1) .If bundles of goods A and B lie on the same indifference curve, one can assume a. ? The individual prefers bundle A to bundle B.
b. ? The individual prefers bundle B to bundle A.
c.:-) the individual enjoys bundle A and B equally.
d. ? bundle A contains the same goods as bundle B.
2). When the price of a product rises, consumers shift their purchases to other products whose prices are now relatively lower.” This statement describes:
a) an inferior good
b) the rationing function of prices
c) the substitution effect
d) the law of supply
e) the income effect
3) Other things being equal, which of the following might shift the demand curve for gasoline to the left?
a) the discovery of vast new oil reserves in Alberta
b) the development of a low-cost electric automobile
c) an increase in the price of train and air transportation
d) a large decline in the price of automobiles
4) An improvement in production technology will:
a) tend to increase equilibrium price
b) shift the supply curve to the left
c) shift the supply curve to the right
d) shift the demand curve to the left
5) A surplus of a product will arise when price is:
a) above equilibrium with the result that quantity demanded exceeds quantity supplied b) above equilibrium with the result that quantity supplied exceeds quantity demanded c) below equilibrium with the result that quantity demanded exceeds quantity supplied d) below equilibrium with the result that quantity supplied exceeds quantity demanded
6) The larger the coefficient of price elasticity of demand for a product, the:
a) larger the resulting price change for a given increase in supply b) more rapid the rate at which the marginal utility of that product diminishes c) less competitive will be the industry supplying that product e) smaller the resulting price change for a given increase in supply
7) Barriers to entry are highest in which two types of markets?