BSNS exam prep, Multiple Choice Questions And
Correct Answers, With Complete Verified Solution.
As price decreases
(a) demand increases.
(b) the demand curve shifts left.
(c) the supply curve shifts right.
(d) quantity demanded increases.
d
A general increase in consumer incomes
(a) leads to a movement along the demand curve.
(b) shifts the demand curve to the right.
(c) shifts the demand curve to the left.
(d) shifts the demand curve, but it may shift left or right.
d
The slope of the supply curve for a good
(a) decreases as consumer incomes increase.
(b) usually decreases as the period of time under consideration increases.
(c) is usually the same as the slope of the demand curve.
(d) reflects the rate of technological progress in the industry.
b
The demand curve is drawn with price on the vertical axis and quantity on the
horizontal axis. This corresponds to the
(a) vertical interpretation of the demand curve in which marginal benefit (i.e.,
marginal dollar value) depends on (i.e., decreases with) the quantity consumed.
(b) horizontal interpretation of the demand curve in which quantity demanded
depends on the price of the good.
(c) usual upward slope of the demand curve.
(d) tendency of the market to seek a price that equalises quantity supplied and
demanded.
b
The market equilibrium price
(a) clears the market.
(b) generally occurs in the inelastic portion of the demand curve.
(c) encourages suppliers to increase the quantity of product that they bring to
market in the next time period.
(d) can be arrived at only with the aid of government regulatory agencies.
a
A market price below the equilibrium price
(a) results in excess demand in the market, which tends to push price upward.
(b) results in excess supply in the market, which tends to push price upward.
(c) results in a higher quantity traded than under the equilibrium price.
(d) is illegal in most countries
a
,Suppose that the market for pizza is initially in equilibrium. A tightening labour
market results in an increase in the wages paid to pizza chefs and delivery
people. Assuming all else remains constant, the pizza
(a) supply curve shifts right, and equilibrium price and quantity traded both
increase.
(b) supply curve shifts left, equilibrium price rises and quantity traded falls.
(c) demand curve shifts left, equilibrium price and quantity traded both fall.
(d) demand curve shifts right, and price quantity traded both rise.
b
Suppose that for most consumers a dinner of ramen noodles is an 'inferior' good.
The ramen noodles are locally produced, and the tight labour market increases
local workers' wages and incomes. Then, assuming all else remains constant, the
(a) price of ramen noodles rises and the change in quantity traded is
indeterminate.
(b) price of a ramen noodles falls and the change in quantity traded is
indeterminate.
(c) change in the price of ramen noodles is indeterminate and quantity traded
rises.
(d) change in the price of ramen noodles is indeterminate and quantity traded
falls.
d
A market in equilibrium is "efficient", under the right conditions, in the sense that
(a) the optimal (i.e., economic surplus maximizing) quantity of the good or service
is traded.
(b) the goods are allocated to the consumers who value them most highly.
(c) the goods are supplied by the producers with the lowest opportunity cost.
(d) All of the above.
d
Using the mid-point formula, if the price elasticity of demand for a product is 2, a
price increase from $.90 to $1.10 causes quantity demanded to
(a) rise by 40 percent.
(b) fall by 40 percent.
(c) rise by 20 percent.
(d) fall by 20 percent.
b
Due mainly to increases in the tax on a pack of cigarettes, New Zealand cigarette
prices rose from about $4.00 to about $8.00 per pack between 1988 and 2001. The
quantity of cigarettes sold fell over the same time period from about 12 million
packs per year to about 8 million packs per year. If nothing else changed over
time, the midpoint formula indicates that the price elasticity of cigarette demand
is about
(a) 0.33
(b) 0.6
(c) 1.0
(d) 1.66
b
, Which of the following is a disadvantage of opening to international trade?
(a) The prices of products change from the domestic prices to the world prices.
(b) Only consumers gain from opening to international trade.
(c) The costs of adjustment for employers and their workers can be high.
(d) Opening to trade raises shipping costs.
c
The main difference between the effects of a tariff on imports and those of a
binding import quota is that
(a) a quota has a smaller effect on total economic surplus.
(b) a tariff has a larger positive effect on domestic production.
(c) the tax revenues generated under a tariff go to importers under a quota.
(d) domestic producer surplus is greater under an import quota.
c
Which of the following represents a valid economic rationale for government
intervention in the economy?
(a) Marginal consumer value equals marginal social cost in equilibrium.
(b) Marginal social cost exceeds marginal consumer value in equilibrium.
(c) The equilibrium wage rate varies across industries.
(d) Equilibrium prices vary over the course of the year.
b
A good is a commons good (or common-property good) if it is
(a) excludable and rival.
(b) non-excludable and non-rival.
(c) excludable and non-rival.
(d) non-excludable and rival.
d
Heating one's home with a wood or coal burner requires disposing of waste,
namely smoke and ashes. Smoke particles are usually emitted freely into the
atmosphere through a flue. This can cause problems (i.e., impose costs on
others) if a lot of people heat with wood burners and there's not much wind
flushing the particulates away. Disposing of waste this way represents a 'cost not
priced in the market'. The ideal way to price this external cost is to
(a) set a charge per unit smoke emitted that varies climatic conditions.
(b) require people to invest in a low-emissions burner.
(c) charge an annual emissions tax on every household burner.
(d) impose a tax per kilogram on wood and coal.
a
A disadvantage of pricing access to the local atmosphere for waste disposal is
that
(a) the cost of installing emissions monitors in flues and managing the
programme may exceed the benefits from cleaner air.
(b) income constrained households may reduce heat to the point of discomfort or
illness.
(c) local residents may feel aggrieved that a previously unpriced natural resource,
available freely to everyone, is now just another thing they have to pay for to
Correct Answers, With Complete Verified Solution.
