# economics#

27) A "change in demand" means: a) a change in the elasticity of a demand curve b) the shift of a demand curve c) a movement along a given demand schedule or curve d) the quantity demanded changes as price changes 28) Suppose that a severe frost destroys one- half of Ontario's apple crops. As a result, we would expect: a) an increase in the demand for apples b) a rise in the price of pears c) a decline in the price of apples d) none of the above 29) If the supply of product X is perfectly elastic, an increase in the demand for it will increase: a) equilibrium quantity but reduce equilibrium price b) equilibrium quantity but equilibrium price will be unchanged C) equilibrium price but reduce equilibrium quantity d) equilibrium price but equilibrium quantity will be unchanged 30) The demand for a product is said to be inelastic with respect to price if: a) consumers are largely unresponsive to a per unit price change b) the clasticity coefficient is greater that I ") a drop in price is accompanied by a decrease in the quantity demanded d) a drop in price is accompanied by an increase in the quantity demanded 31) The basic formula for the price elasticity of demand coefficient is: a) absolute decline in quantity demandedabsolute increase in price b) percentage change in quantity demanded/percentage change in price c) absolute increase in price /absolute decline in quantity demanded d) percentage change in price/ percentage change in quantity demanded 32) For a linear demand curve: a) elasticity is constant along the curve b) clasticity is unity at every point on the curve ") demand is clastic at low prices c) demand is inclastic at high prices D demand is clastic at high prices21) An unusual bountiful crop of coffee beans might be expected to: a) increase the supply of coffee b) reduce the price of coffee c) increase the quantity of coffee consumed d) lower the price of tea e) do all of the above 22) At the current price there is a shortage of a product. We would expect price to: a) increase, quantity demanded to increase, and quantity supplied to decrease b) increase, quantity demanded to decrease, and quantity supplied to increase ") increase, quantity demanded to increase, and quantity supplied to increase d) decrease, quantity demanded to increase, and quantity supplied to decrease 23) Given the down-sloping demand curve and an up-sloping supply curve for a product, a decrease in resource prices will: a) increase equilibrium price and quantity b) decrease equilibrium price and quantity c) decrease equilibrium price and increase equilibrium quantity d) increase equilibrium price and decrease equilibrium quantity ) have no impact upon equilibrium price and quantity 24) A surplus of a product will arise when price is: a) above equilibrium with the result that quantity demanded exceeds quantity supplied b) above equilibrium with the result that quantity supplied exceeds quantity demanded ") below equilibrium with the result that quantity demanded exceeds quantity supplied 1) below equilibrium with the result that quantity supplied exceeds quantity demanded 25) At the current price there is a shortage of a product. We would expect price to: a) increase, quantity demand to increase, and quantity supplied to decrease b) increase, quantity demanded to decrease, and quantity supplied to increase c) increase, quantity demanded to increase, and quantity supplied to increase d) decrease, quantity demanded to increase, and quantity supplied to decrease 26) Assume in a competitive market that price is initially above the equilibrium level. We can predict that price will: a) decrease, quantity demanded will decrease, and quantity supplied will increase b) decrease and quantity demanded and quantity supplied will both decrease o) decrease, quantity demanded will increase, and quantity supplied will decrease d) increase, quantity demanded will decrease, and quantity supplied will increase15) The law of supply indicates that: a) producers will offer more of a product at high prices that they will at low prices b) the product supply curve is downsloping consumers will purchase less of a food at high prices than they will at low prices d) producers will offer more of a product at low prices than they will at high prices 16) A leftward shift of a product supply curve depends upon: a) an improvement in the relevant technique of production b) a decline in the prices of needed inputs c) an increase in consumer incomes d) some firms leaving an industry 17) An improvement in production technology will: a) tend to increase equilibrium price b) shift the supply curve to the left c) shift the supply curve to the right d) shift the demand curve to the left 18) Which of the following statements is incorrect? a) If demand increases and supply decreases, equilibrium price will rise b) If supply increases and demand decreases, equilibrium price will fall ") If demand decreases and supply increases, equilibrium price will rise d) If supply declines and demand remains constant, equilibrium price will rise 19) A market is in equilibrium: a) provided there is no surplus of