Quiz 2

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Question #1

Suppose we have a good known as Nazarovs. It has a PES of 1.2. Suddenly, there is a huge increase in tastes and preferences for it. What happens as a result?

A The price increases a little but the quantity increases a lot

B The price increases a lot but the quantity falls by a lot

C The price decreases and the quantity increases

D The supply shifts to the right

E The price increases a lot but the quantity increases only a little

Question #2

Suppose you have the following information for the demand for toddler walkers:
P1=15 Q1=100
P2=10 Q2=500
Which of the following is true?

A A decrease in costs will cause a greater change in the price than in the quantity

B An increase in tastes and preferences will cause a greater change in the quantity than the price

C Toddler walkers are not responsive to changes in price

D A slight increase in price will cause a huge decrease in the good’s quantity demanded

E None of the above are true

Question #3

Suppose the PED of milk is -0.4. How can we interpret this number?

A Milk’s demand curve is flat and upward sloping

B A small increase in income will cause a huge increase in demand

C Milk’s demand is not that responsive to changes in the price

D Milk has no complements

E None of the above

Question #4

Suppose the tax per unit increases. What is the effect on the tax revenue?

A Decreases

B Increases

C Unclear

D Stays the same

E None of the above

Question #5

Consider the good known as Shirwanis. Initially, a tax is placed on the buyers of this good. Suppose that due to intense pressure from consumer groups, the government decides to switch the tax to being on sellers. Which of the following is a result of this switch?

A Price buyers pay decreases

B Sellers pay the entire tax

C Government obtains more revenue

D Quantity decreases

E None of the above

Question #6

Consider the market for marijuana. Suppose the price of a vaporizer (which is used to consume marijuana) becomes cheaper. What is the effect on P and Q?

A Not enough information

B P decreases, Q increases

C P increases, Q decreases

D P increases, Q increases

E P decreases, Q decreases

Question #7

Consider the product of gas-powered cars. Suppose tastes and preferences for this good are falling while the cost of making them is rising. What is the effect of these two trends on the gas-powered car market?

A Price falls and quantity falls

B Price is unclear while quantity falls

C Price rises while quantity is unclear

D Price falls and quantity is unclear

E None of the above

Question #8

Consider the market for marijuana. Suppose buyers suddenly expect the price of marijuana to rise. What is the effect on P and Q?

A Price falls and quantity rises

B Price rises and quantity falls

C Price rises and quantity rises

D Price falls and quantity falls

E None of the above

Question #9

In addition to selling gas, gas stations also sell snacks in their convenience store. In fact, both gas and the snacks are bought together. What happens to the market for these snacks if the price of gas increases?

A Price falls and quantity rises

B Price rises and quantity falls

C Price rises and quantity rises

D Price falls and quantity falls

E None of the above

Question #10

The opportunity cost of taking this quiz could be going out to a basketball game with your friends.

A TRUE

B FALSE

Question #11

Which of the following is an example of positive microeconomics?

A A price ceiling should be applied on gasoline

B A tax on texts would reduce the quantity of them

C The minimum wage should be raised

D We ought to legalize transgender bathrooms

E The US unemployment rate for September 2019 was 3.5%

Question #12

Which of the following is something included in the circular flow model?

A International Trade

B Government

C An explanation of where firms come from

D Banks

E None of the above is included in this model

Question #13

What is the definition of the demand curve?

A The curve that tells us how much the quality of goods changes as income increases

B The curve that tells us the quantity demanded at a given price

C The curve that tells us how to study for exams when time is scarce

D The curve that tells us what a country is capable of producing if it uses all its resources

E None of the above

Question #14

What is the definition of microeconomics?

A The study of decision making of how to distribute scarce resources by individual persons and firms

B The science of being boring on an individual scale (like a classroom)

C The study of small amounts of resources

D The study of monetary, financial and historical instruments at the national level

E None of the above

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