As price decreases
(a) demand increases.
(b) the demand curve shifts left.
(c) the supply curve shifts right.
(d) quantity demanded increases.
d
A general increase in consumer incomes
(a) leads to a movement along the demand curve.
(b) shifts the demand curve to the right.
(c) shifts the demand curve to the left.
(d) shifts the demand curve, but it may shift left or right.
d
The slope of the supply curve for a good
(a) decreases as consumer incomes increase.
(b) usually decreases as the period of time under consideration increases.
(c) is usually the same as the slope of the demand curve.
(d) reflects the rate of technological progress in the industry.
b
The demand curve is drawn with price on the vertical axis and quantity on the
horizontal axis. This corresponds to the
(a) vertical interpretation of the demand curve in which marginal benefit (i.e.,
marginal dollar value) depends on (i.e., decreases with) the quantity consumed.
(b) horizontal interpretation of the demand curve in which quantity demanded
depends on the price of the good.
(c) usual upward slope of the demand curve.
(d) tendency of the market to seek a price that equalises quantity supplied and
demanded.
b
The market equilibrium price
(a) clears the market.
(b) generally occurs in the inelastic portion of the demand curve.
(c) encourages suppliers to increase the quantity of product that they bring to
market in the next time period.
(d) can be arrived at only with the aid of government regulatory agencies.
a
A market price below the equilibrium price
(a) results in excess demand in the market, which tends to push price upward.
(b) results in excess supply in the market, which tends to push price upward.
(c) results in a higher quantity traded than under the equilibrium price.
(d) is illegal in most countries
a
,Suppose that the market for pizza is initially in equilibrium. A tightening labour
market results in an increase in the wages paid to pizza chefs and delivery
people. Assuming all else remains constant, the pizza
(a) supply curve shifts right, and equilibrium price and quantity traded both
increase.
(b) supply curve shifts left, equilibrium price rises and quantity traded falls.
(c) demand curve shifts left, equilibrium price and quantity traded both fall.
(d) demand curve shifts right, and price quantity traded both rise.
b
Suppose that for most consumers a dinner of ramen noodles is an 'inferior' good.
The ramen noodles are locally produced, and the tight labour market increases
local workers' wages and incomes. Then, assuming all else remains constant, the
(a) price of ramen noodles rises and the change in quantity traded is
indeterminate.
(b) price of a ramen noodles falls and the change in quantity traded is
indeterminate.
(c) change in the price of ramen noodles is indeterminate and quantity traded
rises.
(d) change in the price of ramen noodles is indeterminate and quantity traded
falls.
d
A market in equilibrium is "efficient", under the right conditions, in the sense that
(a) the optimal (i.e., economic surplus maximizing) quantity of the good or service
is traded.
(b) the goods are allocated to the consumers who value them most highly.
(c) the goods are supplied by the producers with the lowest opportunity cost.
(d) All of the above.
d
Using the mid-point formula, if the price elasticity of demand for a product is 2, a
price increase from $.90 to $1.10 causes quantity demanded to
(a) rise by 40 percent.
(b) fall by 40 percent.
(c) rise by 20 percent.
(d) fall by 20 percent.
b
Due mainly to increases in the tax on a pack of cigarettes, New Zealand cigarette
prices rose from about $4.00 to about $8.00 per pack between 1988 and 2001. The
quantity of cigarettes sold fell over the same time period from about 12 million
packs per year to about 8 million packs per year. If nothing else changed over
time, the midpoint formula indicates that the price elasticity of cigarette demand
is about
(a) 0.33
(b) 0.6
(c) 1.0
(d) 1.66
b
, Which of the following is a disadvantage of opening to international trade?
(a) The prices of products change from the domestic prices to the world prices.
(b) Only consumers gain from opening to international trade.
(c) The costs of adjustment for employers and their workers can be high.
(d) Opening to trade raises shipping costs.
c
The main difference between the effects of a tariff on imports and those of a
binding import quota is that
(a) a quota has a smaller effect on total economic surplus.
(b) a tariff has a larger positive effect on domestic production.
(c) the tax revenues generated under a tariff go to importers under a quota.
(d) domestic producer surplus is greater under an import quota.
c
Which of the following represents a valid economic rationale for government
intervention in the economy?
(a) Marginal consumer value equals marginal social cost in equilibrium.
(b) Marginal social cost exceeds marginal consumer value in equilibrium.
(c) The equilibrium wage rate varies across industries.
(d) Equilibrium prices vary over the course of the year.
b
A good is a commons good (or common-property good) if it is
(a) excludable and rival.
(b) non-excludable and non-rival.
(c) excludable and non-rival.
(d) non-excludable and rival.
d
Heating one's home with a wood or coal burner requires disposing of waste,
namely smoke and ashes. Smoke particles are usually emitted freely into the
atmosphere through a flue. This can cause problems (i.e., impose costs on
others) if a lot of people heat with wood burners and there's not much wind
flushing the particulates away. Disposing of waste this way represents a 'cost not
priced in the market'. The ideal way to price this external cost is to
(a) set a charge per unit smoke emitted that varies climatic conditions.
(b) require people to invest in a low-emissions burner.
(c) charge an annual emissions tax on every household burner.
(d) impose a tax per kilogram on wood and coal.
a
A disadvantage of pricing access to the local atmosphere for waste disposal is
that
(a) the cost of installing emissions monitors in flues and managing the
programme may exceed the benefits from cleaner air.
(b) income constrained households may reduce heat to the point of discomfort or
illness.
(c) local residents may feel aggrieved that a previously unpriced natural resource,
available freely to everyone, is now just another thing they have to pay for to
