Exam (elaborations)
ECS2601 test bank.
- Course
- ECS2601 - Microeconomics
- Institution
- University Of South Africa
ECS2601 test bank. 100% CORRECT questions, answers, workings and explanations. for assistance.
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ECS2601 test bank,1
ECS2601 TESTBANK
Question 1
Elasticity measures:
[1] the slope of a demand curve.
[2] the inverse of the slope of a demand curve.
[3] the percentage change in one variable in response to a 1% increase in another variable. (Option
3)
[4] sensitivity of price to a change in quantity
Question 2
The price elasticity of demand for a demand curve that has a zero slope is
[1] zero.
[2] one.
[3] negative but approaches zero as consumption increases.
[4] infinite.(Option 4)
Question 3
A vertical demand curve is:
[1] completely inelastic. (Option 1)
[2] infinitely elastic.
[3] highly (but not infinitely) elastic.
[4] highly (but not completely) inelastic.
Question 4
Along any downward-sloping straight-line demand curve:
[1] both the price elasticity and slope vary.
[2] the price elasticity varies, but the slope is constant. (Option 2)
[3] the slope varies, but the price elasticity is constant.
[4] both the price elasticity and slope are constant.
Question 5
If two goods are substitutes, the cross-price elasticity of demand must be:
[1] negative.
[2] positive. (Option 2)
[3] zero.
[4] infinite.
Question 6
When the government controls the price of a product, causing the market price to be below the free
market equilibrium price:
[1] some consumers gain from the price controls and other consumers lose. (Option 1)
[2] all producers gain from the price controls.
[3] both producers and consumers gain.
[4] all consumers are better off.
Question 7
What happens if price falls below the market clearing price?
[1] Demand shifts out.
[2] Supply shifts in.
[3] Quantity demanded decreases, quantity supplied increases, and price falls.
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[4] Quantity demanded increases, quantity supplied decreases, and price rises. (Option 4)
Question 8
Other things being equal, the increase in rents that occurs after rent controls are abolished is smaller
when:
[1] the own price elasticity of demand for rental homes is price inelastic.
[2] the own price elasticity of demand for rental homes is price elastic. (Option 2)
[3] the own price elasticity of demand for rental homes has unitary price elasticity.
[4] rented homes and owned homes are complements.
[5] rented homes and owned homes are substitutes.
Question 9
Which of the following is NOT an assumption regarding people's preferences in the theory of
consumer behaviour?
[1] Preferences are complete.
[2] Preferences are transitive.
[3] Consumers prefer more of a good to less.
[4] All of the above are basic assumptions about consumer preferences (Option 4)
Question 10
The assumption of transitive preferences implies that indifference curves must:
[1] not cross one another. (Option 1)
[2] have a positive slope.
[3] be L-shaped.
[4] be convex to the origin.
[5] all of the above.
Question 11
Suppose that a market basket of two goods is changed by adding more of one of the goods and
subtracting one unit of the other, the consumer will:
[1] rank the market basket more highly after the change. (Option 1)
[2] more likely prefer a different market basket.
[3] rank the market basket as being just as desirable as before.
[4] be unable to decide whether the first market basket is preferred to the second or vice versa.
[5] have indifference curves that cross.
Question 12
A consumer prefers market basket A to market basket B, and prefers market basket B to market
basket C. Therefore, A is preferred to C. The assumption that leads to this conclusion is:
[1] transitivity. (Option 1)
[2] completeness.
[3] all goods are good.
[4] diminishing MRS.
[5] rationality.
Question 13
The slope of an indifference curve reveals:
[1] that preferences are complete.
[2] the marginal rate of substitution of one good for another good. (Option 2)
[3] the ratio of market prices.
[4] that preferences are transitive.
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[5] none of the above.
Question 14
A consumer has R100.00 per day to spend on product A, which has a unit price of R7.00, and product
B, which has a unit price of R15.00. What is the slope of the budget line if good A is on the horizontal
axis and good B is on the vertical axis?
[1] -7/15 (Option 1)
[2] -7/100
[3] -15/7
[4] 7/15
Question 15
Suppose that the prices of good A and good B were to suddenly double. If good A is plotted along
the horizontal axis,
[1] the budget line will become steeper.
[2] the budget line will become flatter.
[3] the slope of the budget line will not change. (Option 3)
[4] the slope of the budget line will change, but in an indeterminate way.
Question 16
Theodore's budget line has changed from A to B. Which of the following explains the change in
Theodore's budget line?
[1] The price of food and the price of clothing increased.
[2] The price of food increased, and the price of clothing decreased.
[3] The price of food decreased, and the price of clothing increased. (Option 3)
[4] The price of food and the price of clothing decreased.
[5] None of the above
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