EXAM 1 AND 2 MULTIPLE
CHOICE QUESTIONS--
INTERMEDIATE MICRO
ECONOMICS
Which of the statements below is/are normative?
A) An increase in price is likely to result in fewer sales.
B) An increase in price will unfairly hurt poor consumers the most.
C) An increase in price does not necessarily increase revenue.
D) B and C - B) An increase in price will unfairly hurt poor consumers the most.
If the price of automobiles were to decrease substantially, the demand curve for
automobiles would most likely
A) shift rightward.
B) shift leftward.
C) remain unchanged.
D) become steeper. - C) remain unchanged.
If price is initially above the equilibrium level,
A) the supply curve will shift rightward.
B) the supply curve will shift leftward.
C) a surplus exists.
D) a shortage exists. - C) a surplus exists.
For a given positively sloped supply curve, the price increase to consumers resulting
from a unit (or specific) tax imposed on sellers will be
A) greater the more price elastic demand is.
B) greater the less price elastic demand is.
, C) equal to the entire tax when demand is perfectly elastic.
D) equal to half of the tax whenever demand is unit elastic. - B) greater the less price
elastic demand is.
If a demand curve shifts left, it implies
A) as a group, consumers are willing and able to pay less for the product.
B) as a group, consumers are willing and able to pay more for the product.
C) government has regulated how many people can purchase the product.
D) the profit motive of the firms is making the price too high. - A) as a group, consumers
are willing and able to pay less for the product.
Suppose the demand function for a good is expressed as Q = 100 - 4p. If the good
currently sells for $10, then the price elasticity of demand equals
A) -1.5.
B) -0.67.
C) -4.
D) -2.5. - B) -0.67.
If ethanol production is expected to increase the price of corn, U.S. farmers will likely
A) shift the supply of corn to the left.
B) shift the supply of corn to the right.
C) reduce the production of corn by sliding down the corn supply curve, all else equal.
D) increase the production of corn by sliding up the corn supply curve, all else equal. -
D) increase the production of corn by sliding up the corn supply curve, all else equal.
An increase in the price of oil will
A) shift the supply curve of oil to the left.
B) shift the supply curve of oil to the right.
C) leave the supply curve of oil unchanged.
D) Not enough information to answer the question. - C) leave the supply curve of oil
unchanged.
If the consumer's income increases while the prices of both goods remain unchanged,
what will happen to the budget line?
A) The budget line rotates inward from the intercept on the horizontal axis.
B) The budget line rotates outward from the intercept on the vertical axis.
C) The budget line shifts inward without a change in slope.
D) The budget line shifts outward without a change in slope. - D) The budget line shifts
outward without a change in slope.
As the price of a Giffen good increases, the consumer will
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