GNEC115 Revision 2

Utility expresses the degree of satisfaction that a firm derives from production of products.

• False

• True

An indifference curve is based on cardinal utility.

• False

• True

Elasticity shows the impact of a change in price on quantity demanded or supplied.

• False

• True

it is possible to compare the utility derived by two different consumers from the consumption of the same product (eg beef).

• False

• True

If the price of 3G data bundles, a substitute for fixed-line data bundles, decreases, then the demand curve for fixed-line data bundles will shift to the left.

• True

• False

If the income elasticity of demand for a good is –0,5, then this implies that this good must be a necessity.

• False

• True

Consumer equilibrium is illustrated where the budget line intersects the indifference curve that lies closest to the origin.

• False

• True

The income elasticity of demand indicates by how much the incomes of suppliers will change if the price of the product changes by one per cent.

• False

• True

A consumer equilibrium position of a given bundle of goods is defined as the point of consumption where the combination is affordable, and the goods are of the same price.

• False

• True

A university increases its fees but finds that just as many students enrol as previously. This is an example of:

• perfectly inelastic demand.

• perfectly elastic demand

• elastic demand.