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# versioncexam1 - Introduction to Microeconomics Fall 2010...

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Version C Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 1. The income of a typical worker in a country is most closely linked to which of the following? a. government policies b. population c. productivity d. market power ____ 2. If the price elasticity of demand for a good is 1.65, then a 3 percent decrease in price results in a a. 1.82 percent increase in the quantity demanded. b. 5.55 percent increase in the quantity demanded. c. 0.55 percent increase in the quantity demanded. d. 4.95 percent increase in the quantity demanded. ____ 3. If the consumer's income and all prices simultaneously decrease by one-half, then a. the optimum will shift outward relative to the old optimum. b. the optimum will move leftward along the old budget constraint. c. the optimum will not change. d. the optimum will shift inward relative to the old optimum. ____ 4. Suppose a gardener produces both green beans and corn in her garden. If she must give up 14 bushels of corn to get 5 bushels of green beans, then her opportunity cost of 1 bushel of green beans is a. 2.8 bushels of corn. b. 70 bushels of corn. c. 2.4 bushels of corn. d. 0.36 bushel of corn. ____ 5. One way to characterize the difference between positive statements and normative statements is as follows: a. Positive statements involve advice on policy matters, whereas normative statements are supported by scientific theory and observation. b. Economists outside of government tend to make normative statements, whereas government-employed economists tend to make positive statements. c. Positive statements tend to reflect optimism about the economy and its future, whereas normative statements tend to reflect pessimism about the economy and its future. d. Positive statements offer descriptions of the way things are, whereas normative statements offer opinions on how things ought to be. ____ 6. In a competitive market, each seller has limited control over the price of his product because a. these markets are highly regulated by government. b. sellers usually agree to set a common price that will allow each seller to earn a comfortable profit. c. other sellers are offering similar products. d. buyers exert more control over the price than do sellers. ____ 7. Holding all other forces constant, when the price of gasoline rises, the number of gallons of gasoline demanded would fall substantially over a ten-year period because a. buyers tend to be much less sensitive to a change in price when given more time to react. b. buyers will have substantially more income over a ten-year period. c. the quantity supplied of gasoline increases very little in response to an increase in the price of gasoline. d.

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versioncexam1 - Introduction to Microeconomics Fall 2010...

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