TMA1/ECO231

TMA Quiz Questions TMA: TMA1/ECO231 Matric Number:  SCORE=10.00 ECO231 - Micro Economic Theory I Mr. Adedeji Abiodun Liadi (aliadi@noun.edu.ng ) 1 The price elasticity of a commodity supplied is half, then an increase in the price boosts the quantity supplied by a larger percentage the supply is elastic the percentage change in price is greater than the percentage change in the quantity supplied all of the above 2 The term “demand” refers to a need for good curve or schedule quantity point 3 If Y on the vertical axis and X on the horizontal axis, if the price-quantity curve for X is downward sloping to the right the price elasticity of demand for X is relatively elastic the price elasticity of demand for X is relatively inelastic X is an inferior good the price elasticity of demand for X is equal to -1 4 In economics if taxes on petrol increase, petrol consumption will decrease is an example of what kind of statement? a positive statement a macroeconomic statement a normative statement a conservative statement 5 Assume that demand curve for political vest shifts rightward and at the same time the supply curve shifts leftward during election, then the equilibrium quantity definitely increases the equilibrium price definitely decreases the equilibrium price definitely increases the equilibrium quantity definitely decreases 6 Assume that demand curve for political vest shifts rightward and at the same time the supply curve shifts leftward during election, then the equilibrium quantity definitely increases the equilibrium price definitely decreases the equilibrium price definitely increases the equilibrium quantity definitely decreases 7 Economic agents regard MILO chocolates and BORNVITA chocolates as substitutes. If the price of a MILO chocolates decreases the demand for MILO chocolates will increase the demand for BORNVITA chocolates will increase the demand for BORNVITA chocolates will decrease the supply of MILO chocolates will increase 8 When the price of a particular resource with a perfectly inelastic supply is determined by the supply consists of only opportunity cost and has no economic rent cannot change is pure economic rent 9 When both the price of a substitute and the price of a complement of commodity X rise, the demand for X rises falls constant all of the above 10 Every point on or below a budget constraint are equally desirable represent market basket combinations that exhaust the income available are attainable with the given income all of the above 11 It not rational for Indifference curves to intersect because of the transivity property of indifference theory of diminishing marginal utility more is better than less A and C 12 If the prices of both goods increase by the same percent, the budget line will pivot about the y axis shift parallel to the left pivot about the x axis shift parallel to the right 13 The absolute value of the slope of an indifference curve equals the marginal rate of substitution equal one else there would be no indifference the consumer’s marginal utility none of the above 14 The main income effect of a price change of a good is either positive or negative always positive always negative related to a change in nominal income 15 A market equilibrium will occur where the internal forces of the market are balanced the quantity supplied equals the quantity demanded the demand and supply intersect a,b and c 16 Assume that the price of flour used to produce bread increases in the country. Therefore, the equilibrium price of a bread ____ and the equilibrium quantity ____. rises; increases decreases; increases increases; decreases falls; decreases 17 The income elasticity of demand is negative for normal goods . is positive for inferior goods A and B above equals the relative change in demand for a good divided by the relative change in the income of 18 Assuming that the income elasticity of demand for a good is above 2 the good is an inferior good the good is an inelastic normal good the good is an elastic inferior good the good is an elastic normal good 19 A concavity of production possibility frontier (curve) shows that the opportunity cost of a good is constant as more of the good is produced opportunity cost of a good decreases as more of the good is produced opportunity cost of a good increases as more of the good is produced opportunity cost relationship is linear 20 Holding everything constant, the higher the interest rate, the smaller the quantity of capital demanded lower the interest rate, the smaller the quantity of capital demanded. higher the interest rate, the greater the quantity of capital demanded interest rate and the quantity of capital demanded are not connected