Academic Year: 2012/2013Instructors: Brenda Lynch and PJ Hunt Contact: firstname.lastname@example.org email@example.com
Q1. If demand is elastic, a price cut:1.Lowers total revenue, but increases quantity sold.2. Lowers total revenue and lowers the quantity sold.3. Raises total revenue, but lowers the quantity sold.4. Raises total revenue, and raises the quantity sold.Q2. An automobile would be an example of:1. A consumer non-durable good.2. A durable good.3. An inferior good.4. A producer good.
Q3. If income elasticity was positive, thisindicates that the products are: 1. Compliments. 2. Substitutes. 3. Normal goods. 4. Inferior goods. Q4. If income elasticity for compact disks is3, and if income rises by 5%, what do youforecast for sales of compact disks. 1. A rise of 5%. 2.A rise of 10% 3.A rise of 15% 4.A rise of 20% 5.None of these.
Q5. A price increase:1. Raises total revenue if demand is inelastic.2. Lowers total revenue if demand is elastic.3. Neither raises or lowers total revenues ifdemand is unit elastic.4.All of the above.
Q6. In the short run1. Output is fixed2. At least one input is fixed3. All of the inputs are permitted to vary4. here is no fixed cost Q7. If marginal costs are greater than average total costs, then 1. Average total cost curve is falling 2. Average total cost curve is flat 3. Average total cost curve is rising 4. Average total cost curve is at a minimum
Q8. Suppose that FC is €100 and the AVC is €8 atan output of 7 units. What is the TC at anoutput of 7?1. €562. €573. €1564. €22.28
Q9. You are given the following cost function: TC= 1500 + 300Q + 25Q2 . From this cost we know:1. Fixed cost is 3002. ATC is 1500/Q3. TC declines as Q rises4. MC is 300 + 50Q
Q10. In the short run, if the price is less thanATC but higher than AVC:1. The firm earns an economic profit2. The firm earns a loss if it continues to operate,but a smaller loss than if it shut down3. The firm should shut down in the short run4. The firm should expand production
Q11. A price increase tends to reduce purchasesof a good. According to the model of consumerchoice, the primary reason for this reduction is: 1. the substitution effect 2. inferior goods 3. luxury goods 4. the income effect
Q12. If the absolute value of PED for a goodequals 0.9, then the demand for that good is: 1. Relatively price inelastic; 2. Infinitely price elastic; 3.Relatively price elastic; 4.The above information is insufficient to make ajudgement.
Q13. If Government imposes a per-unit sales taxon cars the retail price of cars will increase moreif the demand for cars is; 1. Price elastic. 2. Price inelastic. 3. Unit elastic. 4. Impossible to tell without further information.
Q14. Which is NOT a characteristic of anindustry that displays perfect competition? 1. free entry 2. heterogeneous product 3. many sellers 4. free exit.