Question

28) Tosaythatturnipsarenecessitygoodsmeansthattheincome elasticity

a) is definitely greater than 1.
b) is negative.
c) is greater than 0 but less than 1. d) is equal to 1.
e) is equal to 0.

29) The fact that the PPF usually bows away from the origin implies that ...

a) as the production of any good increases, there is an increase in the opportunity cost of producing it.

2. b) as the production of any good increases, there is a decrease in the opportunity cost of producing it.

3. c) getting more of one good means getting less of another good.

4. d) getting more of one good means getting more of another good.

5. e) resources are perfectly fungible, easily moved between alternative

        uses to satisfy consumer demand.
   

30) What are the two distinguishing characteristics of a public good?

1. a) It is provided by the core sphere; it is freely available to anyone.

2. b) It is provided by the public purpose sphere; it is freely available to anyone.

3. c) It is freely available to anyone; use by one person diminishes the ability of another person to use it.

4. d) It is freely available to anyone; use by one person does not diminish the ability of another person to use it.

5. e) It is provided at low cost; use by one person does not diminish the ability of another person to use it.

31) Which one of the following statements is false?

1. A laissez-faire economy is an economy with little government regulation.

2. A laissez-faire view of the economy favors unregulated markets.

3. A laissez-faire view is that self-interested individuals interact

   in a socially beneficial way.

4. Laissez-faire is a French term that means “let it be.”

5. A laissez-faire economy is an economy with central planning.

34) Suppose we observe a large increase in the price of corn but the quantity of corn sold stays the same. What is the most plausible explanation (or combination of explanations) below?

1. a) A drought occurred in corn-growing regions.

2. b) A drought occurred in corn-growing regions and a medical report was

   issued that corn is good for your health.

3. c) A drought occurred in corn-growing regions and a medical report was

   issued that corn is bad for your health.

4. d) A new fertilizer was invented that doubles corn yields.

5. e) A new fertilizer was invented that doubles corn yields and a

   medical report was issued that corn is bad for your health.

35) If the sellers of a good are unable to set their own prices (i.e., there is a “going price”), the demand for the good faced by a particular seller is ...

a) perfectly elastic.
b) moderately elastic. c) perfectly inelastic. d) moderately inelastic. e) zero.

36) If a rise in the price of oranges from $7 to $9 a bushel, caused by a shift of the demand curve, increases the quantity of bushels supplied from 4,500 to 5,500 bushels, the
a) demand for oranges is elastic.

b) supply of oranges is elastic.
c) demand for oranges is inelastic. d) supply of oranges is inelastic.
e) demand for oranges is unit elastic.

Answer 1

Q.28)= option 'B' . Negative is the correct answer.

Q.29)= option 'A'. The production of any good increases,there is an increase in the opportunity cost of producing it. is the correct answer.

Q.30)= option 'D'. It is freely available to anyone;use by one person does not diminish the ability of another person to use it. is the correct answer.

Q.31)= option 'D'. laissez-faire is a French term that means "let it be" is false statement because laissez-faire means 'leave alone'.

Q.34)= option 'B'. A drought occured in corn-growing regions and a medical report was issued that corn is good for your health. is the correct answer.

Q.35)= option 'A'.perfectly elastic.is the correct answer.

Q.36)= option 'D'.supply of oranges is inelastic.is the correct answer because,

old price=$7 and new price= $9

old quantity supplied=4500 and new quantity supplied=5500

percentage change in quantity supplied = 5500-4500/4500*100 =22%

percentage change in price= 9-7/7*100=28.57%

now,price elasticity of supply=percentage change in quantity supplied/percentage change in price.

22/28.57=0.77

because it is less than 1,the supply of oranges is inelastic.