Wages of bus drivers increase. At the same time, the incomes of consumers generally increase. In the market for bus rides, we should expect to see curves shift. The supply curve will ___________ and the demand curve will __________.

a.

shift right - shift to the right

b.

shift right - shift to the left

c.

shift left - shift to the right

d.

shift left - shift to the left

As a result of the simultaneous fall in gasoline prices and the rise in consumer incomes, we should expect to see in the new equilibrium that price will __________ and the number of bus rides will ____________.

a.

be uncertain - decrease

b.

be uncertain - increase

c.

increase - be uncertain

d.

decrease - be uncertain

Wages of workers who pick coffee rise. At the same time, the price of half-and-half (a compliment for coffee) decreases. In the market for coffee, we should expect to see curves shift. The supply curve will _________ and the demand curve will ___________.

a.

shift right - shift to the right

b.

shift left - shift to the left

c.

shift right - shift to the left

d.

shift left - shift to the right

As a result of the simultaneous increase in the price of tea and of the drop in the cost of production of coffee, we would expect that the price of coffee will ________ and the quantity of coffee will ____________ in the new equilibrium.

a.

be uncertain - decrease

b.

increase - be uncertain

c.

be uncertain - increase

d.

decrease - be uncertain

Which of the following statements regarding utility is not true?

a.

It is a satisfying power of a commodity.

b.

It helps consumers to make choices.

c.

The utility is always measurable.

d.

It is purely a subjective entity.

If consumers expect the price of gold to decrease next year, their current demand will_______ but their demand next year will________

a.

increase - increase

b.

increase - decrease

c.

decrease - increased.

decrease - decrease

Price floors are ________ the equilibrium point and cause _______

a.

the same as - shortage

b.

surplus - shortage

c.

below - shortage

d.

above - surplus

The price of ink cartridges decrease, so the demand for printers will _______ while the demand for ink cartridges will _________

a.

decrease - increase

b.

increase - increase

c.

increase - decrease

d.

decrease - decrease

_____________ is the addition to total utility by the consumption of one additional unit of the commodity.

a.

Marginal utility

b.

Total utility

c.

Ordinal utility

d.

Average utility

According to the law of diminishing marginal utility, _________.

a.

Additional consumption always yields extra utility

b.

Additional consumption leads to lower average total utility

c.

Additional consumption always yields negative utility

d.

After a point any addition in the consumption causes a reduction in total utility.

The want satisfying power of a commodity is known as:

a.

Supply

b.

Utility

c.

Demand

d.

Consumption

The total utility divided by the number of units consumed is known as_______.

a.

Total utility

b.

Average utility

c.

Marginal utility

d.

None of above

Consumption of a good will be carried to the point at which:

a.

the marginal utility derived from the good equals the marginal utility derived from the consumption of all other goods.

b.

the total utility derived from the good is maximised.

c.

the marginal utility derived from the good begins to decline.

d.

the total utility derived from the good equals the total utility derived from the consumption of all other goods.

A consumer with a given income will maximise their utility when:

a.

the marginal utility derived from each commodity is equal.

b.

the marginal utilities derived from each commodity consumed are proportional to their prices.

c.

the total utility derived from each commodity consumed is equal.

d.

the marginal utility derived from each product consumed is zero.

A fall in the price of lemons would

a.

likely lead to an increase in the quantity demanded for lemons

b.

likely lead to an increase in the demand for lemons

c.

likely lead to the consumer buying more lemons

d.

likely lead to a decrease in the consumer's demand for lemons

The so-called law of demand states that there is

a.

usually an infinitely large change in quantity demanded given even a small change in price.

b.

a positive relationship between a change in the price of a good and the quantity of it demanded

c.

always a proportionate change in the quantity demanded when there is a change in price

d.

an inverse relationship between a change in the price of a good and the quantity of it demanded

When graphing the relationship between price and quantity demanded it is conventional in economics to

a.

to scale the axes so that they meet at a value of 100

b.

plot price on the horizontal and quantity demanded on the vertical axes

c.

to find that the resulting demand curve usually slopes upward to the right.

d.

plot price on the vertical and quantity demanded on the horizontal axis

A decrease in the quantity of a good demanded would show up on a conventionally plotted graph as

a.

a shift of the demand curve downward and to the left, toward the origin

b.

a movement along the curve, downward and to the right from the original position on it

c.

a movement along the curve, upward and to the left from the original position on it.

d.

a shift of the demand curve upward and to the right, away from the origin

A change in the demand for a good might be caused by

a.

a change in the preferences of consumers

b.

either (b) or (c), but not (a)

c.

a change in the income of consumers

d.

an increase in its price

As the term is used in economics, rationality implies that a consumer will

a.

purchase as large a quantity of the good he or she most prefers that his or her available income will permit

b.

normally place the interests of others above those of him or herself

c.

seek to maximize his or her total satisfaction given the income available.

d.

seldom be constrained by limited income when it comes to buying the goods he or she really wants

If a consumer wanted to increase the marginal utility of a good he or she normally purchases

a.

the consumer can by buying less of the good

b.

there is nothing the consumer can do about it because marginal utility is determined by the costs of production

c.

the consumer can do by finding additional income

d.

the consumer can do by buying more of the good

Consumer surplus refers to

a.

goods the consumer has purchased but wishes she hadn't

b.

satisfaction the consumer realizes because most goods can be bought at lower prices in large quantities

c.

satisfaction the consumer realizes on units of a good bought at a price which is below the value the consumer places on those units

d.

income the consumer receives which is in excess of what the consumer needs to meet current expenses

If you plot a perfectly elastic demand schedule on a conventionally defined graph the resulting curve will be

a.

a vertical straight line

b.

a straight 45 degree line from the origin, sloping upward and to the right

c.

a horizontal straight line

d.

a curve concave to (bowing out from) the origin.

Which of the following is NOT an economic concept?

a.

Indifference Map

b.

Other-things equal assumption

c.

Scarcity and Choice

d.

Entrepreneurial activity

At a price of $11.00, quantity demanded is 90 units; and at a price of $9.00, quantity demanded is 110 units. What ids the price elasticity of demand?

a.

-0.72

b.

0.2

c.

-0.2

d.

-1

Demand is price inelastic if a relatively_______ price increase leads to a relatively _______ in the quantity demanded

a.

Small; large increase

b.

Large; small increase

c.

Large; small decrease

d.

Small; large decrease

If demand is inelastic and price decreases, then total revenue will

a.

Equal one

b.

Fall

c.

Rise

d.

Remain constant

An increase in bus fare by the JUTC in order to raise revenue, assume that demand for JUTC service is likely to be

a.

Income elastic

b.

Income inelastic

c.

Price elastic

d.

Price inelastic

If the cross-price elasticity between two goods is negative, the two goods are likely to be

a.

Complements

b.

Neciessities

c.

Luxuries

d.

Substitutes