Download Here`s the worksheet for week 12

EC4004 Week 12 Worksheet
Here is a recap MCQ.
1. Suppose the price of new houses has risen, and the number of new houses has
also risen. We can conclude that
a. the demand for new homes has risen
b. the law of demand has been violated
c. new firms have entered the construction industry
d. construction firms must face higher costs
2. Along a production possibilities curve, an increase in the production of one
good can be accomplished only by
a. decreasing the production of another good.
b. increasing the production of another good.
c. holding constant the production of another good.
d. producing at a point on a corner of the curve.
3. A good that provides external benefits to society has
a. to few resources devoted to its production
b. too many resources devoted to its production
c. the optimal number of resources devoted to its production
d. no provided profits to the producers of the good.
4. Which of the following will increase the supply of a good?
a.
An increase in the price of another good producers could produce.
b.
A lower price paid resources used in the production of the good.
c.
A decrease in the number of sellers.
d.
An increase in taxes paid to the government by producers.
5. Suppose student A and student B are smitten with each other but neither
knows of the other’s feelings. Suppose students union organize a class
party in the Stables. The “payoff” is based on whether the two students’
advances are rebuffed or accepted. If they both “declare” they get positive
utility but if they are rebuffed they face humiliation (significantly negative
payoff) As students are, they mildly enjoy humiliating others. Finally,
suppose both choose the outcome that maximizes their worst outcome,
that is they want to avoid the humiliation.
(A’s Payoff, B’s Payoff)
A
Declare Ignore/Rebuff
Declare
10,10
1,-10
Ignore/Rebuff
-10,1
0,0
B
Student A’s dominant strategy is to
a. Declare.
b. Choose at random.
c. Rebuff/ignore
d. None of the above
6. When the supply of credit is fixed, an increase in the price level stimulates the
demand for credit, which, in turn, reduces consumption and investment
spending. This effect is called the
a. real balances effect.
b. interest-rate effect.
c. net exports effect.
d. substitution effect.
7. Which of the following would eliminate scarcity as an economic problem?
a. Moderation of people’s competitive instincts
b. Discovery of sufficiently large new energy reserves
c. Resumption of steady productivity growth
d. None of the above because scarcity cannot be eliminated
8. If a shortage exists in a market then:
a. the price is below equilibrium.
b. the quantity demand exceeds the quantity supplied.
c. the price will rise in the near future.
d. all of the above.
9. Which of the following statements is true?
a. If the income elasticity of demand is less than zero, the good is an
inferior good.
b. Only if the demand curve is vertical will sellers raise the price by the
full amount of a tax.
c. Two goods are substitutes if the cross-elasticity of demand coefficient is
positive.
d. A price elasticity of supply coefficient equal to 1.5 means the product
exhibits an elastic supply and a 10% increase in the price will increase the
quantity supplied by 15%.
e. All of the above.
10. Which of the following statements is true?
a. Total utility is the extra satisfaction from the consumption of a good or
service.
b. Marginal utility is the amount of satisfaction received from all the units
of a good or service consumed.
c. The law of diminishing marginal utility states that as more of a good or
service is consumed total utility decreases.
d. Consumer equilibrium is a combination of goods and services
consumed which maximizes total utility from a given budget.
11. Which of the following statements is true?
a. Income distribution in the United States has become more unequal
since 1929.
b. The Lorenz curve indicates the degree of discrimination in an economy.
c. The Lorenz curve indicates the degree of income inequality in an
economy.
d. The riches 5 percent of Americans earn approximately half of the
nation's income.
e. All of the above.
12. Which of the following statements is true?
a. The four phases of the business cycle, in order, are: peak, recovery,
trough, recession.
b. When unemployment is rising then real GDP is rising.
c. The economic problem typically associated with a recovery is rising
unemployment.
d. Full employment exists in an economy when the unemployment rate
equals the sum of seasonal, frictional, and structural unemployment rates.