If the price of a substitute to good X increases, then A) the demand for good X will increase. B) the market price of good X will decrease. C) the demand for good X will decrease. D) the demand for good X will not change
Q1. Choose the best answer for the following statement
.
- If the
price of a substitute to good X increases, then
- A) the
demand for good X will increase. - B) the market price of good X will decrease.
- C) the demand for good X will decrease.
- D) the demand for good X will not change
- When the price of a good or service changes,
- A) there is a movement along a stable demand curve.
- B) demand shifts in the opposite direction.
- C) demand shifts in the same direction.
- D) supply shifts in the opposite direction
- Suppose that a decrease in the price of X results in less of good Y sold. This would mean that X and Y are
- A) complementary goods.
- B) substitute goods.
- C) unrelated goods.
- D) normal goods
- Which of the following is a determinant of demand?
- A) the price of a substitute goods
- B) the price of a complement goods
- C) the price of the goods next month
- D) all of the above
- The downward-sloping demand curve reflects which of the following?
- A) The price is positively related to quantity supplied.
- B) There is an inverse relationship between price and quantity demanded.
- C) There is a direct relationship between price and quantity demanded.
- D) When the price falls, buyers willingly buy less.
6) According to the law of diminishing
- A) Additional consumption always yields extra utility
- B) Additional consumption leads to lower average total utility
- C) Additional consumption always yields negative utility
- D) After a point any addition in the consumption causes a reduction in total utility.
7) The want satisfying power of a commodity is known as:
- A) Supply
- B) Consumption
- C) Utility
- D) Demand
8) When Marginal Utility = 0, Total Utility is
- A) Maximum
- B) Constant
- C) Minimum
- D) None of the above
9)----------- is the addition to total utility by the consumption of one additional unit of the commodity.
- A) Total utility
- B) Ordinal utility
- C) Average utility
- D) Marginal utility
10) A consumption points inside the budget line
- A) is unaffordable.
- B) shows that the consumer spends income on only one of the goods.
- C) shows that the consumer has chosen to spend all of his or her income on both products.
- D) is possible to afford but has some unspent income.
11)Which of the following describes what happens to a consumer's budget line if that consumer's budget increases? The budget line.
- A) becomes steeper.
- B) shifts farther away from the origin of the graph.
- C) does not change.
- D) becomes more horizontal.
- E) shifts closer to the origin of the graph
12)Suppose a consumer has $100 to spend on two goods, shoes and shirts. If the price of a pair of shoes is $20 per pair and the price of a shirt is $15 each, which of the following combinations is unaffordable to the consumer?
- A) 0 pairs of shoes and 0 shirts
- B) 2 pairs of shoes and 4 shirts
- C) 5 pairs of shoes and 0 shirts
- D) 0 pairs of shoes and 7 shirts
- E) 2 pairs of shoes and 3 shirts
13) An indifference curve is related to which of the following?
- A) Choices and preferences of consumer
- B) Prices of goods X and Y
- C) Consumer’s income
- D) Total utility from goods X and Y
14) An Indifference curve slope down towards right since more of one commodity and less of another result in which of the following?
- A) Decreasing expenditure
- B) Maximum satisfaction
- C) Greater satisfaction
- D) Same satisfaction
15)The
- A) the slope of a budget curve.
- B) how often the price of a good changes.
- C) the responsiveness of the quantity demanded to changes in price.
- D) how sensitive the quantity demanded is to changes in demand.
16)The price elasticity of demand is 5.0 if a 10 percent increase in the price results in a ________ decrease in the quantity demanded.
- A) 10 percent
- B) 50 percent
- C) 2 percent
- D) 5 percent
17)If demand is price elastic,
- A) a 1 percent decrease in the price leads to an increase in the quantity demanded that exceeds 1 percent.
- B) a 1 percent increase in the price leads to an increase in the quantity demanded that exceeds 1 percent.
- C) the price is very sensitive to any shift of the supply curve.
- D) a 1 percent decrease in the price leads to a decrease in the quantity demanded that is less than 1 percent
18)The price elasticity of demand can range between
- A) negative one and one.
- B) zero and infinity.
- C) zero and one.
- D) negative infinity and infinity.
19)If the price elasticity is between 0 and 1, demand is
- A) inelastic.
- B) elastic.
- C) perfectly elastic.
- D) unit elastic.
20)Demand is inelastic if
- A) a large change in quantity demanded results in a small change in price.
- B) the price elasticity of demand is greater than 1.
- C) the quantity demanded is very responsive to changes in price.
- D) the price elasticity of demand is less than 1.
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