Goods X and Y Are Compliments While

Goods X and Y are Compliments while goods X and Z are substitutes If the supply of good X increasesSubstitutes are goods that compete with one another or can be substituted for one another like butter and margarineCompliments are goods that go hand in hand with each another Examples are left shoe and right shoe or bread and buttera) Price rises quantity rises (demand shifts to the right butter and margarine are substitutes)d) Price rises quantity rises (demand shifts to the right bread and butter are complementary goods)

The demand for both Y and Z will increase The demand for Y will increase while the demand for Z will decrease The demand for Y will decrease while the demand for Z will increase The demand for both Y and Z will decrease If diminishing marginal utility holds and a person consumes less of a good then all else being equalThe law of diminishing marginal utility states that as you consume more and more of a Particular good the satisfaction or utility that you derive from each additional unit fallsThe marginal utility curve slopes downwards in a MU-Q graph showing the principle ofdiminishing marginal utility The MU curve is exactly equal to the demand curveThe total utility curve starts at the origin and reaches the peak when marginal utility is zero Marginal utility can be derived from total utility It is the slope of the lines joining two adjacent points on the TU curve The price of the good will riseMarginal utility will riseExpenditure on the good will increaseMarginal utility will declineA market is said to be in equilibrium whenEquilibrium quantity is the quantity that clears the market in other words it is it is the quantity at which the quantity demand is equal to the quantity suppliedSupply equals demand There is downward pressure on price The amount consumers wish to buy at the current price equals the amount producers wish to sell at that price All buyers are able to find sellers willing to sell to them at the current priceIf a consumerrsquos marginal rate of substitution equals 2 eggs for 1 hamburgerAn indifference curve is a line which charts out all the different points on which the consumer is indifferent with respect to the utility he derives (in other words it is a combination of all equality points) It is drawn in goods space ie a good Y on the vertical axis and a good X on the horizontal axis Indifference curves are bowed in towards the origin In other words its slope decreases (in absolute terms) as we move down along the curve from left to right The average slope of the indifference curve between any two points is

given by the change in the quantity of good Y divided by change in the quantity of good X This is called the marginal rate of substitution (MRS) The consumerrsquos indifference curve must be positively slopedThe consumerrsquos indifference curve must be convex with respect to the origin of the graphThe ratio of the consumerrsquos marginal utility of 1 egg to that of 1 hamburger must equal frac12All of the given optionsIf the income elasticity of demand is 12 the good isIf the sign of income elasticity of demand is positive the good is normal and if sign is negative the good is inferior A luxuryA normal good (but not a luxury)An inferior goodA Giffen goodIf marginal product is equal to average productRelationship between APP and MPPbull If the marginal physical product equals the average physical product the average physical product will not changebull If the marginal physical product is above the average physical product the averagephysical product will risebull If the marginal physical product is below the average physical product the averagephysical product will fall The total product will fallThe average product will not changeAverage variable costs will fallTotal revenue will fall

When the price elasticity of demand for a good is greater than 1 we say that the demand is ____________________Demand is said to be ____________________ when the elasticity of demand is less than ______Elastic and Inelastic DemandSlope and elasticity of demand have an inverse relationship When slope is high elasticity of demand is low and vice versaWhen the slope of a demand curve is infinity elasticity is zero (perfectly inelastic demand) and when the slope of a demand curve is zero elasticity is infinite (perfectly elastic demand)Unit elasticity means that a 1 change in price will result in an exact 1 change in quantity demanded Thus elasticity will be equal to oneElastic inelastic -1 Elastic inelastic 1 Inelastic elastic 1 Inelastic elastic -1 The marginal rate of substitution is equal to the

The indifference curve for perfect substitutes is a straight line while it is L-shaped forperfect compliments Magnitude of the slope of the indifference curveRelative priceMarginal cost of each goodSlope of the budget lineThe demand curve generally slopes upward becauseA Giffen good is a sub-category of inferior goods its consumption increases when itrsquos price increases This is because of its very strong income effectBoth normal and inferior goods have downward sloping demand curves A higher price increases the consumers desired level of consumption A higher price decreases the consumers desired level of consumption Thatrsquos just the way that it is None of the given optionsYou observe that the price of houses and the number of houses purchased both rise over the course of the year You conclude that a) Price rises quantity rises (demand shifts to the right butter and margarine are substitutes)d) Price rises quantity rises (demand shifts to the right bread and butter are complementary goods)

The demand for houses has increased The demand curve for houses must be upward-sloping The supply of houses has increased Housing construction costs must be decreasingSuppose price rises from $15 to $17 and quantity demanded decreases by 20 We can concludeElastic and Inelastic DemandSlope and elasticity of demand have an inverse relationship When slope is high elasticity of demand is low and vice versaWhen the slope of a demand curve is infinity elasticity is zero (perfectly inelastic demand) and when the slope of a demand curve is zero elasticity is infinite (perfectly elastic demand)Unit elasticity means that a 1 change in price will result in an exact 1 change in quantity demanded Thus elasticity will be equal to one Demand is inelastic The elasticity of demand is 2 Total revenue will decrease Demand is unit elastic The ____________________ is a graph of the ____________________ of a good and the ____________________A demand curve is a graph that obtains when price (one of the determinants of demand) is plotted against quantity demanded A supply curve obtains when price is plotted against quantity suppliedSupply curve price quantity supplied Demand curve price quantity supplied Supply curve price quantity demanded Supply curve quantity supplied and income of consumers

The concave (bowed) shape of the production possibilities curve illustrates a) When there are constant opportunity costs This will occur when resources are equally suited to producing either good This might possibly occur in our highly simplified world of just two goods In the real world it is unlikelyb) When there are decreasing opportunity costs This will occur when increased specialization in one good allows the country to become more efficient in its productionIt gains lsquoeconomies of scalersquo sufficient to offset having to use less suitable resources

Increasing opportunity costs for both goods Increasing opportunity cost for good X but not for good Y Increasing opportunity cost for good Y but not for good X Constant opportunity costs for both goods The effect of a change in income on the quantity of the good consumed is called theIncome effect is the effect of a price rise on quantity demanded that works through a decline in the real income (or purchasing power) of the consumer Income effect can be positive or negative depending on whether the good is normal or inferior Income effectBudget effectSubstitution effectReal income effectThe numerical measurement of a consumerrsquos preference is calledUtility is the usefulness benefit or satisfaction derived from the consumption of goods and servicesSatisfactionUsePleasureUtilityWe know that the demand for a product is elastic ifPrice Elasticity of DemandPrice elasticity of demand is the percentage change in quantity demanded with respect to the percentage change in price Price elasticity of demand can be illustrated by the following formulaPЄd = Percentage change in Quantity demandedPercentage change in PriceWhere Є = Epsilon universal notation for elasticityIf for example a 20 increase in the price of a product causes a 10 fall in the Quantity demanded the price elasticity of demand will bePЄd = - 1020 = - 05When price rises revenue rises When price rises revenue falls When price rises quantity demanded rises When price falls quantity demanded risesWhen an industrys raw material costs increase other things remaining the same

Equilibrium can shift ifbull Demand Curve Shiftsbull Supply Curve Shiftsbull Both ShiftThis gives rise to eight possibilities These eight possibilities can be summarized as followingD S ~ P QD ~ S 1048774 P QD 1048774 S 1048774 P QD 1048774 S ~ P QD ~ S P QD 1048774 S 1048774 P Q D 1048774 S 1048774 P Q D 1048774 S 1048774 P QThe symbol ldquo rdquo or ldquo rdquo shows increase and the symbol ldquo rdquo and ldquo rdquo shows a decrease while the symbol ldquo~rdquo shows that the particular thing remains same The supply curve shifts to the leftThe supply curve shifts to the rightOutput increases regardless of the market price and the supply curve shifts upwardOutput decreases and the market price also decreaseThe effect of a change in the price of a good or service on the quantities consumed when the consumer remains indifferent between the original and new combination of goods consumed is thePrice effect is the sum of income and substitution effectsSubstitution effectReal income effectIncome effectPrice effectAn individual with a constant marginal utility of income will beA risk neutral person is one who buys a good when OR gt 1He is indifferent when OR = 1 and will not buy when OR lt 1Risk averseRisk neutralRisk lovingInsufficient information for a decisionPrice floor results inA price ceiling is the maximum price limit that the government sets to ensure that prices donrsquot rise above that limit (medicines for eg)A price floor is the minimum price that a Government sets to support a desired commodity or service in a society (wages for eg)Equilibrium Equilibrium is a state in which there are no shortages and surpluses in other words the quantity demanded is equal to the quantity suppliedEquilibriumExcess demandExcess supplyAll of the given optionsIf a sales tax on beer leads to reduced tax revenue this means

As supply becomes more elastic so output will fall and hence tax revenue will fall At the same time price will tend to rise and hence the incidence will shift from the producer to the consumerAs demand becomes more elastic so this too will lead to a fall in sales This however will have the opposite effect on the incidence of the tax the burden will tend to shift from the consumer to the producerElasticity of demand is lt 1 Elasticity of demand is gt 1 Demand is upward-sloping Demand is perfectly inelastic Assume that the current market price is below the market clearing level We would expectCurrent market prices of all final goods and services produced during a year by the factors owned by the citizens of a countryUnemployment was high because of obstructions to the free market mechanism in the labor market which were preventing wages from falling to the market clearing levelPolicy recommendation these obstructions benefit payments to unemployed taxes onIncome and trade unions be eliminated A surplus to accumulateDownward pressure on the current market priceUpward pressure on the current market priceLower production during the next time periodAssume that the government sets a ceiling on the interest rate that banks charge on loans If the ceiling is set below the market equilibrium interest rate the result will beBecause supply is at a high level the increased supply creates a surplus which pushes down the price Individual farmers could not prevent the price falling If they continued to charge the higher price consumers would simply buy from those farmers charging the lower price A surplus of creditA shortage of creditGreater profits for banks issuing creditA perfectly inelastic supply of credit in the market placeOur economy is characterized by Unlimited wants and needsUnlimited material resourcesNo energy resourcesAbundant productive laborDue to capacity constraints the price elasticity of supply for most products is The same in the long run and the short runGreater in the long run than in the short runGreater in the short run than in the long runToo uncertain to be estimated

