Topic 6 Group Competition MCQ Quiz

James allocates his income between bubble gum and ice cream. The graph shows James’ budget line.  Which of the following events could cause James’ budget line to shift inward, from the dotted line to the solid line? 

• A decrease in James’ income.

• An increase in James’ income.

• An increase in the price of bubble gum relative to ice cream.

• An increase in the price of one good and a decrease in the price of the other.

The demand curve is downward sloping because:

• Producers offer less of a product for sale as the price of the product falls.

• Lower prices of a product create income and substitution effects that lead consumers to purchase more of it.

• The larger the number of buyers in a market, the lower the product price.

• Price and quantity demanded arc are directly (positively) related.

The law of supply states that, other things being constant, as price decreases:

• Supply increases

• Supply decreases

• The quantity supplied increases

• The quantity supplied decreases

If demand is price inelastic, then:

• Buyers do not respond much to a change in price.

• Buyers respond substantially to a change in price, but the response is very slow.

• Buyers do not respond much to advertising, fads, or general changes in tastes.

• The demand curve is very flat.

Astley is exhausting his money income consuming products A and B in such quantities that MUa/Pa = 5 and MUb/Pb = 8. Astley should purchase:

• More of A and less of B.

• More of both A and B.

• More of B and less of A.

• Less of both A and B.

If Nayla’s income decreases and her demand for a particular good increases, it can be concluded that the good is:

• normal

• complement

• substitute

• inferior

If a 30% increase in the price of iron ore leads to the quantity demanded falling by 10%. The price elasticity of demand is therefore:

• 0.33

• 3.3

• -0.33

• cannot be determined with the information provided

The notion of meliorating can be defined as:

• overreliance on a piece of information that may or may not be relevant as a reference point when making a decision.

• engage in irrational behaviour that leads consumers away from their achievement rather than toward it.

• starting from the present level of well-being and then taking any opportunity to do better.

• actions focused on the well-being of others, with no thought about oneself.

If two goods are complements for each other, an increase in the price of one will necessarily:

• decrease the demand for the other

• increase the demand for the other

• decrease the quantity demand of the other

• increase the quantity demand of the other

If, given consumer preferences, a certain good has many close substitutes available, then:

• The demand for that good will be relatively inelastic, compared to goods for which there are few close substitutes.

• The supply of that good will be relatively inelastic, compared to goods for which there are few close substitutes.

• The demand for that good will be relatively elastic, compared to goods for which there are few close substitutes.

• The supply of that good will be relatively elastic, compared to goods for which there are few close substitutes.