exam_june_2010_Eco1010f

exam_june_2010_Eco1010f - Eco1010f June exam 1 1. In The...

Info iconThis preview shows pages 1–5. Sign up to view the full content.

View Full Document Right Arrow Icon
1 Eco1010f June exam
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
2 1. In The Wealth of Nations Adam Smith wrote that, “it is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest”. His main point was that businessme n: A. are naturally kind to customers and therefore like to charge low prices B. are naturally nasty people who like exploiting others C. benefit society by pursuing their own interests * D. produce goods for household consumption, but not services or investment goods E. like to make money so that they can gain status by giving it away later 2. When an economy is inside its production possibility boundary (PPB) we know that: A. it should expect prices to rise B. there are unemployed resources available for use * C. the only way it can reach the boundary in the short run is through trade D. training workers should shift the boundary in towards the origin in the long run E. all of the above 3. Assume that the demand equation for beer is Q D = 1000 20 P Beer + 4 Y + 20 P lem , where P Beer is the price of beer, Y the level of income, and P lem is the price of lemonade. We can say that: i. the demand for beer is price elastic ii. beer is a normal good iii. the demand curve for beer is downward sloping iv. beer and lemonade are complements A. all of the above are true B. ii, iii and iv C. ii and iii * D. i and iv E. iv only 4. The equilibrium price of Sprite increases while the equilibrium quantity of Sprite sold decreases. This could be the result of: A. an increase in average income levels (Sprite is a normal product) B. a strike at the Sprite factory * C. a decrease in the price of sugar (there is a lot of sugar in Sprite) D. a decrease in the price of Coke, a substitute for Sprite E. a change in people’s tastes
Background image of page 2
3 Question 5 refers to the following demand curve for chocolate bars P x y DD Q/t 5. A move from point x to point y could be caused by: A. a rise in consumer incomes B. a fall in consumer incomes C. news that chocolate is good for one s health D. a fall in the prices of inputs used for chocolate manufacture * E. none of the above 6. Say that the price elasticity of demand for a product is - 0.25. If the product’s price now rises by 10% then: A. the firm’s revenue will rise B. sales of the good will rise by 40% C. sales of the good will fall by 2,5% D. both A and B E. both A and C * 7. If the demand for apples is Q D = 1000 50 P and their supply is Q S = 400 + 10P, then at equilibrium the price elasticities of demand and supply are respectively: A. -1 and +0.2 * B. -1 and +1 C. -0.5 and +0.2 D. -0.5 and +0.1 E. indeterminate
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
4 8. The price of a good rises from R90 to R110 and a producer responds by increasing production from 480 per day to 520 per day. The price elasticity of supply (using the mid-point approach) is: A. 5.0 B. 2.4 C. 2.0 D. 0.5 E. 0.4 * Questions 9 and 10 refer to the following indifference curve / budget line diagram A 15 5 20 30 B 9. When the consumer is maximizing her utility: A. good B costs twice as much as good A B. good A gives twice the total utility of good B C. good B gives twice the total utility of good A D.
Background image of page 4
Image of page 5
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 24

exam_june_2010_Eco1010f - Eco1010f June exam 1 1. In The...

This preview shows document pages 1 - 5. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online