If consumer incomes increase the demand for product Y

Normal goods are goods whose quantity demanded goes up as consumer income increasesWill necessarily remain unchanged Will shift to the right if Y is a complementary good Will shift to the right if Y is a normal good Will shift to the right if Y is an inferior good In a free-market economy the allocation of resources is determined byA free marketcapitalist economy is a system in which the questions about what to produce how to produce and for whom to produce are decided primarily by the demand and supply interactions in the marketVotes taken by consumersA central planning authorityBy consumer preferencesThe level of profits of firmsThe short run as economists use the phrase is characterized byThe short run is the period where at least one factor of production is fixed In perfect competition it also means that no new firms can enter the marketIn the long run all the factors of production are variable

All inputs being variableAt least one fixed factor of production and firms neither leaving nor entering the industry No variable inputs - that is all of the factors of production are fixed A period where the law of diminishing returns does not hold Although there are many reasons why a market can be non-competitive the principal economic difference between a competitive and a non-competitive market is The number of firms in the marketThe extent to which any firm can influence the price of the productThe size of the firms in the marketThe annual sales made by the largest firms in the marketIn pure capitalism freedom of enterprise means thatPerfect competition can be thought of as an extreme form of capitalism ie all the firms are fully subject to the market forces of demand and supply Businesses are free to produce products that consumers wantConsumers are free to buy goods and services that they wantResources are distributed freely to businesses that want themGovernment is free to direct the actions of businesses

Which of the following is not an assumption of ordinal utility analysisMarginal utility approach involves cardinal measurement of utility ie you assign exact values or you measure utility in exact units while the indifference curve approach is an ordinal approach ie you rank possibilities or outcomes in an order of preferences without assigning them exact utility values Consumers are consistent in their preference

Consumers can measure the total utility received from any given basket of goodConsumers are non-satiated with respect to the goods they confrontAll are necessaryThe law of diminishing marginal utility states The supply curve slopes upwardYour utility grows at a slower and slower rate as you consume more and more units of a good The elasticity of demand is infinite None of the given optionsA normative economic statementNormative economics refers to value judgments eg what ldquooughtrdquo to be the goals of public policy Normative statements cannot be tested Is a statement of factIs a hypothesis used to test economic theoryIs a statement of what ought to be not what isIs a statement of what will occur if certain assumptions are trueIf there is a price ceiling there will be ShortageSurpluses EquilibriumNone of the given optionsA price ceiling is the maximum price limit that the government sets to ensure that prices donrsquot rise above that limit (medicines for eg)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

Isoquant An isoquant represents different combinations of factors of production that a firm can employ to produce the same level of outputIsoquants can be used to illustrate the concepts of returns to scale and returns to factorBudget Line The concept of iso-cost is similar to the budget line developed in indifference curve analysis It is a line which captures all the different combinations of inputs that the firm can afford to hirea If price of both inputs increases the iso-cost line shifts inwardsb If price of one input increases it pivots outc The slope of iso-cost is PLPKThe isoquant-isocost combination can help answera What is the least cost way of producing a particular level of outputb What the highest level of output the firm can produce given a certain budget An isoquantA production possibility curveA production functionAn isocost functionA firm never operates

Select correct option

At the minimum of its average total cost curve

At the minimum of its average variable cost curve

On the downward-sloping portion of its average total cost curve

On the downward-sloping portion of its average variable cost curve

The cross elasticity of demand of complements goods isIf on the other hand the price of bread (a compliment) rose the demand for butter would fall If a 4 rise in the price of bread led to a 3 fall in the demand for butter the cross-price elasticity of demand for butter with respect to bread would bePbЄda = - 34 = - 075Less than 0Equal to 0Greater than 0Between 0 and 1A nations production possibilities curve is bowed out from the origin becauseWhen there are decreasing opportunity costs This will occur when increased specialization in one good allows the country to become more efficient in its productionIt gains lsquoeconomies of scalersquo sufficient to offset having to use less suitable resources Resources are not perfectly shift able between productions of the two goods Capital goods and consumer goods utilize the same production technology Resources are scarce relative to human wants Opportunity costs are decreasing A partial explanation for the inverse relationship between price and quantity demanded is that aRational choice consists in evaluating the costs and benefits of different decisions and then choosing the decision that gives the highest benefit relative to costIgnorance and Irrationality There is a difference between ldquoignorancerdquo and ldquoirrationalityrdquo A person operating under uncertainty and thus at least partial ignorance can still make rational decisions by taking into account all the information she has at her disposal Rationality is an ex-ante concept Economists do not judge rational behavior on the basis of actual outcomes rather on the basis of choices made

Lower price shifts the supply curve to the left Higher price shifts the demand curve to the left Lower price shifts the demand curve to the right Higher price reduces the real incomes of buyers

Demand is elastic when the elasticity of demand is


Greater than 0

Greater than 1

Less than 1

Less than 0

According the law of diminishing returnsThe law of diminishing marginal utility states that as you consume more and more of a particular good the satisfaction or utility that you derive from each additional unit falls The marginal product falls as more units of a variable factor are added to a fixed factorMarginal utility falls as more units of a product are consumedThe total product falls as more units of a variable factor are added to a fixed factorThe marginal product increases as more units of a variable factor are added to a fixed factorIn Keynesian economics equilibrium can occur


Only at full employment

Only at levels less than full employment

Only at levels greater than full employment

At any level of aggregate output equal to aggregate expenditures

An indifference curve isIndifference curves are bowed in towards the origin In other words its slope decreases (in absolute terms) as we move down along the curve from left to right A collection of market baskets that is equally desirable to the consumerA collection of market baskets that the consumer can buyA curve whose elasticity is constant for every priceA curve which passes through the origin and includes all of the market baskets that the consumer regards as being equivalentA Demand Curve is price inelastic whenKinked Demand CurveA kinked demand curve explains the ldquostickinessrdquo of the prices in oligopolistic markets The main insight is that if one firm raises prices no one else will and so the firm will face declining revenues (elastic demand) However if one firm lowered its price everyone else would lower their prices as well and everyonersquos revenues including the first firmrsquos revenues would fall (inelastic demand)

Changes in demand are proportionately smaller than those in price Changes in demand are proportionately greater than those in price Changes in demand are equal than those in price None of the given optionsThe concept of a risk premium applies to a person that isRisk aversion is a common feature of rational utility maximizing behavior by the average consumer Risk averseRisk neutralRisk lovingAll of the given optionsCurves that are convexu-shaped to the origin reflectIndifference curves are bowed in towards the origin In other words its slope decreases (in absolute terms) as we move down along the curve from left to right The average slope of the indifference curve between any two points is given by the change in the quantity of good Y divided by change in the quantity of good X This is called the marginal rate of substitution (MRS)An increasing marginal rate of substitutionA decreasing marginal rate of substitution A constant marginal rate of substitutionA marginal rate of substitution that first decreases then increasesThe burden of a tax is shifted toward buyers ifWhen the slope of a demand curve is zero elasticity is infinite (perfectly elastic demand)

Demand is perfectly elasticDemand is relatively more elastic than supplyDemand is relatively more inelastic than supplyDemand and supply have equal elastic tiesIf a decrease in price increases total revenueTotal revenue and ElasticityTotal revenue (TR) = Price x Quantity when the demand curve is inelastic TR increases as the price goes up and vice versa when the demand curve is elastic TR falls as the price goes up and vice versa

Demand is elastic Demand is inelastic Supply is elastic Supply is inelastic What happens in the market for airline travel when the price of traveling by rail decreasesMarket demand curve is a graphic representation of a market demand which shows the quantities of a commodity that consumers are willing able to purchase during a period of time at various alternative prices while holding constant everything else that effects demand The market demand curve for a commodity is negatively sloped indicating that more of a commodity is purchased at a lower price

The demand curve shifts left

The demand curve shifts rightThe supply curve shifts leftThe supply curve shifts right

Question 1 of 15 ( Start time 012442 PM ) Total Marks 1

A person with a diminishing marginal utility of income


Will be risk averse

Will be risk neutral

Will be risk loving

Cannot decide without more information


We know that the demand for a product is elastic if


When price rises revenue rises

When price rises revenue falls

When price rises quantity demanded rises

When price falls quantity demanded rises




Will necessarily remain unchanged

Will shift to the right if Y is a complementary good

Will shift to the right if Y is a normal good

Will shift to the right if Y is an inferior good

It is expected that the sign of cross elasticity between two complementary goods would be

Positive

Negative

Zero

None of the given options

A Demand Curve is price inelastic when

Changes in demand are proportionately smaller than those in price

Changes in demand are proportionately greater than those in price

Changes in demand are equal than those in price



The production possibilities curve

Shows all combinations of goods that society most desires

Indicates that any combination of goods lying outside the curve is attainable

Separates all combinations of two goods that can be produced from those that cannot

Shows only those combinations of two goods that reflect full production

Reference The production possibilities curve is a frontier indicating the maximum amount of one good achievable for a given amount of the other good Only one of these combinations

represents the combination society most desires and therefore represents full production


The demand for chicken is downward-sloping Suddenly the price of chicken rises from $130 per kilo to $140 per kilo This will cause

The demand curve to shift to the left

The demand curve to shift to the right

Quantity demanded to increase

Quantity demanded to decrease

If marginal product is below average product


The total product will fall

The average product will fall

Average variable costs will fall

Total revenue will fall

Reference The marginal product is the extra output per factor (eg employee) the average product is the output per factor (eg per employee) If marginal product is below average product the average product will fall


It is calculated as the percentage change in quantity demanded of a given good with respect to the percentage change in the price of ldquoanotherrdquo good


Price elasticity of demand

Income elasticity of demand

Cross price elasticity of demand

Supply price elasticity


A partial explanation for the inverse relationship between price and quantity demanded is that a


Lower price shifts the supply curve to the left

Higher price shifts the demand curve to the left

Lower price shifts the demand curve to the right

Higher price reduces the real incomes of buyers

Feedback The demand curve is the relationship between price and quantity demanded all else equal A change in price changes quantity demanded but does not shift the demand curve One explanation for the inverse relationship between price and quantity demanded along the curve is that a higher price reduces the real incomes of buyers For normal goods this drop in real income will reduce desired purchases modest_khan 4

In the classical model given an initial aggregate equilibrium at full employment the long run effect of an increase in government spending is


An increase in the price level

An upward shift of the aggregate demand curve

A constant level of output

All of the above

A Giffen good is defined as one for which


Marginal utility is zero

The demand curve is perfectly elastic

The substitution effect is positive

The demand curve is positively sloped

According the law of diminishing returns


The marginal product falls as more units of a variable factor are added to a fixed factor

