Question

1. An inferior good has a ______________________.

1. Positive price elasticity of demand b) Negative price elasticity of demand c) Negative Income elasticity of demand d) Positive income elasticity of demand

2. A movement down the demand curve is a(n):

1. A decrease in quantity demanded b) an increase in quantity demanded c) an increase in demand d) a decrease in demand

3. When a market is at equilibrium,

1. There are no shortages or surpluses b) the price is a fair price c) all consumers can afford the good d) all the above are correct

4. If the demand for peanuts increases,

1. The quantity supplied of peanuts will decrease b) the supply of peanuts will decrease
2. The supply of peanuts will increase d) none of the above are correct

5. A change in a firm’s input costs affect:

1. Supply b) demand c) both supply and demand d) neither supply nor demand

6. A market price will exceed its equilibrium price if the government institutes a:

1. Price floor b) Price ceiling c) an asymmetric target price d) all the above

7. An example of a price ceiling is:

1. Food stamps b) education scholarships c) rent control d) agricultural subsidies

8. “All else held constant” is stated with the phrase:

1. E pluribus Unum b) De gustibus non est disputadum c) ceteris paribus d) coitus acetum

9. The price elasticity of supply for a product must be:

1. Negative b) positive c) greater than one d) smaller than the price elasticity of demand

10. If the price elasticity of demand is perfectly inelastic, the demand curve will be:

1. Vertical b) Horizontal c) Positively Sloped d) Negatively Sloped

11. A price ceiling above a market’s equilibrium price:

1. Creates a shortage b) creates a surplus c) does nothing d) performs price discovery

12. If there is greater quantity supplied than there is quantity demanded at a given price in a market, the price will: a) rise b) fall c) remain the same d) inadequate information to say

13. If a product has a high price elasticity of demand and a high-income elasticity of demand, the product is likely a: a) necessity b) substitute c) luxury d) small solar powered flashlight

14. A highly elastic price elasticity of demand generally means that a good is:

1. Necessary b) very substitutable c) inexpensive d) rarely bought and sold

15. A pair of goods are substitutes if their cross-price elasticity of demand is:

1. Positive b) negative c) zero d) one

Answer 1

Answer)

An inferior good has a negative income elasticity of demand. So, option C is correct. When income of consumer increases, the demand for inferior goods decrease.

A movement down the demand curve is decrease in quantity demanded. So, option A is correct.

When there is market equilibrium, there are no shortages or surpluses. So, option A is correct. Other options are incorrect.

If the demand for peanuts increase, the supply of peanuts will increase. So, option C is correct.

A change in firms input cost affects the supply. So, option A is correct.

A market price will exceed the equilibrium price if the government Institutes a price floor. So, option A is correct.

An example of price ceiling is C) Rent Control.

“All else held constant” is stated with the phrase: Ceteriss paribus. So, option C is correct

The price elasticity of supply for a product must be: greater than one so that it gains comparitive advantage over it's rivals. So, option C is correct.

If the price elasticity of demand is perfectly inelastic, the demand curve will be: Vertical. So, option A is correct.

A price ceiling above a market’s equilibrium price:creates a surplus because quantity supplied exceeds quantity demanded. Option B is correct.

If there is greater quantity supplied than quantity demanded, then price will rise. So, option A is correct.

If a product has a high price elasticity of demand and a high-income elasticity of demand, the product is likely c) luxury . So, option C is correct.

A highly elastic price elasticity of demand generally means that a good is:very substitutable. So, option B is correct.

A pair of goods are substitutes if their cross-price elasticity of demand is positive. So, correct option is A.

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