ECO401 Economics part 2 mid term paper 2011

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Marks: 47
Question No: 1 ( Marks: 1 ) - Please choose one
If pen and ink are complements, then an increase in the price of pen will
cause:
An increase in the price of ink► .
► Less ink to be demanded at each price .
► A decrease in the demand for pen.
► A rightward shift in the demand curve for ink.
Question No: 2 ( Marks: 1 ) - Please choose one
A good for which income and quantity demanded are inversely related is
known as:
► Inferior good .
► Complementary good.
► Normal good.
► None of the given options.
Question No: 3 ( Marks: 1 ) - Please choose one
At the equilibrium price:
► There will be a shortage.
► There will be neither a shortage nor a surplus.
► There will be a surplus.
► There are forces that cause the price to change.
Question No: 4 ( Marks: 1 ) - Please choose one
A market is said to be in equilibrium when:
► Demand equals output.
► There is downward pressure on price.
► The amount consumers wish to buy at the current price equals the
amount
producers wish to sell at that price.
► All buyers are able to find sellers willing to sell to them at the current price.
Question No: 5 ( Marks: 1 ) - Please choose one
We know that the demand for a product is elastic:
► When price rises, total revenue rises.
► When price rises, total revenue falls .
When income rises, quantity demanded rises► .
► When income falls, quantity demanded rises.
Question No: 6 ( Marks: 1 ) - Please choose one
Which of the following is regarded as a general determinant of price
elasticity of demand?
► Nature of the good (luxury versus necessity).
► Availability of close substitutes.
► Share of consumer's budget and passage of time.
► All of the given options.
Question No: 7 ( Marks: 1 ) - Please choose one
As more of a good is consumed, then total utility typically:
► Increases at a decreasing rate.
► Decreases as long as marginal utility is negative.
► Decreases as long as marginal utility is positive.
► Is negative as long as marginal utility is decreasing.
Question No: 8 ( Marks: 1 ) - Please choose one
Which of the following is the term that economists use to describe how
consumers rank
different goods and services?
► Satisfaction index.
► Goodness.
► Utility.
► None of the given options.\
Question No: 9 ( Marks: 1 ) - Please choose one
The extra value that consumers receive above what they pay for that good
is called:
► Producer surplus.
► Utility.
► Marginal utility.
► Consumer surplus .
Question No: 10 ( Marks: 1 ) - Please choose one
A risk-averse individual has:
► A diminishing marginal utility of income.
► An increasing marginal utility of risk.
► An increasing marginal utility of income.
► A diminishing marginal utility of risk .
Question No: 11 ( Marks: 1 ) - Please choose one
As long as all prices remain constant, an increase in money income results
in:
► An increase in the slope of the budget line.

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