The Microeconomy

What is the defining characteristic of a mixed economy?

• one in which the allocation of resources is determined partly by the state and partly by

  individual producers and consumers

• one in which there are both monopolies and purely competitive industries

• one in which there are features of both more economically developed and less economically

  developed economies

• one which produces a mixture of agriculture and industrial products

The market demand equation for a good is given by

Qd = 310 - 20p

and the supply equation by

Qs = 10 + 10p

where p denotes the price of the good.

What is the equilibrium price?

• 5

• 10

• 15

• 20

What does not cause the demand curve for a good to shift its position?

• advertising expenditure

• consumer tastes

• the price of substitute goods

• the price of the good

What can be concluded about a product which has an income elasticity of demand (YED) of +1.5

and a cross elasticity of demand (XED) of +1.2?

• YED figure: the product is an inferior good

  XED figure: the product has a close complement

• YED figure: the product is an inferior good

  XED figure: the product has a close substitute

• YED figure: the product is a normal good

  XED figure: the product has a close complement

• YED figure: the product is a normal good

  XED figure: the product has a close substitute

A manufacturer increases the price of his product in an attempt to increase total revenue.

The table shows the outcome of the policy.

Price: $4

Total revenue: $400

Price: $5

Total revenue: $500

Price: $6

Total revenue: $600

What is the price elasticity of demand for the product?

• perfectly elastic

• perfectly inelastic

• relatively elastic

• relatively inelastic