ECO401 Quiz No. 1 Spring 2011

ECO401 - Economics

Quiz 01

Start Date Apr 19, 2011 12:00 AM

Last Date Apr 21, 2011 11:59 PM

Question # 1 of 15 ( Start time: 07:45:05 PM ) Total Marks: 1
Which of the following is true about the entrepreneur?
Select correct option:

An entrepreneur is an innovator.
An entrepreneur is someone who brings resources together and produces a product.
An entrepreneur is a risk taker.
All of the given options are correct.
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Question # 2 of 15 ( Start time: 07:46:04 PM ) Total Marks: 1
Goods X and Y are complements while goods X and Z are substitutes. If the supply of good X increases:
Select correct option:

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.
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Question # 3 of 15 ( Start time: 07:47:05 PM ) Total Marks: 1
If the income elasticity of demand for boots is 0.2, a 10% increase in consumer income will lead to a:
Select correct option:

20% increase in the quantity of boots demanded.
20% decrease in the quantity of boots demanded.
2% increase in the quantity of boots demanded.
0.2% increase in the quantity of boots demanded.
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Question # 4 of 15 ( Start time: 07:48:27 PM ) Total Marks: 1
A person with a diminishing marginal utility of income:
Select correct option:

Will be risk averse.
Will be risk neutral.
Will be risk loving.
Cannot decide without more information.
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Question # 5 of 15 ( Start time: 07:49:13 PM ) Total Marks: 1
Assume Leisure is a normal good. If income effect equals substitution effect then a wage rate increase will lead a person to:
Select correct option:

Increase hours of work
Decrease hours of work
Not change hours of work
None of the given options
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Question # 6 of 15 ( Start time: 07:50:10 PM ) Total Marks: 1
The substitution effect of a price decrease for a good with a normal indifference curve pattern:
Select correct option:

Is always inversely related to the price change.
Measures the change in consumption of the good that is due to the consumer’s 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.
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Question # 7 of 15 ( Start time: 07:51:25 PM ) Total Marks: 1
More output could be produced with available resources if:
Select correct option:

Resources are allocated efficiently.
Resources are imperfectly shiftable among alternative uses.
Prices are reduced.
The economy is operating at a point inside the production possibilities curve.
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Question # 8 of 15 ( Start time: 07:52:09 PM ) Total Marks: 1
A new technology which reduces costs for firms:
Select correct option:

Shifts the supply curve to the right.
Shifts the supply curve to the left.
Reduces the equilibrium quantity.
Raises the equilibrium price.
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Question # 9 of 15 ( Start time: 07:52:57 PM ) Total Marks: 1
If consumer incomes increase, the demand for product Y:
Select correct option:

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.
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Question # 10 of 15 ( Start time: 07:54:07 PM ) Total Marks: 1
The study of economics basically focuses on:
Select correct option:

For whom resources are allocated to increase efficiency.
How society spends the income of individuals.
How scarce resources are allocated to fulfill society's goals.
What scarce resources are used to produce goods and services.
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Question # 12 of 15 ( Start time: 07:55:15 PM ) Total Marks: 1
A partial explanation for the inverse relationship between price and quantity demanded is that a:
Select correct option:

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.
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Question # 13 of 15 ( Start time: 07:56:31 PM ) Total Marks: 1
Demand is elastic when the elasticity of demand is:
Select correct option:

Greater than 0.
Greater than 1.
Less than 1.
Less than 0.
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Question # 14 of 15 ( Start time: 07:57:34 PM ) Total Marks: 1
Which of the following is not an assumption of ordinal utility analysis?
Select correct option:

Consumers are consistent in their preference.
Consumers can measure the total utility received from any given basket of good.
Consumers are non-satiated with respect to the goods they confront.
All are necessary.
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Question # 15 of 15 ( Start time: 07:58:17 PM ) Total Marks: 1
Suppose we find that the cross-price elasticity of demand for two products is a negative number. We know that:
Select correct option:

The two goods are normal goods.
The two goods are inferior goods.
The two goods are substitutes.
The two goods are complements.
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Question # 1 of 15 ( Start time: 10:28:54 AM )
The more inelastic the demand, the more of the tax’s burden will fall on:
Consumers.
Producers.
Government.
Middle man.
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Question # 3 of 15 ( Start time: 10:31:05 AM )
Income elasticity of demand for the normal goods is usually:
Positive.

Negative.

Constant.

One.
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Question # 8 of 15 ( Start time: 10:46:08 AM )
A Demand Curve is price inelastic when:

Changes in demand are proportionately greater than those in price.