Marginal utility falls as more units of a product are consumed

The total product falls as more units of a variable factor are added to a fixed factor

The marginal product increases as more units of a variable factor are added to a fixed factor

This occurs when variable factors are added to fixed factors According to the law of diminishing returns the marginal product falls as more units of a variable factor are added to a fixed factor

Monopolistically competitive firms have monopoly power because they


Face downward sloping demand curves

Are great in number

Have freedom of entry

Are free to advertise

The concept of a risk premium applies to a person that is


Risk averse

Risk neutral

Risk loving

All of the given options


When drawing demand and supply curves economists are assuming that the primary influence on production and purchasing decisions is


Price

Cost of production

The overall state of the economy

Consumer incomes

Reference Although there are many determinants of quantity demanded and quantity supplied the

demand and supply curves show the relationship between price and quantity all other factors equal The primary factor is assumed to be the price

The substitution effect of a price decrease for a good with a normal indifference curve pattern


Is always inversely related to the price change

Measures the change in consumption of the good that is due to the consumerrsquos feeling of being richer

Is measured by the horizontal distance between the original and the new indifference curves

Is sufficient information to plot an ordinary demand curve for the commodity being considered

A schedule which shows the various amounts of a product consumers are willing and able to purchase at each price in a series of possible prices during a specified period of time is called


Supply

Demand

Quantity supplied

Quantity demanded

The principle that states that a change in investment causes a magnified change in income is termed as the


Water paradox

Paradox of thrift

Saving theorem

Multiplier effect

Under New Classical macroeconomics monetary policy


Affects the level of equilibrium output

Affects the composition of equilibrium output

Affects both the level and composition of equilibrium output


When the price of petrol rises 10 the quantity of petrol purchased falls by 8 The demand for petrol is


Perfectly elastic

Unit elastic

Elastic

Inelastic

If marginal product is above the average product



The average product will rise


Total revenue will fall Ref A mathematical connection between average product and marginal product stating that the change in the average product depends on a comparison between the average product and marginal product If marginal product is less than average product then average product declines If marginal product is greater than average product then average product rises If marginal product is equal to average product then average product does not change

Other things equal expected income can be used as a direct measure of well-being


No matter what a persons preference to risk

If and only if individuals are not risk-loving

If and only if individuals are risk averse

If and only if individuals are risk neutral

Price floor results in


Equilibrium

Excess demand

Excess supply


It measures the percentage change in demand given a percentage change in consumers income





Cross price elasticity



Greater than 0

Greater than 1

Less than 1

Less than 0

The cross elasticity of demand of complements goods is Select correct option

Less than 0

Equal to 0Greater than 0Between 0 and 1

THREE CORE RULES OF ELASTICTYRULE 01

Less than greater than

Price elasticity Inelastic 1 Elastic

RULE 02

+ Normal good

Income elasticity- Inferior good

RULE 03

+ Substitutes

Cross elasticity

- Complements

The point at which AC intersects MC is where Select correct option

AC is decreasing MC is at its minimum AC is at its minimumAC is at its maximum

Which of the following can be thought of as a barrier to entry Select correct option

Scale economiesPatentsStrategic actions by incumbent firmsAll of the given options are true

When oligopolists collude they are able to Select correct option

Raise price but not restrict outputRaise price and restrict output but not attain the monopoly profitRaise price and restrict output and therefore attain the monopoly profit Restrict output but not raise price






The marginal product is the extra output per factor (eg employee) the average

product is the output per factor (eg per employee) If marginal product is below

average product the average product will fall

In a production process all inputs are increased by 10 but output increases more than 10 This means that the firm experiences Select correct option

Decreasing returns to scaleConstant returns to scale Increasing returns to scaleNegative returns to scale

Which of the following is true

a) If the marginal cost is greater than the average cost the average cost falls

b) If the marginal cost is greater than the average cost the average cost increases

c) If the marginal cost is positive total costs are maximised

d) If the marginal cost is negative total costs increase at a decreasing rate if output increases

The marginal cost measures the extra cost of producing another unit the average cost

measures the cost per unit If the marginal cost is greater than the average cost the

average cost increases

Disposable income is


Total income plus transfer payments

Total income minus saving

Total income plus net taxes

The law of diminishing returns assumes

a) There are no fixed factors of production

b) There are no variable factors of production

c) Utility is maximised when marginal product falls

d) Some factors of production are fixed

This occurs when variable factors are added to fixed factors It assumes some

factors of production are fixed

When internal economies of scale occur

a) Total costs fall

b) Marginal costs increase

c) Average costs fall

d) Revenue falls

These occur when the unit cost (average costs) falls as the scale of production

increases

The first level of output at which the long run average costs are minimised is called

a) The Minimum Efficient Scale

b) The Minimum External Scale

c) The Maximum External Scale

d) The Maximum Effective Scale

This is the variable cost per unit when added to the fixed cost per unit this leads to

the total cost per unit As output increases the average fixed cost falls so the

average variable cost and average cost converge

The average variable cost curve

a) Is derived from the average fixed costs

b) Converges with the average cost as output increases

c) Equals the total costs divided by the output

d) Equals revenue minus profits




If marginal cost is positive and falling

a) Total cost is falling

b) Total cost is increasing at a falling rate

c) Total cost is falling at a falling rate

d) Total cost is increasing at an increasing rate

This means the extra cost of a unit is falling total cost will increase at a decreasing

rate

An individual with a constant marginal utility of income will be

Risk averse

Risk neutral

Risk loving

Not enough information

At the equilibrium price


There will be a shortage

There will be neither a shortage nor a surplus

There will be a surplus

There are forces that cause the price to change

Because of the relationship between a perfectly competitive firms demand curve and its marginal revenue curve the profit maximization condition for the firm can be written as


P = MR

P = AVC

AR = MR

P = MC

In the long run competitive firms MUST be profit maximizes because if they do not maximize profits


They will attract new competitors

They will not be price takers

The profits that they do earn will only cover variable costs

They will not survive

If a firm pays cash to buy a building so as to have office space for its workers the monthly opportunity cost of the building is best measured as

The price the firm paid divided by twelve

Zero

The rent the firm could earn if it rented the building to another firm

The monthly mortgage payment the firm would have had to pay

The oligopoly model that predicts that oligopoly prices will tend to be very rigid is the ______________ model


Cournot

Stackelberg

Dominant firm

kinked demand

In which market structure(s) will price exceed marginal revenue

Differentiated oligopoly and monopoly only

Standardized oligopoly and pure competition only

Monopolistic competition and monopoly only

Monopolistic competition oligopoly and monopoly

Feedback Price will exceed marginal revenue in any industry in which firms face a downward-sloping demand curve Pure competition is the only industry in which this is not the case

A new technology which reduces costs for firmsrsquo

Shifts the supply curve to the rightShifts the supply curve to the leftReduces the equilibrium quantityRaises the equilibrium price

If the income elasticity of demand is 2 the good is

A luxury

A normal good(but not a luxury)

An inferior good

A Giffen good

3-Which of the following events could cause the ADI curve to shift to the right Select correct optionA decrease in the rate of inflationA decrease in government expendituresA decrease in investment spendingA decrease in income tax rates 4-Intermediate goods are meant for Select correct option

Direct use by the consumersFurther processingThe term do not existNone6-When the demand curve is downward sloping marginal revenue is Select correct option Equal to priceEqual to average costLess than priceMore than price 7-If two goods were perfect complements their indifference curves would beSelect correct optionStraight linesL-shapedRectangular hyperbolasParabolic

8-The demand curve facing a perfectly competitive firm is Select correct option

The same as its average revenue curve but not the same as its marginal revenue curve The same as its average revenue curve and its marginal revenue curveThe same as its marginal revenue curve but not its average revenue curveNot the same as either its marginal revenue curve or its average revenue curve 9-When government sets the price of a good and that price is above the equilibrium price the result will beSelect correct optionA surplus of the goodA shortage of the goodAn increase in the demand for the goodA decrease in the supply of the good

12-More output could be produced with available resources ifSelect correct optionResources are allocated efficientlyResources are imperfectly shiftable among alternative usesPrices are reducedThe economy is operating at a point inside the production possibilities curve 13-Those who hold the classical view of the labour market are likely to believe that Select correct optionMonetary but not fiscal policy will have an effect on output and employmentFiscal but not monetary policy will have an effect on output and employmentBoth monetary and fiscal policy will have an effect on output and employmentNeither monetary nor fiscal policy will have an effect on output and employment 14-Oligopoly differs from monopolistic competition in that an oligopoly includes Select correct optionProduct differentiationNo barriers to entryBarriers to entryDownward sloping demand curves facing the firm 15-In a free-market economy the allocation of resources is determined by Select correct optionVotes taken by consumersA central planning authorityBy consumer preferencesThe level of profits of firms

-If the total product of labor per day is as shown in the chart below and the price of the product is $10unit what is the value of the marginal product (VMPL) of the 5th worker Labor Total output

1 10 2 25 3 35 4 40 5 41Select correct option51050100 4-Which of the following markets is most likely to be oligopolisticSelect correct option The market for corn The market for aluminum The market for colas The market for ground coffees 5-Which of the following statements describes increasing returns to scaleSelect correct option

Doubling the inputs used leads to double the output Increasing the inputs by 50 leads to a 25 increase in output Increasing inputs by 14 leads to an increase in output of 13 None of the given options7-When the marginal revenue product is greater than the marginal input cost of labor the profit maximizing firm willSelect correct option Hire more Hire less Maintain the same employment Decrease output8-Marginal Cost is defined asSelect correct option The derivative of variable cost with respect to quantity produced The derivative of Average Cost with respect to quantity produced The derivative of Total Cost with respect to quantity produced None of the given option 9-The long run aggregate supply will shift to the right wheneverSelect correct option The price level increases Factors of production (such as labor and capital) increase Expenditures (such as consumption and net exports) increase The prices of inputs used to produce goods and services (such as wages and the price of oil) decrease 10-Which of the following statements is accurate about a competitive market in the long runSelect correct option Firms break even Firms experience profits New firms enter the market Firms experience losses 11-If a profit-maximizing firm finds that at its current level of production MR lt MC it willSelect correct option Increase output Operate at a loss Shut down Decrease output 13- A graph showing all the combinations of capital and labour available for a given total cost is theSelect correct option Budget constraint Expenditure set isoquant isocost line

