Set 20

Which of the following would shift the demand curve for new textbooks to the right?
1. A fall in the price of paper used in publishing texts
2. A fall in the price of equivalent used text books.
3. An increase in the number of students attending college.
4. A fall in the price of new text books.
Which of these measures the responsiveness of the quantity of one good demanded to an
increase in the price of anot her good?
1. Price elasticity
2. Income elasticity.
3. Cross-price elasticity.
4. Cross-substitution elasticity.
Assume that the current market price is below the market clearing level. We would expect:
1. A surplus to accumulate.
2. Downward pressure on the current market price.
3. Upward pressure on the current m arket price
4. Lower production during the next time period.
The income elasticity of demand is the:
1. Absolute change in quantity demanded resulting from a one-unit increase in income.
2. Percent change in quantity demanded resulting from the absolute increase in
  income.
3. Percent change in quantity demanded resulting from a one percent increase in income.
4. Percent change in income resulting from a one percent increase in quantity demanded.
In the long run, new firms can enter an industry and so the supply elasticity tends to be:
1. More elastic than in the short-run.
2. Less elastic than in the short-run.
3. Perfectly elastic.
4. Perfectly inelastic.
A curve that represents all combinations of market baskets that provide the same level of
utility to a consumer is called:
1. A budget line.
2. An isoquant.
3. An indifference curve.
4. A demand curve.
The magnitude of the slope of an indifference curve is:
1. Called the marginal rate of substitution.
2. Equal to the ratio of the total utility of the goods.
3. Always equal to the ratio of the prices of the goods.
4. All of the above.
Which of the following is a positive statement?
1. Intermediate microeconomics should be required of all economics majors in order to build a solid foundation in economic theory.
2. The minimum wage should not be increased, because to do so would increase unemployment.
3. Smoking should be restricted on all airline flights.
4. None of the above.
A supply curve reveals:
1. The quantity of output consumers are willing to purchase at each possible market price
2. The difference between quantity demanded and quantity supplied at each price.
3. The maximum level of output an industry can produce, regardless of price.
4. The quantity of output that producers are willing to produce and sell at each
  possible market price.
The slope of an indifference curve reveals:
1. That preferences are complete.
2. The marginal rate of substitution of one good for another good
3. The ratio of market prices.
4. That preferences are transitive.
An increase in income, holding prices constant, can be represented as:
1. A change in the slope of the budget line.
2. A parallel outward shift in the budget line.
3. An outward shift in the budget line with its slope becoming flatter.
4. A parallel inward shift in the budget line.
If prices and income in a two-good society double, what will happen to the budget line?
1. The intercepts of the budget line will increase.
2. The intercepts of the budget line will decrease.
3. The slope of the budget line may either increase or decrease.
4. There will be no effect on t he budget line.
An individual consumes only two goods, X and Y. Which of the following expressions represents the utility maximizing market basket?
1. MRSxy is at a maximum.
2. Px/Py = money income.
3. MRSxy = money income.
4. MRSxy = Px/Py.
Which of the following is true regarding income along a price consumption curve?
1. Income is increasing.
2. Income is decreasing.
3. Income is constant.
4. The level of income depends on the level of utility
An individual with a constant marginal utility of income will be
1. Risk averse.
2. Risk neutral.
3. Risk loving
4. Insufficient information for a decision.
A function that indicates the maximum output per unit of time that a firm can produce, for every combination of inputs with a given technology, is called:
1. An isoquant.
2. A production possibility curve.
3. A production function.
4. An isocost function
The short run is:
1. Less than a year.
2. Three years.
3. However long it takes to produce the planned output.
4. A time period in which at least one input is fixed.
The rate at which one input can be reduced per additional unit of the other input, while holding output constant, is measured by the:
1. Marginal rate of substitution.
2. Marginal rate of technical substitution.
3. Slope of the isocost curve.
4. Average product of the input.

Set 20

Quiz