Question

2a In moving from one point to another point on an income-consumption curve, which of the following is false?

A The prices of both goods remain constant.

B The slope of the budget line remains constant.

C Utility changes.

D Income remains constant.

E Income changes.

2B Regarding the U.S. economy, an economist has made the following two statements:

    A: “Reducing the number of months during which unemployed workers receive unemployment benefit payments will decrease the unemployment rate.”

    B: “The unemployment rate in the U.S. in August 2020 was 8.4%.”

Which of the following best describes the above statements?

A is a normative statement, and B is a positive statement.

A is a normative statement, and B is a normative statement.

A is a positive statement, and B is a normative statement.

A is a positive statement, and B is a positive statement.

2C. A researcher wishes to analyze the short-run and long-run demands for two products: microwave ovens and motorcycles. Which of the following statements about the price elasticity of demand for these products is likely to be most accurate?

A The demand for microwave ovens should be more elastic in the long run than in the short run, but the demand for motorcycles should be less elastic in the long run than in the short run.

B The demands for both microwave ovens and motorcycles should be more elastic in the long run than in the short run.

C The demand for microwave ovens should have the same elasticity in both the long run and the short run, and the demand for motorcycles should have the same elasticity in both the long run and the short run.

D The demands for both microwave ovens and motorcycles should be less elastic in the long run than in the short run.

E The demand for microwave ovens should be less elastic in the long run than in the short run, but the demand for motorcycles should be more elastic in the long run than in the short run.

2D. If the demand for the movie tickets is elastic, a 10 percent decrease in the price of movie tickets will:

A. increase the amount demanded by more than 10 percent.

B. increase the amount demanded by less than 10 percent.

C. decrease the amount demanded by more than 10 percent.

D. increase the amount demanded by exactly 10 percent.

E. decrease the amount demanded by exactly 10 percent.

F. decrease the amount demanded by less than 10 percent.

Answer 1

2a. (D)

Income remains constant is false because income changes,either it will decrease or increase causing shift in the budget constraint.

2B. A is a normative statement and B is a positive statement

Because positive is a statement stating only fact.

Normative statement provides value judgement along with the fact.

2D. (A)

Increase the amount demanded by mre than 10%

When demand is elastic,quantity demanded increases more than proportionally.

2.C. (B)

Both are substitute products,therefore in the long run,when there is price change relative to substitutes,demand becomes more elastic.