ECO401 Quiz 1 File by VU Topper RM

Q1. Vu-Topper RM (1 marks)

Giffen goods are the sub category of:

Inferior goods Page 10

What does the economic term scarcity refer to?

1. Unlimited wants and unlimited resources
2. Limited wants and unlimited resources

Unlimited wants and limited resources

If the cost of computer components increases, then:?

The demand curve for computers shifts to the right. The demand curve for computers shifts to the left. The supply curve for computers shifts to the right. The supply curve for computers shifts to the left.

How is Normative Economics defined?

1. Study of economic trends
2. Study of “what could be”
3. Study of values and judgements
4. Study of “what is”

Correct answer: Study of values and judgements

What does the term “equilibrium price” mean in Economics?

1. The highest possible price in the market
2. The price determined by a government
3. The price where demand and supply curves intersect
4. The lowest possible price in the market

Correct answer: The price where demand and supply curves intersect

A shortage is a situation in which: A. Supply remains neutral

B. Demand exceeds supply

C. Demand remains neutral D. Demand does not exceed supply Demand is said to be ---------------- when the price elasticity of demand is less than 1. Elastic

Inelastic

Unit Elastic Perfectly Inelastic

Which of the following is a normative statement?

1. When the price of a good goes up, consumers buy less of it.
2. Public should properly use their right to vote to elect the right person.
3. When the Federal government sells bonds, interest rates rise and private investment is reduced.
4. When the price of a good goes up, firms produce more of it.

Correct answer: Public should properly use their right to vote to elect the right person.

Price floor results in: A. Undetermined B. Excess supply. C. Excess demand. D. Equilibrium.

if there is a reduction in price of resources used for production of commodity, then supply curve of that commodity will: A. Shift rightward. B. Remain same. C. Shift leftward. D. Remain undetermined.

What best describes a market economy?

1. Prices are determined by feudalists
2. Prices are determined by elite group
3. Prices are determined by market forces
4. Prices are determined by the government

Correct answer: Prices are determined by market forces

When consumers' expenditures on a particular good fall in response to increase in their income,that good can be categorized as: A. Complementary good B. Normal good C. Luxury good

D. Inferior good

Inferior goods are those goods whose quantity demanded goes down as: A. Consumer income remains constant B. Consumer income decreases C. Price of goods increases

D. Consumer income increases

When percentage increase in the price of a good decreases its quantity demanded by the same percentage, it shows that demand of this good is: A. Perfectly price inelastic B. Unit price elastic

C. Price inelastic

D. Price elastic

What does a concave shape of Production Possibility Frontier (PPF) show?

1. Law of decreasing opportunity cost
2. Law of constant opportunity cost
3. Law of increasing opportunity cost
4. Law of diminishing returns

Correct answer: Law of increasing opportunity cost

Hasan runs a surgical business and provides surgical tools to the local hospitals. For his company, Hasan falls in the category of ________. A. Money B. Capital C. Labor