Question

21.    A positive income elasticity of demand coefficient indicates that
    a.    a product is an inferior good
    b.    two products are substitute goods
    c.    two products are complementary goods
    d.    a product is a normal good


22.    All the combinations of two products that will yield the same total utility to a consumer are reflected in
    a.    the budget line
    b.    the marginal rate of substitution
    c.    an indifference curve
    d.    the position of consumer equilibrium


23.    As we move down a straight-line demand curve, the price elasticity becomes
    a.    smaller
    b.    larger
    c.    larger, then smaller
    d.    smaller, then larger


24.    Price elasticity of supply is the ratio of the
    a.    percentage change in quantity supplied to the percentage change in price    
    b.    change in quantity supplied to the change in price
    c.        quantity supplied as a percentage of the price to the quantity demanded as a percentage of the price    
    d.    quantity supplied to the price


25.    The introduction of bumper crops to agricultural markets results in
    a.    an increase in the demand for agricultural products
    b.    an increase in farmers’ revenues
    c.    a reduction of farmers’ revenues
    d.    an increase in price elasticity of demand for agricultural products

26.    The long run is a length of time in which
    a.    none of the factors of production can be changed
    b.    all of the factors of production can be changed
    c.    the supply of a good is perfectly inelastic
    d.    some of the factors of production can be changed but at least one other cannot


27.    A consumer’s utility-maximization point is illustrated as
    a.    any intersection of the budget line and an indifference curve
    b.    any intersection of two indifference curves
    c.    a tangency between the budget line and an indifference curve
    d.    any intersection between two budget lines


28.    In a consumer’s indifference map,
    a.    higher indifference curves signify greater utility    
    b.    indifference curves cross if the two goods are substitutes    
    c.    indifference curves always are negatively sloped straight lines
    d.    all of the above are true


29.    Price elasticity of supply
    a.    is equal to zero in the short run
    b.    is greater in the long run than in the short run
    c.    is greater in the market period than in the long run
    d.    is of equal magnitude in the market period, short run, and long run


30.    An indifference curve shows
    a.    combinations of labor and capital that yield the same level of production by a firm
    b.    combinations of goods that are equally preferred by a consumer
    c.    combinations of goods that a consumer can afford to purchase, given prices and a budget
    d.    none of the above

31.    If the demand for agricultural products is inelastic, an introduction of bumper crops to the market will cause
    a.    equilibrium price to rise and equilibrium quantity to fall
    b.    an increase in quantity supplied but no change in equilibrium price
    c.     a decrease in the revenues of farmers
    d.    equilibrium price and quantity to increase


32.    If two combinations of goods lie on a consumer’s budget line, we may conclude that
    a.    neither combination can maximize the consumer’s utility
    b.    the consumer cannot afford either combination
    c.    the two combinations are equally preferred by the consumer
    d.    the two combinations are equally affordable to the consumer


33.    Ceteris paribus, when a consumer’s income increases, her
    a.    budget constraint shifts rightward
    b.    budget constraint shifts leftward
    c.     budget constraint takes on a steeper slope
    d.    budget constraint takes on a flatter slope

Answer 1

Answer.)

Q21.)   d. a product is a normal good

Q22.)   c. an indifference curve

Q23.)   a. smaller

Q24.)   a. percentage change in quantity supplied to the percentage change in price   

Q25.)   c. a reduction of farmers’ revenues

Q26.)   b. all of the factors of production can be changed

Q27.)   a. any intersection of the budget line and an indifference curve

Q28.)   a. higher indifference curves signify greater utility