14-The demand curve faced by an individual firm in a competitive market isSelect correct option Upward sloping Downward sloping Horizontal Vertical The kinked demand curve model is based on the assumption that each firm


Considers its rivals output to be fixed

Considers its rivals price to be fixed

Believes rivals will match all price changes


GDP measures


Expenditure on all final goods and services

Total income of everyone in the economy

Total value-added by all firms in the economy


Which of the following is not a stock variable


Government debt

The labor force

The amount of money held by the public

Inventory investment

Suppose the short-run production function is q = 10 L If the wage rate is $10 per unit of labor then MC=


q10

0q

q

1

1 The process by which resources are transformed into useful forms is

A capitalisation

B consumption

C allocation

D production

2 The concept of choice would become irrelevant if

A capital were eliminated

B scarcity were eliminated

C we were dealing with a very simple one-person economy

D poverty were eliminated

3 Which of the following is not a resource as the term is used by economists

A money

B land

C buildings

D labour

4 Capital as economists use the term

A is the money the firm spends to hire resources

B is money the firm raises from selling stock

C refers to the process by which resources are transformed into useful forms

D refers to things that have already been produced that are in turn used to produce other goods and services

5 Opportunity cost most broadly define is

A the additional cost of producing an additional unit of output

B what we forgo or give up when we make a choice or a decision

C a cost that cannot be avoided regardless of what is done in the future

D the additional cost of buying an additional unit of a product

6 A graph showing all the combinations of goods and services that can be produced if all of societys resources are used efficiently is a

A demand curve

B supply curve

C production possibility frontier

D circular-flow diagram

7 Periods of ldquoless than full employmentrdquo of resources correspond to

A points on the ppf

B points outside the ppf

C either points inside or outside the ppf

D points inside the ppf

8 What lies is at the heart of the allocation of goods and services in a free-market economy

A Concerns of equity or equal distribution among individuals

B The order or command of the ruling government or dictator

C The wishes of consumers in the market

D The price mechanism

9 The phrase ceteris paribus is best expressed as

A all else equal

B everything affects everything else

C scarcity is a fact of life

D there is no such thing as a free lunch

10 Laboratory (or controlled) experiments cannot be performed in economics because

A of resource scarcity

B economics is a natural science

C of the difficulty of distinguishing between normative and positive statements

D economics is a social science

11 Positive statements are

A value judgments

B verifiable or testable

C statements in the affirmative

D good statements

12 The former Soviet Union was an example of

A a planned economy

B free-marketcapitalism

C dictatorship

D a mixed economy

13 Rational choice or rational decision-making involves

A comparing the net benefit of a choice with the total net benefit foregone of all the alternatives combined

B weighing up total costs and total benefits associated with a decision

C weighing up marginal costs and marginal benefits associated with a decision

D all of the above

14 The PPF can be used to illustrate

A the principle of opportunity costs and increasing opportunity costs

B the distinction between micro and macroeconomics

C efficient infeasible and inefficient production combinations

D all of the above

Note for students Unless otherwise stated you should assume that we are operating in

P-Q space

15 The concept of ldquointerdependence of marketsrdquo can refer to the interdependence between

A two or more factor markets

B goods and factor markets

C goods markets

D all of the above

16 The law of demand implies that

A as prices fall quantity demanded increases

B as prices fall demand increases

C as prices rise quantity demanded increases

D as prices rise demand decreases

1 What effect is working when the price of a good falls and consumers tend to buy it instead of other goods

A the substitution effect

B the ceteris paribus effect

C the total price effect

D the income effect

2 The quantity demanded (Qd) of a soft drink brand A has decreased This could be because

A Arsquos consumers have had an increase in income

B the price of A has increased

C Arsquos advertising is not as effective as in the past

D the price of rival brand B has increased

5 Demand curves in P-Q space are derived while holding constant

A consumer tastes and the prices of other goods

B incomes tastes and the price of the good

C incomes and tastes

D incomes tastes and the prices of other goods

6 Suppose the demand for good Z goes up when the price of good Y goes down We can say that goods Z and Y are

A perfect substitutes

B unrelated goods

C complements

D substitutes

7 If the demand for coffee decreases as income decreases coffee is

A a normal good

B a complementary good

C an inferior good

D a substitute good

8 Which of the following will NOT cause a shift in the demand curve for compact discs

A a change in the price of pre-recorded cassette tapes

B a change in wealth

C a change in income

D a change in the price of compact discs

9 Which of the following is consistent with the law of supply

A As the price of calculators rises the supply of calculators increases ceteris paribus

B As the price of calculators falls the supply of calculators increases ceteris paribus

C As the price of calculators rises the quantity supplied of calculators increases ceteris paribus

D As the price of calculators rises the quantity supplied of calculators decreases ceteris paribus

10 The price of computer chips used in the manufacture of personal computers has fallen This will lead to __________ personal computers

A a decrease in the supply of

B a decrease in the quantity supplied of

C an increase in the supply of

D an increase in the quantity supplied of

11 When there is excess demand in an unregulated market there is a tendency for

A quantity demanded to increase

B quantity supplied to decrease

C price to fall

D price to rise

12 Equilibrium in the market for good A obtains

A when there is no surplus or shortage prevailing in the market

B where the demand and supply curves for A intersect

C when all of what is produced of A is consumed

D all of the above

13 A shift in the demand curve (drawn in the traditional Price-Quantity space) to the left may be caused by

A a decrease in supply

B a fall in income

C a fall in the price of a complementary good

D a fall in the number of substitute goods

Assume the good is normal

14 A shift in the demand curve (drawn in Income-Quantity space) to the left may be caused by

A a fall in the price of a complementary good

B a fall in income

C a change in tastes such that consumers prefer the good more

D a rise in the number of substitute goods


15 A movement along the demand curve (drawn in Quantity-Price space) to the left may be caused by

A an increase in supply

B a rise in income

C a rise in the price of a complementary good



16 When the market operates without interference price increases will distribute what is available to those who are willing and able to pay the most This process is known as

A price fixing

B quantity setting

C quantity adjustment

D price rationing

17 How many different equilibria can obtain when you allow for shifts in the demand andor the supply curves

A 2

B 4

C 8

D 16

18 What will happen to equilibrium price and quantity when the demand curve shifts to the left and the supply curve shifts to the right

A price falls unambiguously but the effect on quantity cannot be determined

B both price and quantity falls unambiguously

C quantity falls unambiguously but the effect on price cannot be determined

D the effect on both price and quantity cannot be determined

19 What will happen to equilibrium price and quantity when both the demand and supply curves shift to the left





20 A price ceiling imposed by the government can cause a shortage (excess demand)

A when the price ceiling is above the free (or unregulated) market price

B when the price ceiling is below the free (or unregulated) market price

C when the price ceiling is equal to the free (or unregulated) market price

D either of the above

21 What is the effect of imposing a fixed per unit tax on a good on its equilibrium price and quantity

A Price falls quantity rises

B Price rises quantity falls

C Both price and quantity fall

D Both price and quantity rise

22 A price floor is

A a maximum price usually set by government that sellers may charge for a good or service

B a minimum price usually set by government that sellers must charge for a good or service

C the difference between the initial equilibrium price and the equilibrium price after a decrease in supply

D the minimum price that consumers are willing to pay for a good or service

23 The need for rationing a good arises when

A there is a perfectly inelastic demand for the good

B supply exceeds demand

C demand exceeds supply

D a surplus exists

24 If the ldquoregulated-marketrdquo price is below the equilibrium (or ldquofree-marketrdquo price) price

A the quantity demanded will be greater than quantity supplied

B demand will be less than supply

C quantity demanded will be less than quantity supplied

D quantity demanded will equal quantity supplied

25 If a government were to fix a minimum wage for workers that was higher than the market-clearing equilibrium wage economists would predict that

A more workers would become employed

B there would be more unemployment

C the costs and prices of firms employing cheap labour would increase

D wages in general would fall as employers tried to hold down costs

Demand is elastic when the elasticity of demand is Greater than 0 but less than 1

Greater than 1 Less than 0

Equal to 1Which of the following statements would you consider to be a normative one

Faster economic growth should result if an economy has a higher level of investment

Changing the level of interest rates is a better way of managing the economy than using taxation and government expenditure

Higher levels of unemployment will lead to higher levels of inflation The average level of growth in the economy was faster in the 1990s

than the 1980s

_____questions have to do with explanation and prediction _____ questions have to do with what ought to be

Positive negative Negative normative

normative positive Positive normative

To calculate the price elasticity of demand you need to know ____________________ point(s) on the ____________________ demand curve

One same Two same

One opposite Two opposite

A welfare loss occurs in monopoly where

The price is greater than the marginal cost The price is greater than the marginal benefit

The price is greater than the average revenue The price is greater than the marginal revenue

In monopoly which of the following is NOT true

Products are differentiated There is freedom of entry and exit into the industry in the long run

The firm is a price maker There is one main seller

Question No 7 ( Marks 1 ) - Please choose oneIf income elasticity is negative the good is

Normal good A substitute good

A complementary good Inferior good

Question No 8 ( Marks 1 ) - Please choose oneA schedule which shows the various amounts of a product consumers are willing and able to purchase at each price in a series of possible prices during a specified period of time is called

Supply schedule Demand schedule

Quantity supplied schedule Quantity demanded schedule

Question No 9 ( Marks 1 ) - Please choose oneWhich of the following is true in long run equilibrium for a firm in a monopolistic competitive industry

The demand curve is tangent to marginal cost curve The demand curve is tangent to average cost curve The marginal cost curve is tangent to average cost curve

The demand curve is tangent to marginal revenue curve

Question No 10 ( Marks 1 ) - Please choose oneAn electric power company uses block pricing for electricity sales Block pricing is an example of

First-degree price discrimination Second-degree price discrimination

Third-degree price discrimination Block pricing is not a type of price discrimination

Question No 11 ( Marks 1 ) - Please choose oneA perfectly competitive firm maximizes profit by finding the level of production at which

Price = Marginal Cost Price = Average Total Cost

Average Total Cost = Marginal Cost Price lt Marginal Cost

Question No 12 ( Marks 1 ) - Please choose oneWhich of the following is an example of a natural monopoly

The trademark protecting Gatoraide The talents of Tom Hanks

The local water company

The patent on an Intel processor

Question No 13 ( Marks 1 ) - Please choose oneThe good produced by a monopoly

Has perfect substitutes Has no substitutes at all

Has no close substitutes Can be easily duplicated

Question No 14 ( Marks 1 ) - Please choose oneProducer surplus in a perfectly competitive industry is

