Académique Documents
Professionnel Documents
Culture Documents
Department of Economics
Econ 101 - Principles of Microeconomics
PROBLEM SET - 4
2. The branch of economics that examines the functioning of individual industries and
the behavior of individual decision-making units is
a. Positive economics.
b. Normative economics.
c. Macroeconomics
d. Microeconomics
3. Which of the following could lead to a rightward shift of the demand curve for a
good?
a. a decrease in the price of a substitute good
b. an increase in the price of a complementary good
c. an increase in income assuming that the good is an inferior good
d. expectations that the price of the good will rise in the future
4. Suppose that the market for lima beans is in equilibrium. Then, both the supply and
demand curves for lima beans shift to the left. As a result, the equilibrium price
___________ and the equilibrium quantity will ___________.
a. will fall; fall
b. will fall; rise
c. cannot be determined; fall
d. cannot be determined; rise
1
Izmir University of Economics
Department of Economics
Econ 101 - Principles of Microeconomics
5. Figure 2-10 shows the production possibilities frontier for food and clothing. A
movement from point J to point K could be caused by:
a. the development of new and better technology
b. increasing unemployment
c. the law of increasing opportunity costs
d. eliminating productive inefficiency
6. Assume that the publishing industry produces novels and textbooks, as shown by the
production possibilities frontier in Figure 2-9. Between points F and G, the
opportunity cost of one more novel equals __________. Between points G and H, the
opportunity cost of one more novel equals __________.
a. 0.4 textbooks; 0.5 textbooks
b. 4 textbooks; 5 textbooks
c. 4 million textbooks; 5 million textbooks
d. 2.5 textbooks; 2 textbooks
2
Izmir University of Economics
Department of Economics
Econ 101 - Principles of Microeconomics
Refer to the information provided in Table 1 below to answer the questions that
follow.
7. Refer to Table 1. This market will be in equilibrium if the price per pizza is
a. 6 b. 8 c.10 d. 12
8. Refer to Table 1. If the price per pizza is $6, there is an excess _________ pizzas.
a. demand of 150
b. demand of 50
c. supply of 200
d. supply of 50
Refer to the information provided in Figure 1 below to answer the question that follow.
3
Izmir University of Economics
Department of Economics
Econ 101 - Principles of Microeconomics
11. When the price of fresh fish increases 5%, quantity demanded decreases 10%. The
price elasticity of demand for fresh fish is
a. Perfectly inelastic
b. elastic
c. inelastic
d. unitary elastic
12. Refer to the graph below. Using the midpoint formula, if the price of a hamburger is
increased from $8 to $10, the price elasticity of demand equals
13. Price and total revenue are inversely related when demand is
a. Elastic
b. Inelastic
c. Unitary elastic
d. Perfectly inelastic
4
Izmir University of Economics
Department of Economics
Econ 101 - Principles of Microeconomics
15. When income increases from $20,000 to $30,000 the quantity of inter-city bus trips
taken per year decreases from 10 to 8. Hence
a. inter-city bus trips are a normal good.
b. the income elasticity of demand for inter-city bus trips is -1.8.
c. the income elasticity of demand for inter-city bus trips is 0.56.
d. the income elasticity of demand for inter-city bus trips is -0.4.
Essay Questions
1. Answer following questions referring to the table below.
5
Izmir University of Economics
Department of Economics
Econ 101 - Principles of Microeconomics
3. Fill in the blanks in the table below. Use the midpoint formula to compute elasticity
values.