AUGUST 25 - ECO 1100 Revision Test 2

Suppose a consumer spends her income on two goods: ball pen and books. The consumer has RM100 to allocate to these two goods, the price of a ball-pen RM1, and the price of a book is RM20.  What is the maximum number of books the consumer can purchase?

• 5

• 15

• 25

• 50

A consumer has RM200 to spend on two items: notebooks and markers. The price of a notebook is RM10, and the price of a marker is RM2. How many markers can the consumer buy if she decides to purchase 5 notebooks?

• 25

• 75

• 30

• 40

A budget constraint illustrates the:

• consumption bundles that give a consumer equal satisfaction.

• consumption bundles that a consumer can afford.

• prices that a consumer chooses to pay for products he consumes.

• purchases made by consumers.

Sammy values a new car at RM100,000. It costs RM50,000 for the manufacturer to produce the car. What is the value of total surplus if Sammy bought the car at RM80,000?

• RM30,000

• RM10,000

• RM20,000

• RM50,000

If you pay a price exactly equal to your willingness to pay, then ______.

• you place little value on the good

• your consumer surplus is zero.

• your consumer surplus is negative.

• your willingness to pay is less than your consumer surplus.

________ is a regulatory measure that sets a minimum price that must be paid for a good or service.

• Price floor

• Price ceiling

•   Price equilibrium

• Price cut

In which of the following situations the entire tax burden goes to the buyers?

• The tax is RM5 and the price increases from RM30 to RM38

• The tax is RM5 and the price increases from RM30 to RM33

• The tax is RM5 and the price remains at RM30

• The tax is RM5 and the price increases from RM30 to RM35

Producer surplus is the area __________.

• above the supply curve and below the price

• above the demand curve and below the price

• below the supply curve and above the price

• below the demand curve and above the price

Which of the following is NOT a property of indifference curves?

• Indifference curves are bowed inward

• Two indifference curves do cross

• Higher indifference curve is preferred to the indifference curve

• An indifference curve is sloping downward

Sellers pay the entire tax when a tax is imposed on a good that have _______.

• perfectly inelastic demand

• inelastic demand

• perfectly elastic demand

• elastic demand