Question

5.If the price elasticity of demand is 2.5, then a 40 percent decrease in the price of the good will lead to a _______ percent increase in the quantity demanded

A. 100.00 B. 22.5 C. 66.7 D. 150.00

6.Government intervention to reduce the level of pollution is prompted by the existence of

A. An inequitable distribution of income B. A monopoly C. Government failure D. Externalities

7.GDP is an incomplete measure of social welfare because

A. GDP includes the services of prison guards, so an increase in GDP could mean an increase in crime B. GDP does not include the value of volunteer activities, which may improve social welfare C. All of the above D. An increase in output may increase pollution and traffic congestion

8.In a competitive labor market, at wages above equilibrium, the

A. Labor-supply curve will shift to the left B. Quantity supplied of labor is greater than the quantity demanded C. Quantity demanded of labor is greater than the quantity supplied D. MRP of labor curve shifts to the right

9.A stock person who is laid off by a department store because retail sales across the country have decreased is _______ unemployed

A. Structurally B. Chronically C. Frictionally D. Cyclically

Answer 1

5. We know that price elasticity of demand is % change in Qd / % change in P. When PED is 2.5, and % change in P is 40 there will be a -2.5*-40 = 100% increase in the quantity demanded. Select A. 100.00

6.Government intervention to reduce the level of pollution is prompted by the existence of D. Externalities. This is because pollution generates external cost on society which happens when too much output is produced at too little price.

7.GDP is an incomplete measure of social welfare because B. GDP does not include the value of volunteer activities, which may improve social welfare. These include lawn mowing in homes by owners, housing work done by spouses, etc.

8.In a competitive labor market, at wages above equilibrium, the B. Quantity supplied of labor is greater than the quantity demanded which causes shortage of vacancies or surplus of workers.

9.A stock person who is laid off by a department store because retail sales across the country have decreased is D. Cyclically unemployed