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Test sobre The price system, creado por amy.lee1989 el 16/10/2014.

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The price system

The price system

Pregunta 1 de 10

1

What is the defining characteristic of a normal good?

Selecciona una de las siguientes respuestas posibles:

  • An increase in income leads to an increase in quantity demanded

  • The price elasticity of demand is greater than unity

  • The income effect of a fall in price is negative

  • The substitution effect of a fall in price is positive

Explicación

Pregunta 2 de 10

1

Given that potatoes are an inferior good, what will cause an increase in the price of potatoes?

Selecciona una de las siguientes respuestas posibles:

  • a decrease in advertising expediture

  • a failure of the potato harvest

  • an increase in subsidies to potato growers

  • an increase in the income of consumers

Explicación

Pregunta 3 de 10

1

What will make it more difficult for an industry to react quickly to an increase in market demand?

Selecciona una de las siguientes respuestas posibles:

  • There is a high level of unemployment

  • The industry employs highly skilled workers

  • There is a high degree of substitutability between capital and labour

  • There are no close substitutes for the industry's product

Explicación

Pregunta 4 de 10

1

In which of the following situation is the demand for a product said to be price elastic?

Selecciona una de las siguientes respuestas posibles:

  • The quantity demanded responds to a change in price

  • An increase in price brings about a decrease in the quantity demanded

  • An in crease in price induces consumers to spend more on the product

  • A decrease in price brings about an increase in revenue

Explicación

Pregunta 5 de 10

1

A silversmith sells 100 sets of earrings per week at a price of $5. As a direct result of a price increase to $6, the total revenue from sales rises by 8%.
Within which range does price elasticity of demand lie?

Selecciona una de las siguientes respuestas posibles:

  • under 0.4

  • greater than 0.4 and less than 0.8

  • greater than 0.8 and less than 1.2

  • over 1.2

Explicación

Pregunta 6 de 10

1

The demand for a commodity is perfectly elastic. A firm producing this commodity currently sells 100 units at $5 each.
What will be the revenue obtained by the firm, if it increases its price to $6?

Selecciona una de las siguientes respuestas posibles:

  • 0

  • $400

  • $500

  • $600

Explicación

Pregunta 7 de 10

1

If pizza and soda are complements, we can conclude that

Selecciona una de las siguientes respuestas posibles:

  • the cross-elasticity of demand is positive

  • the cross-elasticity of demand is negative

  • the income elasticity of demand is negative

  • the income elasticity of demand is positive

Explicación

Pregunta 8 de 10

1

The price of a product in creases from $12 to $20 and the quantity demanded falls from 55 to 45. What is the PED?

Selecciona una de las siguientes respuestas posibles:

  • 0.4

  • 2.5

  • -0.4

  • -2.5

Explicación

Pregunta 9 de 10

1

Which of the following is not a factors affecting the elasticity of supply?

Selecciona una de las siguientes respuestas posibles:

  • ability to stock pile

  • ability to increase output

  • Number of close substitutes

  • spare capacity

Explicación

Pregunta 10 de 10

1

If total revenue remains constant after price is increased, demand is _______

Selecciona una de las siguientes respuestas posibles:

  • perfectly inelastic

  • perfectly elastic

  • inelastic

  • unitary elastic

Explicación

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