Multiple choice questions related to factors influencing demand
1) All of the subsequent are non-price factors which influence demand except:
a) income
b) the prices of related goods.
c) tastes and preferences.
d) quantity supplied
2) When total revenue is at its maximum value:
a) marginal revenue equals price
b) average revenue equals 0.
c) average revenue equals marginal revenue
d) marginal revenue equals 0.
3) If the percentage change in quantity demanded is less than the percentage change in price, we would say which over this range, demand is:
a) perfectly elastic
b) elastic
c) unit elastic
d) inelastic
4) Assuming which C = $4, 500, I = $1,000, G = $1,200, Exports = $450, Imports = $550, Depreciation = $600, and Indirect Business
Taxes = $500 (all in billions of dollars), GDP equals:
a) $5,500 billion.
b) $6,000 billion.
c) $6,400 billion.
d) $6,600 billion.
5) Which of the subsequent would be considered an example of a microeconomic problem?
a) Should the North American Free Business Agreement be expanded to include more countries?
b) Should the Federal Reserve increase interest rates?
c) Should General Motors increase the number of cars it is producing each month?
d) Should federal tax rates be decreased?
6) All else constant, if the market for diet soft drinks is initially in equilibrium and a new brand of diet soft drink is then introduced into the market, this will cause:
a) an increase in equilibrium price and decrease in equilibrium quantity.
b) a decrease in equilibrium price and increase in equilibrium quantity.
c) an increase in equilibrium price and quantity.
d) a decrease in equilibrium price and quantity.
7) Which of the subsequent is an example of substitute goods?
a) Beer and pretzels.
b) Cars and gasoline
c) Tennis racquets and tennis balls.
d) Ford and Dodge sport utility vehicles.
8) Suppose an auto company's factories are capable of producing both large and small cars and are operating at full capacity. Suppose the price of large cars increases due to a shift in consumer's preferences toward large cars and away from smaller cars. Illustrate what would reasonably be expected to happen to the equilibrium price and quantity of the company's small cars?
a) Equilibrium price and quantity would both increase.
b) Equilibrium price and quantity would both decrease
c) Equilibrium price would decrease and equilibrium quantity would increase.
d) Equilibrium price would increase and equilibrium quantity would decrease
9) All else constant, an increase in foreign imports would cause the supply of cameras in the United States to:
a) increase.
b) decrease
c) stay the same
d) cannot be determined with the information given.
10) Suppose an analyst has been hired to estimate the price elasticity of demand for a university education and for an education at Illinois State University, respectively. Ceteris paribus, we would expect the coefficient of price elasticity of demand to be:
a) larger for Illinois State than for a university education in general.
b) approximately the same for both Illinois State and a university education in general.
c) larger for a university education in general than for Illinois State
d) none of the above because education cannot be analyzed using the model of supply and demand