The difference between profit at the profit-maximizing and profit-minimizing level of output

The difference between revenue and total cost The difference between revenue and variable cost The difference between revenue and fixed cost

Question No 15 ( Marks 1 ) - Please choose oneAn improvement in technology would result in

Upward shift of marginal cost and reductions in output Upward shift of marginal cost and increases in output

Downward shift of marginal cost and reductions in output Downward shift of marginal cost and increases in output

Question No 16 ( Marks 1 ) - Please choose oneGraphically the Marginal Cost curve cuts through the Average Total Cost curve at

The lowest point on the MC curve The highest point on the MC curve The lowest point on the ATC curve

The middle of the upward-sloping portion of the total cost curve

Question No 17 ( Marks 1 ) - Please choose oneAt the profit-maximizing level of output marginal profit

Is positive Is increasing

Is zero Is also maximized

Question No 18 ( Marks 1 ) - Please choose oneIf current output is less than the profit-maximizing output then which of the following must be TRUE

Total revenue is less than total cost Average revenue is less than average cost

Marginal revenue is less than marginal cost Marginal revenue is greater than marginal cost

Question No 19 ( Marks 1 ) - Please choose one

Which of the following costs always decline as output increases Average cost Marginal cost

Average fixed cost Fixed cost

Question No 20 ( Marks 1 ) - Please choose oneA negatively sloped isoquant implies

Products with negative marginal utilities Products with positive marginal utilities

Inputs with negative marginal products Inputs with positive marginal products

Question No 21 ( Marks 1 ) - Please choose oneAn isoquant curve shows

All the alternative combinations of two inputs that yield the same maximum total product

All the alternative combinations of two products that can be produced by using a given set of inputs fully and in the best possible way

All the alternative combinations of two products among which a producer is indifferent because they yield the same profit


Question No 22 ( Marks 1 ) - Please choose oneWhich of the following statements describes increasing returns to scale

Doubling the inputs used leads to double the output Increasing the inputs by 50 leads to a 25 increase in output

Increasing inputs by 14 leads to an increase in output of 13 None of the given options

Question No 23 ( Marks 1 ) - Please choose oneIn economics the ldquolong runrdquo is a time period in which

All inputs are variable All inputs are paid for

All outputs are determined All loans are repaid

Question No 24 ( Marks 1 ) - Please choose oneA self-employed accountant spends a lot of money identifying clients and advertising his services These activities are an example of

External costs Transaction costs

Fixed inputs Marginal returns

Question No 25 ( Marks 1 ) - Please choose oneA production function

Relates inputs with output Generates a curve that is upward sloping

Shows diminishing marginal product of an input since it gets flatter as output rises


Question No 26 ( Marks 1 ) - Please choose oneIn any production process the marginal product of labour equals

Total output divided by total labour inputs Total output minus the total capital stock

The change in total output resulting from a small change on the labour input

Total output produced by labour inputs

Question No 27 ( Marks 1 ) - Please choose oneIf a market basket is changed by adding more to at least one of the goods then every consumer will

Rank the market basket more highly after the change Rank the market basket more highly before the change

Rank the market basket just as desirable after the change Be unable to decide whether he prefers the first market basket to the

second or the second to the first

Question No 28 ( Marks 1 ) - Please choose oneIf a consumerrsquos marginal rate of substitution equals 2 eggs for 1 hamburger then

The consumerrsquos indifference curve must be positively sloped The consumerrsquos indifference curve must be convex with respect to

the origin of the graph The ratio of the consumerrsquos marginal utility of 1 egg to that of 1

hamburger must equalfrac12 All of the given options

Question No 29 ( Marks 1 ) - Please choose oneSuppose the first four units of an output produced incur corresponding total costs of 400 700 900 and 1000 The marginal cost of the fourth unit of output is

50 100 150 200

Question No 30 ( Marks 1 ) - Please choose oneIf you sum all of the marginal utilities for the consumption of units one through five you will get

The marginal utility for the consumption of the fifth unit The marginal utility for the consumption of the sixth unit The total utility for the consumption of the first five units

The average utility for the consumption of the first five units

Question No 31 ( Marks 1 ) - Please choose oneMarginal utility is best described as

The total satisfaction gained from the total consumption of the good The change in satisfaction from consuming one additional unit

of the good The additional satisfaction gained by consumption of the last good

The per unit satisfaction of the good consumed

Question No 32 ( Marks 1 ) - Please choose oneThe numerical measurement of a consumerrsquos preference is called

Use Pleasure

Utility Satisfaction

Question No 33 ( Marks 1 ) - Please choose oneAs more of a good is consumed then total utility typically

Increases at a decreasing rate Decreases as long as marginal utility is negative

Decreases as long as marginal utility is positive Is negative as long as marginal utility is decreasing

Question No 34 ( Marks 1 ) - Please choose oneCross-price elasticity measures whether

Goods are normal or inferior Two goods are substitutes or complements

Demand is elastic or inelastic Supply is steeper than demand or vice versa

Question No 35 ( Marks 1 ) - Please choose oneIf a decrease in price increases the total revenue then

Demand is elastic Demand is inelastic

Supply is elastic Supply is inelastic

Question No 36 ( Marks 1 ) - Please choose oneIn order to calculate the price elasticity of supply you need to know

Two prices and two quantities supplied The slope of the supply curve

The equilibrium price and quantity in the market The quantity supplied at two different prices all else equal

Question No 37 ( Marks 1 ) - Please choose oneA good for which income and quantity demanded are inversely related is known as

Inferior good Complementary good

Normal good None of the given options

Question No 38 ( Marks 1 ) - Please choose oneAslam decides to stay at home and study for his exam rather than going out with his friends to a movie His dilemma is an example of

The economic perspective Marginal analysis

Allocative efficiency Opportunity cost







Which of the following is the Fisher Equation of Exchange


MT=PV

VT=PM

MV=PQ

MY=VP

Question No 39 ( Marks 1 ) - Please choose oneLand is best described as

Produced factors of production Organizational resources

Physical and mental abilities of people Naturally occurring resources

Question No 40 ( Marks 1 ) - Please choose oneIn pure capitalism freedom of enterprise means that

Businesses are free to produce products that consumers want Consumers are free to buy goods and services that they want

Resources are distributed freely to businesses Government is free to direct the actions of businesses

a Explain the types of price discrimination with suitable examplesb On which factors price discrimination can be considered beneficial or harmful for public interest

)Marks 25+25+25+25(

A Part) What is law of supply explain with the help of schedule and diagramB part) Explain what eliment curve shift left in law of supply

price elasticity of supply shows us


How steep the supply curve is

How fast supply responds to price

How much supply shifts when income changes

How much quantity supplied responds to price changes

All other things equal GDP will rise if


Imports rise

Exports fall

Durable goods consumption rises

Military spending falls

Which of the following is a flow variable


The value of the house in which you live

The balance in your savings account

Your monthly consumption of hamburgers

The number of hamburgers in your refrigerator at the beginning of the month

The aggregate supply curve is the relationship between the


Price level and the real domestic output purchased

Price level and the real domestic output produced

Price level which producers are willing to accept and the price level purchasers are willing to pay

Real domestic output purchased and the real domestic output produced

If the income elasticity of demand for boots is 02 a 10 increase in consumer income will lead to a


20 percent increase in the quantity of boots demanded

20 percent decrease in the quantity of boots demanded



The war in Iraq sent oil prices spiraling upwards resulting in an increase in the overall price level This is an example of which type of inflation


Cost-pull

Cost-push

Demand-pull

Demand-push

What would result from a depreciation of the pound on the foreign exchange market


An increase in the price of imported computers

A fall in the purchasing power of US tourists in London

A fall in the price of imported computers

An increase in the purchasing power of UK tourists overseas

An exchange rate system in which central banks are always ready to buy and sell their currencies at predetermined prices is called


A dirty floating exchange rate system

A flexible exchange rate system

A managed exchange rate system

A fixed exchange rate system

The classical economists thought that the economy would quickly overcome any short run instability because


Price level and quantity were flexible

Prices would get stuck at a low level

The long run aggregate supply would shift to the left

Prices and wages were flexible

The concave shape of the production possibilities curve illustrates


Increasing opportunity costs for both goods

Increasing opportunity cost for good X but not for good Y

Increasing opportunity cost for good Y but not for good X

Constant opportunity costs for both goods

From year 2002 to year 2003 personal income rose by $500 billion If the Marginal Propensity to Consume = 09 then personal consumption expenditures rose by


$450 billion

$500 billion

$450 billion

$50 billion

Gross National Product (GNP) is


Gross Domestic Product (GDP) minus depreciation

Net National Product (NNP) plus depreciation

National income discounted by the GDP deflator

Moving from left to right the typical production possibilities curve


Has a constant negative slope

Has a constant positive slope

Illustrates increasing opportunity costs

Illustrates decreasing opportunity costs

given by the change in the quantity of good Y divided by change in the quantity of good X This is called the marginal rate of substitution (MRS) The consumerrsquos indifference curve must be positively slopedThe consumerrsquos indifference curve must be convex with respect to the origin of the graphThe ratio of the consumerrsquos marginal utility of 1 egg to that of 1 hamburger must equal frac12All of the given optionsIf the income elasticity of demand is 12 the good isIf the sign of income elasticity of demand is positive the good is normal and if sign is negative the good is inferior A luxuryA normal good (but not a luxury)An inferior goodA Giffen goodIf marginal product is equal to average productRelationship between APP and MPPbull If the marginal physical product equals the average physical product the average physical product will not changebull If the marginal physical product is above the average physical product the averagephysical product will risebull If the marginal physical product is below the average physical product the averagephysical product will fall The total product will fallThe average product will not changeAverage variable costs will fallTotal revenue will fall

When the price elasticity of demand for a good is greater than 1 we say that the demand is ____________________Demand is said to be ____________________ when the elasticity of demand is less than ______Elastic and Inelastic DemandSlope and elasticity of demand have an inverse relationship When slope is high elasticity of demand is low and vice versaWhen the slope of a demand curve is infinity elasticity is zero (perfectly inelastic demand) and when the slope of a demand curve is zero elasticity is infinite (perfectly elastic demand)Unit elasticity means that a 1 change in price will result in an exact 1 change in quantity demanded Thus elasticity will be equal to oneElastic inelastic -1 Elastic inelastic 1 Inelastic elastic 1 Inelastic elastic -1 The marginal rate of substitution is equal to the






















