11-From statements given below, select the incorrect one O A positive income elasticity of demand coefficient indicates that a product is a normal good O A positive income elasticity of demand coefficient indicates that two products are substitute goods O A price ceiling means that government is imposing a legal price which is below the equilibrium price O When government regulates rental price of the residential houses (as the maximum legal price that the house-owner can charge) in a city, it is an example of a price ceiling 12-The short run is a time period in which: O all factors of production are fixed O the level of output is fixed O the size of the production plant is variable O some factors of production are fixed and others are variable 13-Which of the following is Not true: O Economists assume that people customarily behave rationally O Financial Assets like Stocks and bonds are considered to be an economic resource O A machine used for production is a capital resource O Microeconomics is concerned with the behaviour of one individual participant in various markets 14-Among the following statements, Which is (are) correct O The price elasticity of demand of a straight-line demand curve is elastic in high-price ranges (range above the mid-point) and inelastic on low-price ranges (range below the mid point) O If the price elasticity of demand for a product is unity, a decrease in price increase the quantity demanded, but total revenue will be unchanged O If the demand for a product is elastic, then a higher tax will generate less tax revenue O All of the above 15-The economic problem is essentially one of deciding how to make the best use of: unlimited resources to satisfy unlimited wants O limited resources to satisfy unlimited wants O unlimited resources to satisfy limited wants O limited resources to satisfy limited wants 17-Marginal cost: O equals both average variable cost and average total cost at their respective minimums O is the difference between total cost and total variable cost O rises for a time, but then begins to decline when diminishing returns set in O declines continuously as output increases 19-Select the true statement(s) O Macroeconomics approaches the study of economics from the viewpoint of entire economic sectors O Economic models are generalizations of economic reality O Ceteris paribus means that all other things remain the same O All of the above 22-Identify the True statement(s): O The Canadian economy most closely approximates a modern mixed economy O Laissez-faire suggests that government should not interfere with the operation of the economy O In the product market businesses sell consumer products to households O All of the above 23-Of the following, which one is False O A provincial government wants to increase the taxes on liquor to increase tax revenue. This tax would only be effective in raising new tax revenues if the price elasticity of demand is less than one O One of the main determinants of elasticity of supply is the amount of time the producer has to adjust inputs in response to a price change O Suppose the income elasticity of demand for toys is +2.00. This means that a 10 percent increase in income will increase the purchase of toys by 20 percent. O Suppose the income elasticity of demand for toys is +2.00. This means that toys are an inferior good 24-To the economist total cost includes: O explicit and implicit costs, including a normal profit. O Neither implicit nor explicit costs. O Implicit, but not explicit, costs O explicit, but not implicit, costs. 25-The law of diminishing returns indicates that: O as extra units of a variable factor of production are added to a fixed factor of production, marginal product will decline beyond some point O because of economies and diseconomies of scale a competitive firm's long-run average total cost curve will be U-shaped O the demand for goods produced by purely competitive industries is downward sloping O beyond some point the extra utility derived from additional units of a product will yield the consumer smaller and smaller extra amounts of satisfaction 26-Which statement below is Not correct O The statement, "The temperature is 22C." is a normative statement O The concept of opportunity cost suggests that the use of resources in any particular line of production means that alternative outputs must be forgone O The shape of each production possibilities curve illustrates the law of increasing opportunity costs O An improvement in technology could be expected to shift the production possibilities curve from lower to a higher curve 27-In the following, Which is Not true O A demand curve which is parallel to the vertical axis is perfectly inelastic O If a firm can sell more or less output at a constant price, demand is perfectly elastic O A demand curve which is parallel to the horizontal axis is perfectly inelastic O If the demand for a product is elastic, then total revenue will rise as price falls