the product b) at all prices above that shown by the intersection of the supply and demand curves c) if the amount that producers want to sell is equal to the amount that consumers want to buy d) whenever the demand curve is down-sloping and the supply curve is up-sloping 20) Given conventional supply and demand curves, a change in the determinants of supply and demand will: a) in all likelihood alter both equilibrium price and quantity b) alter equilibrium quantity, but not equilibrium price c) alter equilibrium price, but not equilibrium quantity d) have no effect upon equilibrium price or quantity e) alter equilibrium price or equilibrium quantity, but not both10) One reason why the quantity of a good demanded increases when its price falls is that the : a) price decline shifts the supply curve to the left b) lower price shifts the demand curve to the left ") lower price shills the demand curve to the right d) lower price increases the real incomes of buyers, enabling them to buy more 1 1) A shift to the right in the demand curve for product A can be most reasonably explained by saying that: a) consumer incomes have declined and they now want to buy less of A at each possible price b) the price of A has increased and, as a result, consumers want to purchase less of it consumer preferences have changed in favour of A so that they now want to buy more at each possible price () the price of A has declined and, as a result, consumers want to purchase more of it e) the supply of A has increased because production costs have declined 12) Other things being equal, which of the following might shift the demand curve for gasoline to the left? a) the discovery of vast new oil reserves in Alberta b) the development of a low-cost electric automobile ") an increase in the price of train and air transportation d) a large decline in the price of automobiles 13) If consumer incomes increase, the demand for product X: a) will necessarily remain unchanged b) may shift either to the right or left c) will necessarily shift to the right () will necessarily shift to the left 14) An increase in product price will cause: a) quantity demanded to decrease b) quantity supplied to decrease o) quantity demanded to increase d) the supply curve to shift to the right c) the demand curve to shift to the left5) The simple circular flow model shows that: a) households are on the demand side of both product and resource markets b) businesses are on the supply side of both product and resource markets c) households are on the supply side of the resource market and on the demand side of the product market d) businesses are on the demand side of the product market and on the supply side of the resource market 6) The law of demand states that: a) price and quantity demanded are inversely related b) the larger the number of buyers in a market, the lower will be product price c) price and quantity demanded are directly related d) consumers will buy more of a given product at high prices than they will at low prices 7) The demand curve shows the relationship between: a) money income and quantity demanded b) price and production costs c) price and quantity demanded d) consumer tastes and the quantity demanded 8) The relationship between quantity supplied and price is and the relationship between quantity demanded and price is a) direct, inverse b) inverse, direct ") inverse, inverse d) direct, direct 9) "When the price of a product rises, consumers shift their purchases to other products whose prices are now relatively lower." This statement describes: a) an inferior good b) the rationing function of prices ") the substitution effect d) the law of supply e) the income effectBUSINESS ECONOMICS CEC2 532-751 & 761 PRACTICE MICROECONOMICS MULTIPLE CHOICE QUESTIONS Warning: These questions have been posted to give you an opportunity to practice with the multiple choice format of questioning and to help you review and understand more deeply the material taught. In no way should you assume that the level of difficulty of the multiple choice questions shown here is the same as that of the questions to be given in the exam. 1) Which of the following is a microeconomics statement? a) the real domestic output increased by 2.5 percent last year. b) Unemployment was 9.8 percent of the labour force last year. ") The price of wheat declined last year. d) The general price level increased by 4 percent last year. 2) If we say that two variables are inversely related, this means that: a) the two graph as an up-sloping line b) an increase in one variable is associated with a decrease in the other ") an increase in one variable is associated with an increase in the other d) the resulting relationship can be portrayed by a straight line parallel to the horizontal axis 3) If the equation y = 5 + 0.6x was graphed, the : a) slope would be -5 b) slope would be +5 ") slope would be +0.6 d) vertical intercept would be +0.6 4) In the simple circular flow model: a) households are suppliers of resources b) businesses are suppliers of final products c) households are demanders of final products d) all of the above are true