QUIZ

MICROECONOMICS
SEM 1 2013
ANSWER ALL QUESTIONS
TIME: 1hr
1. Which will cause the demand for hamburger to increase?
A. a decrease in the price of hamburger
B. an increase in the price of catsup, which is a complementary good
C. an increase in the price of pizza, which is a substitute good
D. a decrease in the price of feed (grain), which is used to produce
hamburger
2. Which will change only the quantity demanded of oranges?
A. an increase in the population
B. a change in the price of oranges
C. a change in the price of tangerines
D. a decrease in the income of consumers
3. Which will not cause a change in the demand for good X?
A. a change in tastes
B. a change in income
C. a change in the price of X
D. a change in price of complementary product
4. A market demand schedule for a product indicates that:
A. as the product's price falls, consumers buy less of the good.
B. there is a direct relationship between price and quantity demanded.
C. as a product's price rises, consumers buy less of other goods.
D. there is an inverse relationship between price and quantity demanded.
5. When one speaks of "demand" in a particular market, this refers to:
A. the quantity demanded at a given price.
B. only one price-quantity combination on the demand schedule.
C. only one point on the entire demand curve.
D. the whole demand curve.
6. Other things being equal, the law of demand implies that as:
A. the demand for CDs increases, the price will decrease.
B. income increases, the quantity of CDs demanded will increase.
C. the price of CDs increases, the quantity of CDs demanded will decrease.
D. the price of CDs increases, the quantity of CDs demanded will increase
7. A lower price increases the quantity demanded because:
A. the purchasing power of individuals decreases.
B. the financial assets of individuals decrease.
C. individuals buy more of the product and less of a substitute.
D. individuals buy less of the product and more of a substitute.
8. Which is consistent with the law of demand?
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A. A decrease in the price of turkey sandwiches causes a decrease in the

quantity of turkey sandwiches demanded.

B. A decrease in the price of tacos causes no change in the quantity of tacos

demanded.
C. An increase in the price of pizza causes an increase in the quantity of
pizza demanded.
D. An increase in the price of hamburgers causes a decrease in the quantity
of hamburgers demanded.
9. Which is not a determinant of demand?
A. income
B. the cost of inputs in production
C. the prices of related goods
D. future price expectations
10.

If average income increases, ceteris paribus, then there will be:

A. a shift of the demand curve.
B. a movement along the demand curve.
C. a movement along and a shift in the demand curve.
D. no effect on the demand curve, because income is not a ceteris paribus
condition.

11.

A normal good is one:

A. which all people like.
B. which all normal people like.
C. for which demand increases when price decreases.
D. for which demand increases when income increases.

12.

If two goods are close substitutes:

A. an increase in the price of one will decrease the demand for the other.
B. an increase in the price of one will increase the demand for the other.
C. a decrease in the price of one will increase the demand for the other.
D. a decrease in the price of one will have no effect on the demand for the
other.

13. People demand more of product X when the price of product Y decreases.
This means X and Y are:
A. complements.
B. substitutes.
C. not related.
D. both inexpensive.
14.

The supply of a product does not depend on :

A. Labor costs .
B. The number of sellers in the market .
C. Consumers tastes .
D. Existing technology .
15.

The law of supply states that an increase in the price of a good:

A. decreases the demand for that good
B. increases the supply of that good
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C. decreases the quantity demanded for that good

D. increases the quantity supplied of that good
16.

Which of the following is consistent with the law of supply?

A. As the price of calculators falls, the supply of calculators increases,
ceteris paribus
B. As the price of calculators rise, the quantity supplied of calculators
increases, ceteris paribus
C. As the price of calculators rise, the quantity supplied of calculators
decreases, ceteris paribus.
D. As the price of calculators rise, the supply of calculators increases,
ceteris paribus.

17. A market will experience a ---------- when the price is above equilibrium,
and a ---------- when price is below equilibrium .
A. Shortage , Shortage .
B. Surplus , Surplus .
C. Shortage , Surplus .
D. Surplus , Shortage .
18.

The table above shows the situation in the gasoline market in Sabah.

If the price of a gallon of gasoline is $1.65, then

A. there is a surplus of gasoline in Sabah.
B. there is a shortage of gasoline in Sabah.
C. the gasoline market in Sabah is in equilibrium.
D. without more information we cannot determine if there is a surplus, a
shortage, or an equilibrium in the gasoline market in Sabah.

19. Consider the market for peanut butter. If there is an increase in the price
of bread (a complement for peanut butter) along with a drought in peanut
growing areas,
A. the equilibrium quantity of peanut butter will definitely decrease.
B. the equilibrium quantity of peanut butter might increase or might
decrease.
C. the equilibrium price of peanut butter will definitely rise.
D. the equilibrium price of peanut butter will definitely fall.
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20.

In Figure below, at a temporary price of $4, will cause

A.
B.
C.
D.

all of the following

a surplus occurs
the supply curve will shift backward
the demand curve will shift outward

21.
supply schedules for chairs are as follows:

The demand and

Price
(RM)

Quantity demanded
(units)

Quantity supplied
(units)

20
30
40
50
60
70
80

180
160
140
120
100
80
60

60
80
100
120
140
160
180

a)
b)
c)
d)

What is the condition for equilibrium?

[1]
What is the equilibrium price of chair?
[1]
What is the equilibrium quantity of chair?
[1]
Assume that a huge fire destroys one half of the chair producing factory.
Thus the supply of chair decreases to half of the amount shown in the
above supply schedule.
i)
What is the new equilibrium price of chair?
[1]
ii)
What is the new equilibrium quantity of chair?
[1]
iii)
Has there been a shift in or a movement along the supply curve? [1]
iv)
Has there been a shift in or a movement along the demand curve? [1]
v)
As the factory destroyed by fire is rebuilt and gradually resume the
production of chair, what will happen to:
a) the price of chair?
[1]
b) the quantity of chair?
c) the supply curve of chair?

All The Best

G/C 04/2013

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