Greater than 0

Greater than 1

Less than 1

Less than 0
















Will be risk averse


Will be risk loving

















Positive

Negative

Zero
















































All of the above

















Are great in number





Risk averse

Risk neutral

Risk loving





Price

Cost of production


Consumer incomes











Supply

Demand

Quantity supplied

Quantity demanded



Water paradox

Paradox of thrift

Saving theorem

Multiplier effect









Perfectly elastic

Unit elastic

Elastic

Inelastic















Equilibrium

Excess demand

Excess supply










Greater than 0

Greater than 1

Less than 1

Less than 0


Less than 0





RULE 02

+ Normal good


RULE 03

+ Substitutes

Cross elasticity

- Complements






































a) Total costs fall



d) Revenue falls


increases























rate


Risk averse

Risk neutral

Risk loving










P = MR

P = AVC

AR = MR

P = MC









Zero





Cournot

Stackelberg

Dominant firm

kinked demand










A luxury


An inferior good

A Giffen good















GDP measures








Government debt

The labor force





q10

0q

q

1


A capitalisation

B consumption

C allocation

D production







A money

B land

C buildings

D labour












A demand curve

B supply curve




A points on the ppf










A all else equal










A value judgments



D good statements


A a planned economy


C dictatorship

D a mixed economy





D all of the above





D all of the above


P-Q space




C goods markets

D all of the above










D the income effect













B unrelated goods

C complements

D substitutes


A a normal good


C an inferior good

D a substitute good



















C price to fall

D price to rise





D all of the above



B a fall in income






B a fall in income






B a rise in income





A price fixing

B quantity setting


D price rationing


A 2

B 4

C 8

D 16





















22 A price floor is









D a surplus exists

















than the 1980s





One same Two same


















































































50 100 150 200









Use Pleasure




























MT=PV

VT=PM

MV=PQ

MY=VP








)Marks 25+25+25+25(










Imports rise

Exports fall























Cost-pull

Cost-push

Demand-pull

Demand-push



























$450 billion

$500 billion

$450 billion

$50 billion

































Greater than 0

Greater than 1

Less than 1

Less than 0
















Will be risk averse


Will be risk loving

















Positive

Negative

Zero
















































All of the above

















Are great in number





Risk averse

Risk neutral

Risk loving





Price

Cost of production


Consumer incomes











Supply

Demand

Quantity supplied

Quantity demanded



Water paradox

Paradox of thrift

Saving theorem

Multiplier effect









Perfectly elastic

Unit elastic

Elastic

Inelastic















Equilibrium

Excess demand

Excess supply










Greater than 0

Greater than 1

Less than 1

Less than 0


Less than 0





RULE 02

+ Normal good


RULE 03

+ Substitutes

Cross elasticity

- Complements






































a) Total costs fall



d) Revenue falls


increases























rate


Risk averse

Risk neutral

Risk loving










P = MR

P = AVC

AR = MR

P = MC









Zero





Cournot

Stackelberg

Dominant firm

kinked demand










A luxury


An inferior good

A Giffen good















GDP measures








Government debt

The labor force





q10

0q

q

1


A capitalisation

B consumption

C allocation

D production







A money

B land

C buildings

D labour












A demand curve

B supply curve




A points on the ppf










A all else equal










A value judgments



D good statements


A a planned economy


C dictatorship

D a mixed economy





D all of the above





D all of the above


P-Q space




C goods markets

D all of the above










D the income effect













B unrelated goods

C complements

D substitutes


A a normal good


C an inferior good

D a substitute good



















C price to fall

D price to rise





D all of the above



B a fall in income






B a fall in income






B a rise in income





A price fixing

B quantity setting


D price rationing


A 2

B 4

C 8

D 16





















22 A price floor is









D a surplus exists

















than the 1980s





One same Two same


















































































50 100 150 200









Use Pleasure




























MT=PV

VT=PM

MV=PQ

MY=VP








)Marks 25+25+25+25(










Imports rise

Exports fall























Cost-pull

Cost-push

Demand-pull

Demand-push



























$450 billion

$500 billion

$450 billion

$50 billion




















Will be risk averse


Will be risk loving

















Positive

Negative

Zero
















































All of the above

















Are great in number





Risk averse

Risk neutral

Risk loving





Price

Cost of production


Consumer incomes











Supply

Demand

Quantity supplied

Quantity demanded



Water paradox

Paradox of thrift

Saving theorem

Multiplier effect









Perfectly elastic

Unit elastic

Elastic

Inelastic















Equilibrium

Excess demand

Excess supply










Greater than 0

Greater than 1

Less than 1

Less than 0


Less than 0





RULE 02

+ Normal good


RULE 03

+ Substitutes

Cross elasticity

- Complements






































a) Total costs fall



d) Revenue falls


increases























rate


Risk averse

Risk neutral

Risk loving










P = MR

P = AVC

AR = MR

P = MC









Zero





Cournot

Stackelberg

Dominant firm

kinked demand










A luxury


An inferior good

A Giffen good















GDP measures








Government debt

The labor force





q10

0q

q

1


A capitalisation

B consumption

C allocation

D production







A money

B land

C buildings

D labour












A demand curve

B supply curve




A points on the ppf










A all else equal










A value judgments



D good statements


A a planned economy


C dictatorship

D a mixed economy





D all of the above





D all of the above


P-Q space




C goods markets

D all of the above










D the income effect













B unrelated goods

C complements

D substitutes


A a normal good


C an inferior good

D a substitute good



















C price to fall

D price to rise





D all of the above



B a fall in income






B a fall in income






B a rise in income





A price fixing

B quantity setting


D price rationing


A 2

B 4

C 8

D 16





















22 A price floor is









D a surplus exists

















than the 1980s





One same Two same


















































































50 100 150 200









Use Pleasure




























MT=PV

VT=PM

MV=PQ

MY=VP








)Marks 25+25+25+25(










Imports rise

Exports fall























Cost-pull

Cost-push

Demand-pull

Demand-push



























$450 billion

$500 billion

$450 billion

$50 billion













Positive

Negative

Zero
















































All of the above

















Are great in number





Risk averse

Risk neutral

Risk loving





Price

Cost of production


Consumer incomes











Supply

Demand

Quantity supplied

Quantity demanded



Water paradox

Paradox of thrift

Saving theorem

Multiplier effect









Perfectly elastic

Unit elastic

Elastic

Inelastic















Equilibrium

Excess demand

Excess supply










Greater than 0

Greater than 1

Less than 1

Less than 0


Less than 0





RULE 02

+ Normal good


RULE 03

+ Substitutes

Cross elasticity

- Complements






































a) Total costs fall



d) Revenue falls


increases























rate


Risk averse

Risk neutral

Risk loving










P = MR

P = AVC

AR = MR

P = MC









Zero





Cournot

Stackelberg

Dominant firm

kinked demand










A luxury


An inferior good

A Giffen good















GDP measures








Government debt

The labor force





q10

0q

q

1


A capitalisation

B consumption

C allocation

D production







A money

B land

C buildings

D labour












A demand curve

B supply curve




A points on the ppf










A all else equal










A value judgments



D good statements


A a planned economy


C dictatorship

D a mixed economy





D all of the above





D all of the above


P-Q space




C goods markets

D all of the above










D the income effect













B unrelated goods

C complements

D substitutes


A a normal good


C an inferior good

D a substitute good



















C price to fall

D price to rise





D all of the above



B a fall in income






B a fall in income






B a rise in income





A price fixing

B quantity setting


D price rationing


A 2

B 4

C 8

D 16





















22 A price floor is









D a surplus exists

















than the 1980s





One same Two same


















































































50 100 150 200









Use Pleasure




























MT=PV

VT=PM

MV=PQ

MY=VP








)Marks 25+25+25+25(










Imports rise

Exports fall























Cost-pull

Cost-push

Demand-pull

Demand-push



























$450 billion

$500 billion

$450 billion

$50 billion








































All of the above

















Are great in number





Risk averse

Risk neutral

Risk loving





Price

Cost of production


Consumer incomes











Supply

Demand

Quantity supplied

Quantity demanded



Water paradox

Paradox of thrift

Saving theorem

Multiplier effect









Perfectly elastic

Unit elastic

Elastic

Inelastic















Equilibrium

Excess demand

Excess supply










Greater than 0

Greater than 1

Less than 1

Less than 0


Less than 0





RULE 02

+ Normal good


RULE 03

+ Substitutes

Cross elasticity

- Complements






































a) Total costs fall



d) Revenue falls


increases























rate


Risk averse

Risk neutral

Risk loving










P = MR

P = AVC

AR = MR

P = MC









Zero





Cournot

Stackelberg

Dominant firm

kinked demand










A luxury


An inferior good

A Giffen good















GDP measures








Government debt

The labor force





q10

0q

q

1


A capitalisation

B consumption

C allocation

D production







A money

B land

C buildings

D labour












A demand curve

B supply curve




A points on the ppf










A all else equal










A value judgments



D good statements


A a planned economy


C dictatorship

D a mixed economy





D all of the above





D all of the above


P-Q space




C goods markets

D all of the above










D the income effect













B unrelated goods

C complements

D substitutes


A a normal good


C an inferior good

D a substitute good



















C price to fall

D price to rise





D all of the above



B a fall in income






B a fall in income






B a rise in income





A price fixing

B quantity setting


D price rationing


A 2

B 4

C 8

D 16





















22 A price floor is









D a surplus exists

















than the 1980s





One same Two same


















































































50 100 150 200









Use Pleasure




























MT=PV

VT=PM

MV=PQ

MY=VP








)Marks 25+25+25+25(










Imports rise

Exports fall























Cost-pull

Cost-push

Demand-pull

Demand-push



























$450 billion

$500 billion

$450 billion

$50 billion



















Are great in number





Risk averse

Risk neutral

Risk loving





Price

Cost of production


Consumer incomes











Supply

Demand

Quantity supplied

Quantity demanded



Water paradox

Paradox of thrift

Saving theorem

Multiplier effect









Perfectly elastic

Unit elastic

Elastic

Inelastic















Equilibrium

Excess demand

Excess supply










Greater than 0

Greater than 1

Less than 1

Less than 0


Less than 0





RULE 02

+ Normal good


RULE 03

+ Substitutes

Cross elasticity

- Complements






































a) Total costs fall



d) Revenue falls


increases























rate


Risk averse

Risk neutral

Risk loving










P = MR

P = AVC

AR = MR

P = MC









Zero





Cournot

Stackelberg

Dominant firm

kinked demand










A luxury


An inferior good

A Giffen good















GDP measures








Government debt

The labor force





q10

0q

q

1


A capitalisation

B consumption

C allocation

D production







A money

B land

C buildings

D labour












A demand curve

