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Centurion University of Technology and Management

Essential Economics for Management (EEM) Quiz Test -1 Marks: 5 Time: 15 minutes 1. The quantity demanded of laptops has increased by 30 per cent. If the price elasticity for laptops is 3.0, the price for laptops must have fallen by A. 6 percent B. 3 percent C. 30 percent D. 10 percent The price of a commodity falls from $10 to $8. Quantity demanded rises from 100 to 200 units. What is the price elasticity of demand between the two prices? Use the midpoint formula. A. 5.0 B. 3.05 C. 2 D. 2.5 Income elasticity for luxuries is A. above zero but below 1 B. below zero C. equal to 1 D. above 1 Look at the table below. Price Quantity $40 2 $30 4 $20 6 $10 8 Demand is most price elastic between A. $30 and $40 B. $20 and $30 C. $10 and $20 Below you find a demand schedule for ice cream cones for June, July and August. A, B and C are three different consumers. Price A B C $2 40 30 10 $3 30 22 8 $4 20 18 2 1) Draw a market demand curve for ice cream cones 2) The current market price is $3. What is market demand at this price?






3) Show on your diagram what happens to the market demand curve when market demand declines by 20 percent owing to cold, rainy weather. 7. The consumer A. has made a rational decision because all three products yield the same marginal utility B. should decrease purchases of C C. should decrease purchases of A and B and increase purchases of C D. should increase purchases of A The slope of the demand curve for butter shows that an increase in the price of butter leads to A. a decline in the amount of butter available B. an increase in demand for margarine C. an expected decline in the price of butter D. a decline in the price of margarine Refer to the table below. What is the utility derived from increasing consumption from 3 ice cream cones to 4 ice cream cones? Number of Ice Cream Cones Total Utility Marginal Utility 1 15 2 5 3 0 4 18 Consumer buys a bundle of two goods, A and B. MU/P for A is 40/1. The marginal utility of B is 20. The price of B must therefore be A. 5 B. 0.5 C. 2 D. none of the above The demand function for strawberries is q = 80 - 8p. Its supply function is q = 40 + 12p. What is the equilibrium price? A. $10 B. $2 C. $4 D. $5





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