Answer the following:

1 If you hire 1 worker, he can produce 10 doughnuts a day. If you hire a 2nd worker, she can produce 8 more doughnuts. If you hire a 3rd worker, she can produce 6 more doughnuts a day. A graph displaying this relationship - with the number of employees on the horizontal axis and the total doughnut output per day on the vertical axis shows.

a. a positive linear relationship

b. an upward-sloping curve that becomes less steep as employment increases

c. a negative linear relationship

d. a negatively-sloped curve that becomes less steep as employment increases

2 Which of the following is NOT an exception to the law of demand?

a. Doctrine of Conspicuous Consumption

b. Engel's law on Consumption

c. Giffen effect

d. None of the above

3 Competition may be limited by the power of larger firms which may dominate the market. This is a/an

a. advantage of a market economy

b. disadvantage of a market economy

c. advantage of a command economy

d. disadvantage of a command economy

4 Wastage and duplication in resource usage can also be avoided. This is a/an

a. advantage of a market economy

b. disadvantage of a market economy

c. advantage of a command economy

d. disadvantage of a command economy

5 Producers are only motivated by profit, certain goods which are necessary for society but are nevertheless unprofitable to produce will be under-supplied by this economic system. This is a/an

a. advantage of a market economy

b. disadvantage of a market economy

c. advantage of a command economy

d. disadvantage of a command economy

6 There is mobility of labor. There is both geographical and occupational mobility. This brings about efficient use of labor and increases its productivity. This is a/an

a. advantage of a market economy

b. disadvantage of a market economy

c. advantage of a command economy

d. disadvantage of a command economy

7 There is consumer sovereignty. This is a/an

a. advantage of a market economy

b. disadvantage of a market economy

c. advantage of a command economy

d. disadvantage of a command economy

8 This system results in a big bureaucratic government machinery which is prone to inefficiency and is slow to reach to economic changes. This is a/an

a. advantage of a market economy

b. disadvantage of a market economy

c. advantage of a command economy

d. disadvantage of a command economy

9 Airline tickets on the eve of Christmas. For this event, which method is used to allocate this scarce resource?

a. market price

b. majority rule

c. contest

d. first-come, first-serve

e. lottery

10 Campus parking space between student areas and faculty areas. For this event, which method is used to allocate this scarce resource?

a. market price

b. majority rule

c. command

d first-come, first-serve

e. lottery

f. personal characteristics

11 Purchase of textbooks. For this event, which method is used to allocate this scarce resource?

a. market price

b. majority rule

c. command

d. first-come, first-serve

e. lottery

f. personal characteristics

Other:

12 Hiring of job applicants for a particular position. For this event, which method is used to allocate this scarce resource?

a. market price

b. majority rule

c. command

d. first-come, first-serve

e. lottery

f. personal characteristics

13 A 10 % increase in the price of a good has led to a 2 % decrease in the quantity demanded of that good. How would you describe the demand for this good? Demand for the good is

a. inelastic

b. elastic

c. unit elastic or unitary

14 You are told that a 10-percent increase in the price of a good has led to a 1 percent increase in the quantity supplied of the good after one month. Use the information to answer the question: If after one year, the quantity supplied has increased by 25 percent, describe how the supply has changed over the year.

a. the supply of the good has become more elastic

b. the supply of the good has become more inelastic

c. the supply of the good is perfectly inelastic

15 Amy has $12 a week to spend on coffee and soda. The price of coffee is $2 a cup, and price of soda is $1 a can. In your own scratch paper, draw Amy's consumption possibilities. If she decides to consume 2 cups of coffee, and 7 cans of soda, did she consume all of her weekly budget?

a. yes

b. no

16 If Amy consumes all of her weekly budget for coffee alone, how many cups of coffee can she consume?