micro

Suppose the market Demand Curve for Rice is Qd = 500 - 10P, what is the price above which no rice will be demanded?

50

Suppose frost destroys part of the wine harvest in France while at the same time there is a shift in world demand towards French wine.  What would we expect to happen to equilibrium P and Q in the French wine market?

P rises but effect on Q is ambiguous

All of the following are determinants of the demand for a good except:

cost of a good

Suppose you play a round of golf costing $75. The golf takes four hours to play. If you were not playing golf you could be working and earning $40 per hour. The opportunity cost of your golf game is:

235

The following question refers to the table below, which shows the maximum number of goods X and Y that producers A and B can produce in one day.

 

	X	Y
Producer A	20	20
Producer B	15	15

No producer has the comparative advantage in producing either x or y

Opportunity cost formula

units of other good given up/unit of goods produced

The demand for books is: Qd = 60 –P and supply of books is: Qs = 20. What is the equilibrium price and quantity of books?

Q=20, P=40

	Tons of Beef	Tons of Ham
Argentina	900m	300m
Spain	200m	600m

The table above gives The table above gives Argentina and Spain’s annual production of beef and ham.   Argentina’s opportunity cost of an extra ton of ham (in terms of beef) is __________ and Spain's opportunity cost of an extra ton of ham in terms of beef is __________.  

3 fewer tons, 1/3 fewer tons

Suppose the supply curve for rice is given by Qs=20+5P and the Demand Curve is Qd=50-10P   If the government insist that price is fixed at 4 this will lead to:

excess supply of 30

We observe that the equilibrium price of T-shirts increases and the equilibrium quantity decreases. Which of the following best fits the observed data?  

Question 9 options:

	A decrease in demand with supply constant
	A decrease in supply with demand constant.
	An increase in demand coupled with an increase in supply
	Demand constant and an increase in supply.
	An increase in demand with supply constant

a decrease in supply with demand constant

	Tons of Cloth	Tons of Wine
Portugal	1800m	600m
England	400m	200m

The table above gives The The table above shows England and Portugal’s production of cloth and wine per annum.   Which of the following statements is true?  

Question 10 options:

	Portugal has a comparative advantage in cloth and England in wine
	Portugal has an absolute advantage in cloth but not in wine
	Portugal has a comparative advantage in cloth and wine
	England has a comparative advantage in cloth and Portugal in wine
	If Portugal specialized in wine and England specialized in cloth both countries would be better off

Portugal has a comparative advantage in cloth and england in wine

Absolute advantage

if x produces more of a good

If Y denotes income and Q denotes quantity demanded, then the correct mathematical expression for income elasticity of demand is (assume it is defined with respect to initial Y and Q).

(△Q/Q) / (△Y/Y)

Suppose that a demand curve is given by Q_d=500-0.5P.  If price is 200, then point price elasticity of demand is:

Question 2 options:

	-2
	-0.25
	-4
	-0.5
	-1

-0.25

Assuming that golf clubs are a normal good, which of these is likely to shift the demand for golf clubs to the left:

Question 5 options:

	an increase in income
	a rise in fees required to play on a golf course
	an increase in the price of golf clubs
	a reduction in the price of golf balls
	a decrease in the price of golf clubs

a decrease in fees required to play on a golf course

If there is a lot of excess capacity in a firm’s production then it is likely that supply is

Question 4 options:

	unresponsive to changes in price
	highly price elastic
	highly price inelastic
	totally price inelastic
	very insensitive to price conditions

highly price elastic

At the local store, when the price of a bottle of Pepsi was €1, then 100 bottles were sold per day. When the price increased to €1.40, only 80 bottles were sold per day. Using the midpoint method, what is the price elasticity of demand for a bottle of Pepsi?  

Question 3 options:

	-2/3
	-1/3
	-3/2
	-1/2
	-2

-2/3

You have one hour to catch a flight to Madrid for spring break. It takes 45 minutes to drive to the airport. Your car is almost out of petrol; the price of petrol at the closest petrol station is higher than the one other side of the town. To you, the price elasticity of demand for petrol is likely to be ______ than it would be if you had several hours before the flight.  

