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Question One: Depending on the following demand and supply equations of a good,
answer the following two questions (4 points):
P = 120 - Qd
Qs = -40 + P
Where P is the price of the good, Qd is the quantity demanded of the good, and Qs is the quantity
supplied.
a. Determine the equilibrium price and quantity.
b. At price of 50, does the market of the good suffer from excess demand or excess supply?
Determine its value.
Question Two: Circle the most appropriate answer (16 Points)
1. An inefficient point lies
A Below the PPF.
C Above the PPF.
B
D
On the PPF.
None of the above.
2. The curve on the given graph has:
A A negative and decreasing slope
C A positive and decreasing slope
B
D
A positive and increasing slope
A negative and increasing slope
3. A change in the number of sellers of a good will affect the :
A Individual demand
B Market demand
C
Individual supply
D Market supply
4. The Approach to economics that that analyzes outcomes of economic behavior, evaluates
them, and may prescribe courses of action is?
A Normative economics
B Positive economics
C Descriptive economics
D Economic theory
5. “The set of institutions that organize an economy to answer the three basic questions” is:
A Command economy
B
Free economy
C Mixed economy
D
Economic system
6. Which of the following questions is not a basic economic question?
A. What goods to be produced?
B. how to spend money?
C. For whom to produce output?
D. none of the above.
7. A negative relationship (positive slope) between P and Qd means that
A When P increases, the Qd iccreases.
B
When P decreases, the Qd decreases
C
When P decreases, the Qd increases
D
When P changes, the Qd does not change
8. As this country moves from point D to B along the Production Possibility Frontier (PPF)
{AE}:
A. the opportunity cost of producing more consumer goods increases
B. the opportunity cost of producing more capital goods increases
C. the opportunity cost is not affected because the curve does not shift
D. the opportunity cost of producing more of either consumer or capital goods increases
9. Which of the following causes a shift of demand curve of a good to the lift?
A. a decrease in the price of the good itself.
B. a decrease in the price of a substitute good
C. a decrease in the price of a complementary good.
D. all of the above.
10. An increase in output of an economy means
A Economic growth
C Stability.
B
D
Equity
None of the above.
11. Which of the following makes the PPF shifts of a country to the left?
A An advance in technology
B
A decrease in the quantity of resources
C An enhance in the quality of resources
D
All of the above
12. When supply of a good decrease while the demand is fixed, then
A. both equilibrium price and equilibrium quantity will increase.
B. both equilibrium price and equilibrium quantity will decrease.
C. equilibrium price will decrease but equilibrium quantity will increase.
D. equilibrium price will increase but equilibrium quantity will decrease.
13. The law of Supply states that:
A. When the supply for a good increase, the price will necessarily begin to increase.
B. As technology advances, supply will increase.
C. There is a positive relationship between the price and quantity supplied of a good, ceteris paribus
D.There is a negative relationship between the price and quantity supplied of a good, ceteris paribus
14. "Capital" in economics refers to:
A Financial statements
C
Money
B
D
Goods produced for consumption
Goods produced to produce other goods
15. Which of the following is not considered as an economic resource??
A Land
B Labor
C
Money
D None of the Above
16. “Ability to pay” implies an answer to the basic question
A For whom to produce
B
What to produce
C How to produce
D
None of the above
GOOD LUCK