EEEB

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?

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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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