B. Corporation.
    C. Partnership.
    D. Proprietorship.
    D. Proprietorship.
    (this multiple choice question has been scrambled)
  65. If a company goes bankrupt, its shareholders will lose:
    A. The value of their shares plus any other business assets they own.
    B. Only the value of their shares.
    C. The value of their shares plus any other personal assets they own.
    D. The value of their shares plus any other business and personal assets they own.
    B. Only the value of their shares.
    (this multiple choice question has been scrambled)
  66. Price Elasticity of demand is generally:
    A. Greater for 'necessities' than it is for 'luxuries'.
    B. Greater in the long run than in the short run.
    C. Greater in the short run than in the long run.
    D. The same in both the short run and the long run.
    B. Greater in the long run than in the short run.
    (this multiple choice question has been scrambled)
  67. The main determinant of elasticity of supply is ther:
    A. Number of close substitutes for the product available to consumers.
    B. Number of uses for the product.
    C. Urgency of consumer wants for the product.
    D. Amount of time the producer has to adjust inputs in response to a price change.
    D. Amount of time the producer has to adjust inputs in response to a price change.
    (this multiple choice question has been scrambled)
  68. The price of product X is reduced from $100 to $90 and, as a result, the quantity demanded increases from 50-60 units. From this we can conclude that the demand for X in this price range:
    A. has declined.
    B. Is elastic.
    C. Is of unit elasticity
    D. Is inelastic.
    B. Is elastic.
    (this multiple choice question has been scrambled)
  69. Suppose the price elasticity coefficients of demand are 1.43, 0.67, 1.11 and 0.29 for products W, X, Y and Z respectively. a 1% decrease in price will result in an increase in total revenue in the case of:
    A. Y and Z.
    B. X and Z.
    C. W and Y
    D. Z and W.
    C. W and Y
    (this multiple choice question has been scrambled)
  70. A given leftward shift in the supply curve of product X will increase equilibrium price to a greater extent the:
    A. Larger the elasticity of demand coefficient.
    B. More elastic the demand for the product.
    C. More inelastic the demand for the product.
    D. More elastic the supply curve.
    C. More inelastic the demand for the product
    (this multiple choice question has been scrambled)
  71. Supply curves tend to be:
    A. Perfectly inelastic in the long run, because the law of scarcity imposes absolute limits upon production.
    B. Perfectly elastic in the long run, because consumer demand will have sufficient time to adjust fully to changes in supply.
    C. More elastic in the long run, because there is time for firms to enter or leave the industry.
    D. Less elastic in the long run, because there is time for firms to enter or leave an industry.
    C. More elastic in the long run, because there is time for firms to enter or leave the industry.
    (this multiple choice question has been scrambled)
  72. Suppose that the price of product X rises by 20%, and the quantity supplied of X increases 18%. The coefficient of price elasticity of supply for good X is:
    A. Negative and, therefore, X is an inferior good.
    B. Positive and, therefore, X is a normal good.
    C. More than 1 and, therefore, supply is elastic.
    D. Less than 1 and, therefore, supply is inelastic.
    D. Less than 1 and , therfore, supply is inelastic.
    (this multiple choice question has been scrambled)
  73. Suppose that, as the price of Y falls from $2.00 to $1.90, the demanded quantity of Y increases from 110 to 118. It can be concluded that the price elasticity of demand is:
    A. 3.94
    B. 4.00
    C. 2.09
    D. 1.37
    D. 1.37
    (this multiple choice question has been scrambled)
  74. Suppose the supply of product X is perfectly inelastic. If there is an increase in the demand for this product, equilibrium price:
    A. Will increase but equilibrium quantity will be unchanged.
    B. Will increase but equilibrium quantity will declien.
    C. Will decrease, but equilibrium quantity will increase.
    D. And quantity will both decrease.
    A. Will increase, but equilibrium quantity will be unchanged.
    (this multiple choice question has been scrambled)
  75. In which of the following cases will total revenue increase?
    A. Price rises and demand is elastic.
    B. Price falls and supply is elastic.
    C. Price rises and demand is inelastic.
    D. Price falls and demand is inelastic.
    C. Price rises and demand is inelastic.
    (this multiple choice question has been scrambled)
  76. If the price elasticity of demand for a product is 2.5, then a price cut from $2.00 to $1.80 will:
    A. Decrease the quantity demanded by 2.5%
    B. Do none of the answers given.
    C. Increase the quantity demanded by 2.5%
    D. Increase the quantity demanded by 25%
    D. Increase the quantity demanded by 25%
    (this multiple choice question has been scrambled)
  77. If the supply of product X is perfectly elastic, an increase in the demand for it will increase:
    A. equilibrium quantity, but reduce equilibrium price.
    B. Equilibrium quantity, but equilibrium price will be unchanged.
    C. Equilibrium price, but reduce equilibrium quantity.
    D. Both equilibrium quantity and equilibrium price.
    B. Equilibrium quantity, but equilibrium price will be unchanged.
    (this multiple choice question has been scrambled)
  78. The price elasticity of demand coefficient indicates:
    A. The extent to which a demand curve shifts when incomes change.
    B. How far business executives can stretch their fixed costs.
    C. The slope of the demand curve.
    D. buyer responsiveness to price changes.
    D. Buyer responsiveness to price changes.
    (this multiple choice question has been scrambled)
  79. A perfectly inelastic demand schedule:
    A. Can be represented by a line parallel to the vertical axis.
    B. rises upward and to the right, but has a constant slope.
    C. Cannot be shown on a two-dimensional graph.
    D. Can be represented by a line parallel to the horizontal axis.
    A. Can be represented by a line parallel to the vertical axis.
    (this multiple choice question has been scrambled)
  80. In which of the following instances will total revenue declien?
    A. Price rises and supply is inelastic.
    B. Price rises and supply is elastic.
    C. Price rises and demand is elastic.
    D. Price falls and demand is elastic.
    C. Price rises and demand is elastic.
    (this multiple choice question has been scrambled)

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