B supply curve




A points on the ppf










A all else equal










A value judgments



D good statements


A a planned economy


C dictatorship

D a mixed economy





D all of the above





D all of the above


P-Q space




C goods markets

D all of the above










D the income effect













B unrelated goods

C complements

D substitutes


A a normal good


C an inferior good

D a substitute good



















C price to fall

D price to rise





D all of the above



B a fall in income






B a fall in income






B a rise in income





A price fixing

B quantity setting


D price rationing


A 2

B 4

C 8

D 16





















22 A price floor is









D a surplus exists

















than the 1980s





One same Two same


















































































50 100 150 200









Use Pleasure




























MT=PV

VT=PM

MV=PQ

MY=VP








)Marks 25+25+25+25(










Imports rise

Exports fall























Cost-pull

Cost-push

Demand-pull

Demand-push



























$450 billion

$500 billion

$450 billion

$50 billion





















Supply

Demand

Quantity supplied

Quantity demanded



Water paradox

Paradox of thrift

Saving theorem

Multiplier effect









Perfectly elastic

Unit elastic

Elastic

Inelastic















Equilibrium

Excess demand

Excess supply










Greater than 0

Greater than 1

Less than 1

Less than 0


Less than 0





RULE 02

+ Normal good


RULE 03

+ Substitutes

Cross elasticity

- Complements






































a) Total costs fall



d) Revenue falls


increases























rate


Risk averse

Risk neutral

Risk loving










P = MR

P = AVC

AR = MR

P = MC









Zero





Cournot

Stackelberg

Dominant firm

kinked demand










A luxury


An inferior good

A Giffen good















GDP measures








Government debt

The labor force





q10

0q

q

1


A capitalisation

B consumption

C allocation

D production







A money

B land

C buildings

D labour












A demand curve

B supply curve




A points on the ppf










A all else equal










A value judgments



D good statements


A a planned economy


C dictatorship

D a mixed economy





D all of the above





D all of the above


P-Q space




C goods markets

D all of the above










D the income effect













B unrelated goods

C complements

D substitutes


A a normal good


C an inferior good

D a substitute good



















C price to fall

D price to rise





D all of the above



B a fall in income






B a fall in income






B a rise in income





A price fixing

B quantity setting


D price rationing


A 2

B 4

C 8

D 16





















22 A price floor is









D a surplus exists

















than the 1980s





One same Two same


















































































50 100 150 200









Use Pleasure




























MT=PV

VT=PM

MV=PQ

MY=VP








)Marks 25+25+25+25(










Imports rise

Exports fall























Cost-pull

Cost-push

Demand-pull

Demand-push



























$450 billion

$500 billion

$450 billion

$50 billion














Perfectly elastic

Unit elastic

Elastic

Inelastic















Equilibrium

Excess demand

Excess supply










Greater than 0

Greater than 1

Less than 1

Less than 0


Less than 0





RULE 02

+ Normal good


RULE 03

+ Substitutes

Cross elasticity

- Complements






































a) Total costs fall



d) Revenue falls


increases























rate


Risk averse

Risk neutral

Risk loving










P = MR

P = AVC

AR = MR

P = MC









Zero





Cournot

Stackelberg

Dominant firm

kinked demand










A luxury


An inferior good

A Giffen good















GDP measures








Government debt

The labor force





q10

0q

q

1


A capitalisation

B consumption

C allocation

D production







A money

B land

C buildings

D labour












A demand curve

B supply curve




A points on the ppf










A all else equal










A value judgments



D good statements


A a planned economy


C dictatorship

D a mixed economy





D all of the above





D all of the above


P-Q space




C goods markets

D all of the above










D the income effect













B unrelated goods

C complements

D substitutes


A a normal good


C an inferior good

D a substitute good



















C price to fall

D price to rise





D all of the above



B a fall in income






B a fall in income






B a rise in income





A price fixing

B quantity setting


D price rationing


A 2

B 4

C 8

D 16





















22 A price floor is









D a surplus exists

















than the 1980s





One same Two same


















































































50 100 150 200









Use Pleasure




























MT=PV

VT=PM

MV=PQ

MY=VP








)Marks 25+25+25+25(










Imports rise

Exports fall























Cost-pull

Cost-push

Demand-pull

Demand-push



























$450 billion

$500 billion

$450 billion

$50 billion












Equilibrium

Excess demand

Excess supply










Greater than 0

Greater than 1

Less than 1

Less than 0


Less than 0





RULE 02

+ Normal good


RULE 03

+ Substitutes

Cross elasticity

- Complements






































a) Total costs fall



d) Revenue falls


increases























rate


Risk averse

Risk neutral

Risk loving










P = MR

P = AVC

AR = MR

P = MC









Zero





Cournot

Stackelberg

Dominant firm

kinked demand










A luxury


An inferior good

A Giffen good















GDP measures








Government debt

The labor force





q10

0q

q

1


A capitalisation

B consumption

C allocation

D production







A money

B land

C buildings

D labour












A demand curve

B supply curve




A points on the ppf










A all else equal










A value judgments



D good statements


A a planned economy


C dictatorship

D a mixed economy





D all of the above





D all of the above


P-Q space




C goods markets

D all of the above










D the income effect













B unrelated goods

C complements

D substitutes


A a normal good


C an inferior good

D a substitute good



















C price to fall

D price to rise





D all of the above



B a fall in income






B a fall in income






B a rise in income





A price fixing

B quantity setting


D price rationing


A 2

B 4

C 8

D 16





















22 A price floor is









D a surplus exists

















than the 1980s





One same Two same


















































































50 100 150 200









Use Pleasure




























MT=PV

VT=PM

MV=PQ

MY=VP








)Marks 25+25+25+25(










Imports rise

Exports fall























Cost-pull

Cost-push

Demand-pull

Demand-push



























$450 billion

$500 billion

$450 billion

$50 billion













RULE 03

+ Substitutes

Cross elasticity

- Complements






































a) Total costs fall



d) Revenue falls


increases























rate


Risk averse

Risk neutral

Risk loving










P = MR

P = AVC

AR = MR

P = MC









Zero





Cournot

Stackelberg

Dominant firm

kinked demand










A luxury


An inferior good

A Giffen good















GDP measures








Government debt

The labor force





q10

0q

q

1


A capitalisation

B consumption

C allocation

D production







A money

B land

C buildings

D labour












A demand curve

B supply curve




A points on the ppf










A all else equal










A value judgments



D good statements


A a planned economy


C dictatorship

D a mixed economy





D all of the above





D all of the above


P-Q space




C goods markets

D all of the above










D the income effect













B unrelated goods

C complements

D substitutes


A a normal good


C an inferior good

D a substitute good



















C price to fall

D price to rise





D all of the above



B a fall in income






B a fall in income






B a rise in income





A price fixing

B quantity setting


D price rationing


A 2

B 4

C 8

D 16





















22 A price floor is









D a surplus exists

















than the 1980s





One same Two same


















































































50 100 150 200









Use Pleasure




























MT=PV

VT=PM

MV=PQ

MY=VP








)Marks 25+25+25+25(










Imports rise

Exports fall























Cost-pull

Cost-push

Demand-pull

Demand-push



























$450 billion

$500 billion

$450 billion

$50 billion


































a) Total costs fall



d) Revenue falls


increases























rate


Risk averse

Risk neutral

Risk loving










P = MR

P = AVC

AR = MR

P = MC









Zero





Cournot

Stackelberg

Dominant firm

kinked demand










A luxury


An inferior good

A Giffen good















GDP measures








Government debt

The labor force





q10

0q

q

1


A capitalisation

B consumption

C allocation

D production







A money

B land

C buildings

D labour












A demand curve

B supply curve




A points on the ppf










A all else equal










A value judgments



D good statements


A a planned economy


C dictatorship

D a mixed economy





D all of the above





D all of the above


P-Q space




C goods markets

D all of the above










D the income effect













B unrelated goods

C complements

D substitutes


A a normal good


C an inferior good

D a substitute good



















C price to fall

D price to rise





D all of the above



B a fall in income






B a fall in income






B a rise in income





A price fixing

B quantity setting


D price rationing


A 2

B 4

C 8

D 16





















22 A price floor is









D a surplus exists

















than the 1980s





One same Two same


















































































50 100 150 200









Use Pleasure




























MT=PV

VT=PM

MV=PQ

MY=VP








)Marks 25+25+25+25(










Imports rise

Exports fall























Cost-pull

Cost-push

Demand-pull

Demand-push



























$450 billion

$500 billion

$450 billion

$50 billion














rate


Risk averse

Risk neutral

Risk loving










P = MR

P = AVC

AR = MR

P = MC









Zero





Cournot

Stackelberg

Dominant firm

kinked demand










A luxury


An inferior good

A Giffen good















GDP measures








Government debt

The labor force





q10

0q

q

1


A capitalisation

B consumption

C allocation

D production







A money

B land

C buildings

D labour












A demand curve

B supply curve




A points on the ppf










A all else equal










A value judgments



D good statements


A a planned economy


C dictatorship

D a mixed economy





D all of the above





D all of the above


P-Q space




C goods markets

D all of the above










D the income effect













B unrelated goods

C complements

D substitutes


A a normal good


C an inferior good

D a substitute good



















C price to fall

D price to rise





D all of the above



B a fall in income






B a fall in income






B a rise in income





A price fixing

B quantity setting


D price rationing


A 2

B 4

C 8

D 16





















22 A price floor is









D a surplus exists

















than the 1980s





One same Two same


















































































50 100 150 200









Use Pleasure




























MT=PV

VT=PM

MV=PQ

MY=VP








)Marks 25+25+25+25(










Imports rise

Exports fall























Cost-pull

Cost-push

Demand-pull

Demand-push



























$450 billion

$500 billion

$450 billion

$50 billion
















Zero





Cournot

Stackelberg

Dominant firm

kinked demand










A luxury


An inferior good

A Giffen good















GDP measures








Government debt

The labor force





q10

0q

q

1


A capitalisation

B consumption

C allocation

D production







A money

B land

C buildings

D labour












A demand curve

B supply curve




A points on the ppf










A all else equal










A value judgments



D good statements


A a planned economy


C dictatorship

D a mixed economy





D all of the above





D all of the above


P-Q space




C goods markets

D all of the above










D the income effect













B unrelated goods

C complements

D substitutes


A a normal good


C an inferior good

D a substitute good



















C price to fall

D price to rise





D all of the above



