micro quizz 4 - Markets: Applications of demand and supply...

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Markets: Applications of demand and supply Q1. Which of the following statements is true if the government places a price ceiling on petrol at €1.50 per litre and the equilibrium price is €1.00 per litre? (a) A significant increase in the demand for petrol could cause the price ceiling to become a binding constraint. (b) A significant increase in the supply of petrol could cause the price ceiling to become a binding constraint (c) There will be a shortage of petrol (d) There will be a surplus of petrol Q2. The burden of a tax falls more heavily on the sellers in a market when (a) both supply and demand are elastic (b) both supply and demand are inelastic (c) demand is inelastic and supply is elastic (d) demand is elastic and supply is inelastic Q3. Which of the following workers would be most likely to find it more difficult to get a job after a rise in the minimum wage rate? (a) A teenage worker with few qualifications (b) A manual worker with fifteen years of work experience (c) A professional worker with a university degree (d) All three are equally likely to find it difficult to get a job Q4. Which of the following is an example of a price floor? (a) The minimum wage (b) Rent controls (c) Restricting petrol prices to €1.00 per litre when the equilibrium price is €1.50 per litre (d) All of these answers are price floors Q5. Which of the following takes place when a tax is placed a good? (a) a decrease in the price buyers pay, an increase in the price sellers receive, and a decrease in the quantity sold (b) an increase in the price buyers pay, a decrease in the price sellers receive, and an increase in the quantity sold (c) a decrease in the price buyers pay, an increase in the price sellers receive, and an increase in the quantity sold (d) an increase in the price buyers pay, a decrease in the price sellers receive, and a decrease in the quantity sold Markets: Elasticity Q1. Joe has ten pairs of football boots and Sue has none. A pair of football boots costs €50 to produce. If Joe values an additional pair of boots at €100 and Sue values a pair of boots at €40, then to maximize (a) efficiency Sue should receive the glove. b. . c. equity, Joe should receive the glove. d. consumer surplus both should receive a glove
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(b) negative but greater than -1 (c) positive and greater than 1 (d) zero Q2. Consumer surplus is the area (a) below the demand curve and above the price (b) above the supply curve and below the price (c) above the demand curve and below the price (d) below the supply curve and above the price (d) below the demand curve and above the supply curve Q3. Total surplus is the area (a) above the supply curve and below the price (b) below the demand curve and above the price (c) below the demand curve and above the supply curve (d) below the supply curve and above the price (e) above the demand curve and below the price Q4. If a benevolent social planner chooses to produce less than the equilibrium quantity of a good, then (a)
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This note was uploaded on 04/23/2011 for the course SUMICRO Micro2011 taught by Professor Huyduong during the Summer '11 term at American InterContinental University Illinois.

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micro quizz 4 - Markets: Applications of demand and supply...

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