Changes in demand are equal than those in price.

None of the given options.

Question # 9 of 15 ( Start time: 10:47:25 AM )
A risk neutral person always has:
Diminishing marginal utility of income.

Increasing marginal utility of income.

Undefined marginal utility of income.

Constant marginal utility of income.
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Question # 2 of 15 ( Start time: 10:29:49 AM ) Total Marks: 1
The opportunity cost of an action:
Will be the same for everyone.

Is the value of the next best alternative.

Measures the undesirable aspects of that action.

Is the average amount of unhappiness experienced by everyone involved.
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Question # 4 of 15 ( Start time: 10:31:56 AM )
A person will be known as risk averse person if he has:
Increasing marginal utility of income.

Constant marginal utility of income.

Diminishing marginal utility of income.

A lot of wealth
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Question # 6 of 15 ( Start time: 10:34:36 AM )
Q = c + d P represents equation of
Supply function

Demand function

Labor supply function

Market demand function
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Question # 10 of 15 ( Start time: 10:48:32 AM ) Total Marks: 1
An increase in the total output of a country over time is called
Economic development

Economic growth

Financial growth

None of the given options
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Question # 11 of 15 ( Start time: 10:49:44 AM )
The slope of budget line –Px/PY is also called:
Input ratio.

Output price ratio.

Input price ratio.

Output ratio.
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Question # 12 of 15 ( Start time: 10:51:12 AM )
If there is increase in resource price then effect on supply and direction of shift in supply curve will be:
Increase, Rightward.

Decrease, Leftward.

Decrease, Rightward.

Increase, Leftward.

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Question # 13 of 15 ( Start time: 10:52:34 AM ) Total Marks: 1
Our economy is characterized by:
Unlimited wants and needs.

Unlimited material resources.

No energy resources.

Abundant productive labor.
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Question # 14 of 15 ( Start time: 10:53:46 AM )
When the price elasticity of demand for a good is greater than 1, we say that the demand is:
Increasing.

Decreasing.

Elastic.

Inelastic.
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Question # 15 of 15 ( Start time: 10:54:42 AM )
If we measure consumer preferences numerically then it is commonly known as:
Satisfaction.

Usage.

Pleasure.

Utility.
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Which school of thought holds that decreases in aggregate demand decrease real output but leave the price level largely unaffected?
Select correct option:

Monetarism

New Classical theory

Real Business Cycle theory

Keynesian
The extra value that consumers receive above what they pay for that good is called:
Select correct option:

Producer surplus

Utility

Marginal utility

Consumer surplus





If a consumer’s marginal rate of substitution equals 2 eggs for 1 hamburger:
Select correct option:

The consumer’s indifference curve must be positively sloped.

The consumer’s indifference curve must be convex with respect to the origin of the graph.

The ratio of the consumer’s marginal utility of 1 egg to that of 1 hamburger must equal ½.

All of the given options

Cartels are:
Select correct option:

Organizations of independent firms, producing similar products, that work together to raise prices and restrict output

Organizations of interdependent firms

Oligopolies
For a monopolist, changes in demand will lead to changes in:
Select correct option:

Price with no change in output

Output with no change in price

Both price and quantity

Any of the above is possible


If the cost of computer components falls, then
Select correct option:

The demand curve for computers shifts to the right.

The demand curve for computers shifts to the left.
The supply curve for computers shifts to the right


The supply curve for computers shifts to the left




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

The same as the market demand curve.

Downward-sloping and less flat than the market demand curve.

Downward-sloping and more flat than the market demand curve.

Perfectly horizontal





If your demand price for one unit of a good is $100 and the market price is $75, your consumer's surplus is:
Select correct option:

$25

$50

$75

$100







A self-employed accountant spends a lot of money identifying clients and advertising her services. These activities are an example of:
Select correct option:

External costs

Transaction costs

Fixed inputs

Marginal returns



The law of diminishing marginal utility states:
Select correct option:

The supply curve slopes upward.

Your 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 options.

A self-employed accountant spends a lot of money identifying clients and advertising her services. These activities are an example of:
Select correct option:

External costs

Transaction costs

Fixed inputs

Marginal returns
If a consumer’s marginal rate of substitution equals 2 eggs for 1 hamburger:
Select correct option:

The consumer’s indifference curve must be positively sloped.

The consumer’s indifference curve must be convex with respect to the origin of the graph.

The ratio of the consumer’s marginal utility of 1 egg to that of 1 hamburger must equal ½.


All of the given options