TMA2/ECO232

TMA Quiz Questions TMA: TMA2/ECO232 Matric Number:  SCORE=10.00 ECO232 - Micro Economic Theory II Mr. Adedeji Abiodun Liadi (aliadi@noun.edu.ng ) 1 If the supply curve of a commodity is positively sloped, a rise in the price of the commodity ceteris paribus, results in and is referred to as an increase in supply an increase in the quantity supplied a decrease in supply a decrease in the quantity supplied 2 A perfectly competitive economy will yield a Pareto efficient allocation of resources because prices adjust to clear each market all participants are price taker all participants optimize all of the above 3 If the allocation of inputs is production-efficient then the MRTS between inputs is equal to marginal revenue the isoquants are tangent to each other the contract curves are tangent for all producers all of the above 4 Construct a market demand function from the demand functions for two individual consumers: consumer A: Q = 20 – P; consumer B: Q = 15 – P. 35- 2P2 35- 2P 30 - 2P 35- P 5 The demand curve facing an individual firm in perfect competition is vertical at the existing market quantity downward sloping horizontal at slightly less than the market price horizontal at the existing market price 6 A unit free measure such as elasticity shows changes in absolute magnitude relative to initial values in standard unit over time 7 In which of the following areas is above-equilibrium price most likely to be found? private secondary school fees agricultural price supports natural gas prices all are equally likely 8 Economists agree that the price controls benefit some consumers who buy at a lower price hurts some consumers who want to buy but cannot hurt the social fabric because laws tend to be disregarded all of the above 9 Which of the following government policies is sometimes used to increase demand either in general or specifically? an increase in the income tax an increase in the tax on cigarettes an educational campaign to reduce gas consumption food subsidies 10 Which of the following government policies will shift the supply curves for a good to the right? an excise tax on the good a subsidy to producers unemployment insurance tax declaring goods illegal 11 . Lagos state has decided to eliminate rent controls because the market for housing is very tight. Which of the following is most likely to happen immediately? an increase in rents a decrease in rents an increase in housing a decrease in housing 12 When is a firm most likely practicing discrimination? when it fires three workers and hires two when it raises prices 5 percent every six months when a store stays closed on Sunday when a firm charges higher prices in wealthy neighbourhood 13 A price floor often leads to black market a decrease in the quantity of the goods supplied a lower quality of good being produced none of the above 14 Which of the following will shift the demand curve for a good to the right? a decrease in the cost of production an increase in the cost of production a decrease in the price of the good none of the above 15 An increase in supply is represented by shifting the supply curve leftward shifting the supply curve rightward moving along the supply curve in an upward direction moving along the supply curve in a downward direction 16 If consumers expect the price of a good to decrease in the future, the usual result is an increase in the quantity of the good demanded a decrease in the quantity of the good demanded the demand curve for the good will shift to the right the demand curve for the good will shift to the left 17 The law of supply states that as the price of a good increase the supply curve shifts leftward the supply curve shift rightward the quantity supplied increases the quantity supplied decreases 18 Which would best describe the short run for a firm as defined by economists? the plant capacity for a firm is variable the plant capacity for a firm is fixed there are diseconomies of scale there are economies of scale 19 If the quantity of a commodity demanded remains unchanged as its price changes, the coefficient of price elasticity of demand is greater than 1 ) equal to 1 smaller than 1 zero 20 Within the relevant range, isoquants cannot cross are convex to the origin are negatively sloped are all of the above