Question

please, choose the right options to these questions. Explanation is NOT NEEDED.

1. If the income elasticity of demand for a good is 0.59, then it is what type of good?

1. Price elastic.
2. Price inelastic.
3. Income elastic.
4. Income inelastic.

2. If the equilibrium price of aspirins is $2.50 for 250 tablets and the government imposes a rise ceiling at 2.00$ for 250 tablets, the eventual result will be a (an)

1. Surplus.
2. Shortage.
3. Accumulation of inventories of unsold aspirins.
4. None of the above.

3. Minimum wage legislation:

1. Sets a price ceiling above the market-clearing price.
2. Has no impact if the minimum wage is above the market-clearing price.
3. Has the same impact in all labor markets.
4. Creates unemployment when the minimum wage is above the equilibrium wage.

4. Price elasticity of demand refers to the:

1. Percentage increase in price in response to a percentage increase in quantity.
2. Percentage decrease in price in response to a percentage increase in income.
3. Minimum amount that consumers will pay for a percentage change in quantity demanded of supplied.
4. Responsiveness of quantity demanded to a change in the price of a good.

5. A reduction in production costs will result in a (an):

1. a rightward shift of the supply curve.
2. increase in supply.
3. greater willingness and ability of producers to supply a large quantity at any given price.
4. all of the above.
   

6. A price ceiling:

1. is the lowest price that the law will allow to be charged in the market.
2. is the highest price that the law will allow to be charged in the market.
3. Is the price that must be charged in the market.
4. Would be imposed if the government believes the market equilibrium price is too low.

7. A price floor (support) set above equilibrium:

1. Is a minimum legal price set by government above equilibrium.
2. Causes the quantity supplied to exceed the quantity demanded.
3. Creates a surplus.
4. All of the above.

8. One of the problems created by price floors set above the equilibrium is:

1. Consumers complain about high prices.
2. Firms don’t have incentives to reduce costs.
3. The creation of surplus.
4. How to cope with the shortages.

9. The cross elasticity of demand for complementary products must:

1. Be greater than one.
2. Be less than one.
3. Be zero.
4. Be negative.

10. which of the following will increase the supply of a good?

1. An increase in the price of another good producers could produce.
2. A lower price paid for resources used in the production of the good.
3. A decrease in the number of sellers.
4. An increase in taxes paid to the government by producers.

Answer 1

Q1) option D)

income inelastic

Q2) option B)

price ceiling leads to Shortage

Q3) option D)

minimum wage is price floor, which leads to unemployment if P is above eqm level

Q4) option D)

price Elasticity of demand = %∆ in Q demanded / %∆ in price

Q5) option D)

all options are right

Q6) option B)

price ceiling is the maximum possible price , allowed by law

Q7) option D)

price floor leads to surplus, is the minimum price, which is binding if it lies above the equilibrium level, all options are right

Q8) option C)

price floors lead to surplus

Q9) option D)

for complementary goods, cross price elasticity is negative

Q10) option B)

as price of resources fall, supply rise