B a fall in income






B a fall in income






B a rise in income





A price fixing

B quantity setting


D price rationing


A 2

B 4

C 8

D 16





















22 A price floor is









D a surplus exists

















than the 1980s





One same Two same


















































































50 100 150 200









Use Pleasure




























MT=PV

VT=PM

MV=PQ

MY=VP








)Marks 25+25+25+25(










Imports rise

Exports fall























Cost-pull

Cost-push

Demand-pull

Demand-push



























$450 billion

$500 billion

$450 billion

$50 billion












A luxury


An inferior good

A Giffen good















GDP measures








Government debt

The labor force





q10

0q

q

1


A capitalisation

B consumption

C allocation

D production







A money

B land

C buildings

D labour












A demand curve

B supply curve




A points on the ppf










A all else equal










A value judgments



D good statements


A a planned economy


C dictatorship

D a mixed economy





D all of the above





D all of the above


P-Q space




C goods markets

D all of the above










D the income effect













B unrelated goods

C complements

D substitutes


A a normal good


C an inferior good

D a substitute good



















C price to fall

D price to rise





D all of the above



B a fall in income






B a fall in income






B a rise in income





A price fixing

B quantity setting


D price rationing


A 2

B 4

C 8

D 16





















22 A price floor is









D a surplus exists

















than the 1980s





One same Two same


















































































50 100 150 200









Use Pleasure




























MT=PV

VT=PM

MV=PQ

MY=VP








)Marks 25+25+25+25(










Imports rise

Exports fall























Cost-pull

Cost-push

Demand-pull

Demand-push



























$450 billion

$500 billion

$450 billion

$50 billion






















GDP measures








Government debt

The labor force





q10

0q

q

1


A capitalisation

B consumption

C allocation

D production







A money

B land

C buildings

D labour












A demand curve

B supply curve




A points on the ppf










A all else equal










A value judgments



D good statements


A a planned economy


C dictatorship

D a mixed economy





D all of the above





D all of the above


P-Q space




C goods markets

D all of the above










D the income effect













B unrelated goods

C complements

D substitutes


A a normal good


C an inferior good

D a substitute good



















C price to fall

D price to rise





D all of the above



B a fall in income






B a fall in income






B a rise in income





A price fixing

B quantity setting


D price rationing


A 2

B 4

C 8

D 16





















22 A price floor is









D a surplus exists

















than the 1980s





One same Two same


















































































50 100 150 200









Use Pleasure




























MT=PV

VT=PM

MV=PQ

MY=VP








)Marks 25+25+25+25(










Imports rise

Exports fall























Cost-pull

Cost-push

Demand-pull

Demand-push



























$450 billion

$500 billion

$450 billion

$50 billion












1


A capitalisation

B consumption

C allocation

D production







A money

B land

C buildings

D labour












A demand curve

B supply curve




A points on the ppf










A all else equal










A value judgments



D good statements


A a planned economy


C dictatorship

D a mixed economy





D all of the above





D all of the above


P-Q space




C goods markets

D all of the above










D the income effect













B unrelated goods

C complements

D substitutes


A a normal good


C an inferior good

D a substitute good



















C price to fall

D price to rise





D all of the above



B a fall in income






B a fall in income






B a rise in income





A price fixing

B quantity setting


D price rationing


A 2

B 4

C 8

D 16





















22 A price floor is









D a surplus exists

















than the 1980s





One same Two same


















































































50 100 150 200









Use Pleasure




























MT=PV

VT=PM

MV=PQ

MY=VP








)Marks 25+25+25+25(










Imports rise

Exports fall























Cost-pull

Cost-push

Demand-pull

Demand-push



























$450 billion

$500 billion

$450 billion

$50 billion

















A demand curve

B supply curve




A points on the ppf










A all else equal










A value judgments



D good statements


A a planned economy


C dictatorship

D a mixed economy





D all of the above





D all of the above


P-Q space




C goods markets

D all of the above










D the income effect













B unrelated goods

C complements

D substitutes


A a normal good


C an inferior good

D a substitute good



















C price to fall

D price to rise





D all of the above



B a fall in income






B a fall in income






B a rise in income





A price fixing

B quantity setting


D price rationing


A 2

B 4

C 8

D 16





















22 A price floor is









D a surplus exists

















than the 1980s





One same Two same


















































































50 100 150 200









Use Pleasure




























MT=PV

VT=PM

MV=PQ

MY=VP








)Marks 25+25+25+25(










Imports rise

Exports fall























Cost-pull

Cost-push

Demand-pull

Demand-push



























$450 billion

$500 billion

$450 billion

$50 billion



















A value judgments



D good statements


A a planned economy


C dictatorship

D a mixed economy





D all of the above





D all of the above


P-Q space




C goods markets

D all of the above










D the income effect













B unrelated goods

C complements

D substitutes


A a normal good


C an inferior good

D a substitute good



















C price to fall

D price to rise





D all of the above



B a fall in income






B a fall in income






B a rise in income





A price fixing

B quantity setting


D price rationing


A 2

B 4

C 8

D 16





















22 A price floor is









D a surplus exists

















than the 1980s





One same Two same


















































































50 100 150 200









Use Pleasure




























MT=PV

VT=PM

MV=PQ

MY=VP








)Marks 25+25+25+25(










Imports rise

Exports fall























Cost-pull

Cost-push

Demand-pull

Demand-push



























$450 billion

$500 billion

$450 billion

$50 billion














D all of the above


P-Q space




C goods markets

D all of the above










D the income effect













B unrelated goods

C complements

D substitutes


A a normal good


C an inferior good

D a substitute good



















C price to fall

D price to rise





D all of the above



B a fall in income






B a fall in income






B a rise in income





A price fixing

B quantity setting


D price rationing


A 2

B 4

C 8

D 16





















22 A price floor is









D a surplus exists

















than the 1980s





One same Two same


















































































50 100 150 200









Use Pleasure




























MT=PV

VT=PM

MV=PQ

MY=VP








)Marks 25+25+25+25(










Imports rise

Exports fall























Cost-pull

Cost-push

Demand-pull

Demand-push



























$450 billion

$500 billion

$450 billion

$50 billion






















B unrelated goods

C complements

D substitutes


A a normal good


C an inferior good

D a substitute good



















C price to fall

D price to rise





D all of the above



B a fall in income






B a fall in income






B a rise in income





A price fixing

B quantity setting


D price rationing


A 2

B 4

C 8

D 16





















22 A price floor is









D a surplus exists

















than the 1980s





One same Two same


















































































50 100 150 200









Use Pleasure




























MT=PV

VT=PM

MV=PQ

MY=VP








)Marks 25+25+25+25(










Imports rise

Exports fall























Cost-pull

Cost-push

Demand-pull

Demand-push



























$450 billion

$500 billion

$450 billion

$50 billion
























C price to fall

D price to rise





D all of the above



B a fall in income






B a fall in income






B a rise in income





A price fixing

B quantity setting


D price rationing


A 2

B 4

C 8

D 16





















22 A price floor is









D a surplus exists

















than the 1980s





One same Two same


















































































50 100 150 200









Use Pleasure




























MT=PV

VT=PM

MV=PQ

MY=VP








)Marks 25+25+25+25(










Imports rise

Exports fall























Cost-pull

Cost-push

Demand-pull

Demand-push



























$450 billion

$500 billion

$450 billion

$50 billion

















B a fall in income






B a rise in income





A price fixing

B quantity setting


D price rationing


A 2

B 4

C 8

D 16





















22 A price floor is









D a surplus exists

















than the 1980s





One same Two same


















































































50 100 150 200









Use Pleasure




























MT=PV

VT=PM

MV=PQ

MY=VP








)Marks 25+25+25+25(










Imports rise

Exports fall























Cost-pull

Cost-push

Demand-pull

Demand-push



























$450 billion

$500 billion

$450 billion

$50 billion












B 4

C 8

D 16





















22 A price floor is









D a surplus exists

















than the 1980s





One same Two same


















































































50 100 150 200









Use Pleasure




























MT=PV

VT=PM

MV=PQ

MY=VP








)Marks 25+25+25+25(










Imports rise

Exports fall























Cost-pull

Cost-push

Demand-pull

Demand-push



























$450 billion

$500 billion

$450 billion

$50 billion














22 A price floor is









D a surplus exists

















than the 1980s





One same Two same


















































































50 100 150 200









Use Pleasure




























MT=PV

VT=PM

MV=PQ

MY=VP








)Marks 25+25+25+25(










Imports rise

Exports fall























Cost-pull

Cost-push

Demand-pull

Demand-push



























$450 billion

$500 billion

$450 billion

$50 billion


















than the 1980s





One same Two same


















































































50 100 150 200









Use Pleasure




























MT=PV

VT=PM

MV=PQ

MY=VP








)Marks 25+25+25+25(










Imports rise

Exports fall























Cost-pull

Cost-push

Demand-pull

Demand-push



























$450 billion

$500 billion

$450 billion

$50 billion





















































































50 100 150 200









Use Pleasure




























MT=PV

VT=PM

MV=PQ

MY=VP








)Marks 25+25+25+25(










Imports rise

Exports fall























Cost-pull

Cost-push

Demand-pull

Demand-push



























$450 billion

$500 billion

$450 billion

$50 billion






























MT=PV

VT=PM

MV=PQ

MY=VP








)Marks 25+25+25+25(










Imports rise

Exports fall























Cost-pull

Cost-push

Demand-pull

Demand-push



























$450 billion

$500 billion

$450 billion

$50 billion












MY=VP








)Marks 25+25+25+25(










Imports rise

Exports fall























Cost-pull

Cost-push

Demand-pull

Demand-push



























$450 billion

$500 billion

$450 billion

$50 billion
































Cost-pull

Cost-push

Demand-pull

Demand-push



























$450 billion

$500 billion

$450 billion

$50 billion




































$450 billion

$500 billion

$450 billion

$50 billion












$500 billion

$450 billion

$50 billion












Goods X and Y Are Compliments While

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Transcript of Goods X and Y Are Compliments While