BASIC MICRO

The law of demand refers to the _____.

• a. Inverse relationship between the price of a commodity and the quantity demanded of the commodity per time period.

• b. Direct relationship between the desire a consumer has for a commodity and the amount of the commodity that the consumer demands.

• c. Inverse relationship between a consumer's income and the amount of a commodity that the consumer demands

• d. Direct relationship between population and the market demand for a commodity

Which of the following is not a determinant of a consumer's demand for a commodity?

• a. Income

• b. Population

• c. Prices of related goods

• d. Tastes

If the price of a good increases, then

• a. The demand for complementary goods will increase.

• b. The demand for the good will increase.

• c. The demand for substitute goods will increase.

• d. The demand for the good will decrease.

It is a Latin phrase that generally means "all other things being equal."

• a. Mutatis Mutandis

• b. Cetris Paribus

• c. Ceteris Paribus

• d. Mutetis Matundis

If a rise in supply exceeds a rise in demand, then we should expec

• a. the equilibrium price and quantity levels will rise.

• b. the equilibrium price will rise while the equilibrium quantity will decline.

• c. The equilibrium price will fall while the equilibrium quantity will rise.

• d. the equilibrium price and quantity levels will decline.

The following are types of the Elasticity of Demand; except:

• a. Price Elasticity of Demand

• b. Income Elasticity of Demand

• c. Profit Elasticity of Demand

• d. Cross Elasticity of Demand

All the statements are true; except:

• a. If the Es is infinite, the supply curve is perfectly elastic

• b. If the Es is <1, the supply curve is inelastic

• c. If the Es is >1, the supply curve is elastic

• d. If the Es is =1, the supply curve is perfectly inelastic

It is an economic concept that measures the responsiveness in the quantity demanded of one good when the price for another good changes.

• a. Substitute Goods

• b. Complementary Goods

• c. Cross Elasticity of Demand

• d. Income Elasticity of Demand

Price elasticity of Demand is a measurement of the change in the consumption of a priduct in relation to a change in its price. Expressed mathematically, it is:

• a. Price elasticity of demand = Percentage change in Quality Demanded/Percentage Change in Price

• b. Exy = Percentage change in Quantity of X/ Percentage change in Price of Y

• c. Percentage change in Quality Demanded = QD2-QD1/ QD1+QD2/2 ×100

• d. Percentage change in Price = P2-P1/ P1+P2/2×100

If the price of the cocoa rises by 10% and the quantity supplied increases by 3% then what is the elasticity of supply for cocoa?

• a. 30

• b. 0.3

• c. 0.03

• d. None of the above