WorksheetsFoundation Economics Chap 2 - Part 14
Total questions: 30
Worksheet time: 30mins
Name
Class
Date
1.
Which of the following statements is incorrect?<br />
a)
An indifference curve must be downward-sloping to the right.<br />
b)
Convexity of a curve implies that the slope of the curve diminishes as one moves from left to right.<br />
c)
The income elasticity for inferior goods to a consumer is positive.<br />
d)
The total effect of a change in the price of a good on its quantity demanded is called the price effect.
2.
The second glass of lemonade gives lesser satisfaction to a thirsty boy. This is a clear case of<br />
a)
Law of demand.
b)
Law of diminishing returns.<br />
c)
Law of diminishing utility.
d)
Law of supply.
3.
What will happen in the rice market if buyers are expecting higher rice prices in the near future?<br />
a)
The demand for rice will increase.
b)
The demand for rice will decrease.<br />
c)
The demand for rice will be unaffected.
d)
None of the above.
4.
In the case of a Giffen good, the demand curve will be:<br />
a)
horizontal.
b)
downward-sloping to the right.<br />
c)
vertical.
d)
upward-sloping to the right.
5.
By consumer surplus, economists mean<br />
a)
the area inside the budget line.<br />
b)
the area between the average revenue and marginal revenue curves.<br />
c)
the difference between the maximum amount a person is willing to pay for a good and its market price.<br />
d)
none of the above.
6.
Which of the following is a property of an indifference curve?<br />
a)
it is convex to the origin.<br />
b)
the marginal rate of substitution is constant as you move along an indifference curve.<br />
c)
marginal utility is constant as you move along an indifference curve.<br />
d)
total utility is greatest where the 45 degree line cuts the indifference curve.
7.
When economists speak of the utility of a certain good, they are referring to<br />
a)
the demand for the good.<br />
b)
the usefulness of the good in consumption.<br />
c)
the expected satisfaction derived from consuming the good.<br />
d)
the rate at which consumers are willing to exchange one good for another.
8.
A vertical supply curve parallel to Y axis implies that the elasticity of supply is:<br />
a)
Zero.
b)
Infinity.<br />
c)
Equal to one
d)
Greater than zero but less than infinity.
9.
The supply of a good refers to:<br />
a)
actual production of the good.
b)
total existing stock of the good.<br />
c)
stock available for sale.<br />
d)
amount of the good offered for sale at a particular price per unit of time.
10.
An increase in the supply of a good is caused by:<br />
a)
improvements in its technology.
b)
fall in the prices of other goods.<br />
c)
fall in the prices of factors of production
d)
all of the above.
11.
Elasticity of supply refers to the degree of responsiveness of supply of a good to changes in its:<br />
a)
demand.
b)
price.<br />
c)
cost of production.
d)
state of technology.
12.
A horizontal supply curve parallel to the quantity axis implies that the elasticity of supply is:<br />
a)
zero.
b)
infinite.<br />
c)
equal to one.
d)
greater than zero but less than one.
13.
Contraction of supply is the result of:<br />
a)
decrease in the number of producers.
b)
decrease in the price of the good concerned.<br />
c)
increase in the prices of other goods.
d)
decrease in the outlay of sellers.
14.
Conspicuous goods are also known as:<br />
a)
prestige goods
b)
snob goods.<br />
c)
veblen goods.
d)
all of the above.
15.
The quantity purchased remains constant irrespective of the change in income. This is known as<br />
a)
negative income elasticity of demand.<br />
b)
income elasticity of demand less than one.<br />
c)
zero income elasticity of demand.<br />
d)
income elasticity of demand is greater than one.
16.
As income increases, the consumer will go in for superior goods and consequently the demand for inferior goods will fall. This means:<br />
a)
income elasticity of demand less than one.<br />
b)
negative income elasticity of demand.<br />
c)
zero income elasticity of demand.<br />
d)
unitary income elasticity of demand.
17.
When income increases the money spent on necessaries of life may not increase in the same proportion, This means:<br />
a)
income elasticity of demand is zero.<br />
b)
income elasticity of demand is one.<br />
c)
income elasticity of demand is greater than one.
d)
None of the above.
18.
The luxury goods like jewellery and fancy articles will have<br />
a)
low income elasticity of demand
b)
high income elasticity of demand<br />
c)
zero income elasticity of demand
d)
none of the above
19.
A good which cannot be consumed more than once is known as<br />
a)
durable good
b)
non-durable good
c)
producer good<br />
d)
none of the above
20.
A relative price is<br />
a)
price expressed in terms of money
b)
what you get paid for babysitting your cousin<br />
c)
the ratio of one money price to another
d)
equal to a money price
21.
A point below the budget line of a consumer<br />
a)
Represents a combination of goods which costs the whole of consumer’s income.<br />
b)
Represents a combination of goods which costs less than the consumer’s income.<br />
c)
Represents a combination of goods which is unattainable to the consumer given his/her money income.<br />
d)
Represents a combination of goods which costs more than the consumers’ income.
22.
Demand is the<br />
a)
the desire for a commodity given its price and those of related commodities.<br />
b)
the entire relationship between the quantity demanded and the price of a good other things remaining the same.<br />
c)
willingness to pay for a good if income is larger enough.<br />
d)
ability to pay for a good.
23.
If, as people’s income increases, the quantity demanded of a good decreases, the good is called<br /><br />
a)
a substitute
b)
a normal good.<br />
c)
an inferior good
d)
a complement.
24.
The price of tomatoes increases and people buy tomato puree. You infer that tomato puree and tomatoes are<br /><br />
a)
normal goods
b)
complements.<br />
c)
substitutes
d)
inferior goods.
25.
Chicken and fish are substitutes. If the price of chicken increases, the demand for fish will<br />
a)
increase or decrease but the demand curve for chicken will not change.<br />
b)
increase and the demand curve for fish will shift rightwards.<br />
c)
not change but there will be a movement along the demand curve for fish.<br />
d)
decrease and the demand curve for fish will shift leftwards.
26.
Potato chips and popcorn are substitutes. A rise in the price of potato chips will —————— the demand for popcorn and the quantity of popcorn will ———————<br />
a)
increase; increase
b)
increase; decrease<br />
c)
decrease; decrease
d)
decrease; increase
27.
If the price of Orange Juice increases, the demand for Apple Juice will .<br /><br />
a)
increase
b)
decrease<br />
c)
remain the same
d)
become negative
28.
An increase in the demand for computers, other things remaining same, will:<br />
a)
Increase the number of computers bought.<br />
b)
Decrease the price but increase the number of computers bought.<br />
c)
Increase the price of computers.<br />
d)
Increase the price and number of computers bought.
29.
When total demand for a commodity whose price has fallen increases, it is due to:<br />
a)
income effect
b)
substitution effect
c)
complemntary effect
d)
price effect
30.
With a fall in the price of a commodity:<br />
a)
consumer’s real income increases.<br />
b)
consumer’s real income decreases.<br />
c)
there is no change in the real income of the consumer.<br />
d)
none of the above.
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