Question 10 options:

	More elastic
	The same
	Less elastic
	Unitary elastic (i.e elasticity of -1)
	None of the above

less elastic

Which of the following is likely to lead to a demand curve for a good to be price inelastic?

Question 9 options:

	the good is a luxury
	none of the above
	the good is a necessity
	there are lots of close substitutes for the good
	the good has a high income elasticity

the good is a necessity

A long-run demand curve, as compared to a short-run demand curve for the same

commodity, is generally:

Question 8 options:

	more elastic
	none of above
	same elasticity
	steeper if curves are plotted against same horizontal scale
	less elastic

more elastic

If quantity demanded, Qd=60-P and quantity supplied Qs=20, then, the point own price elasticity of demand at equilibrium is

Question 7 options:

	-1.5
	-2
	-0.5
	0
	-1

-2

John’s income falls from 1000 euro to 900 euro.  If his demand for pizza then falls from 10 per week to 8 per week, pizza is a

Question 6 options:

	inferior good
	non-normal good
	Giffen good
	luxury good
	necessary good

luxury good

At his current consumption level Brendan gets 3 times more marginal utility from an additional game of pinball than from an additional game of Spiderman. If the price of Spiderman games is $0.50, then he is maximizing utility if the price of a pinball game is

Question 1 options:

	$1
	$2
	$3
	$1.5
	$2.5

$1.5

Assume that Eithne's income is €50, the price of a loaf of bread is €2.50, and the price of a jar of peanut butter is €2.  Eithne can buy a maximum of _____ loaves of bread or a maximum of _____ jars of peanut butter.  

Question 2 options:

	10;50
	20;30
	20;25
	25;20
	10;20

20; 25

The slope of the ---------- shows the marginal rate of substitution while diminishing marginal rate of substitution imply that this is ---------- to the origin.

Question 3 options:

	indifference curve; a straight line
	indifference curve; smoothly convex
	indifference curve; smoothly concave
	budget constraint; smoothly convex
	budget constraint; smoothly concave

indifference curve; smoothly convex

For two goods, A and B, Marginal Utility (MU) of A=18 and Price (P) of A= 3, while MUB=25 and PB=5. In order to maximise utility, the consumer should 

Question 4 options:

	purchase less of A and more of B
	purchase more of A and less of B
	leave choices as they are
	reduce consumption of both A and B
	purchase more of A and B

purchase more of A and less of B

Sam consumes two goods  and  and has a utility function  . If Sam is currently consuming 4 units of  and 16 units of  then the marginal utility of good 1 is --- and the marginal utility of good 2 is ---

Question 5 options:

	1;0.25
	4;16
	0.25;1
	8;16
	16;4

1;0.25

Suppose a consumer consumes two goods, x and y, with utility function U=X^0.5+y^1.5 .  Does the utility function exhibit diminishing marginal utility for (i) x and (ii) y?

Question 6 options:

	yes for x, no for y
	yes for x, yes for y
	not enough information to answer
	yes for y, no for x
	no for x no for y

yes for x, no for y

If a bundle of goods lies within but not on a budget constraint line it is  

Question 7 options:

	unattainable
	unfeasible
	efficient
	exhausting income
	not exhausting income

not exhausting income

An income elasticity of demand equal to 2 for a particular product means that:

Question 8 options:

	the product is an inferior good.
	a 10 percent increase in income will yield a 20 percent increase in the quantity sold.
	a 20 percent increase in income will result in a 10 percent increase in the quantity sold.
	demand curves for the product slope upward
	(% change in Q) / (% change in P) = 2

a 10 percent increase in income will yield a 20 percent increase in the quantity sold

If all prices and income increase by 10%, then the budget line will:

Question 9 options:

	move outward (towards north east)
	remain unchanged.
	rotate around its axis.
	be vertically parallel.
	move inward (towards south west)

remain unchanged

Suppose a consumer has utility function U(x1, x2) = (x1)^1/3 (x2)²/3. If the prices of the two goods are p1 = $1 and p2 = $4, and if the quantity of x1 is 4, then the utility maximising quantity of x2 is

2