2012 Quiz 1

'''Answer All questions by clicking on the appropriate option or filling in the space where necessary. Finally, click on submit to view your scores.''' {"At the price of GHC100, tickets for the Sonnie Badu’s music concert at national theatre are expensive. Yet, there are long queues (lines) of people who wish to buy them.  Many people who desire tickets will not be able to find them." From this quote, we know that the price of the music concert tickets must be: + below equilibrium - above equilibrium - equal to equilibrium - none of the above
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{If point B lies above and to the right of A on a two-commodity indifference map, and the indifference curve passing through point A is characterized by a utility level of 1, then the utility level of the indifference curve passing through point B has utility + greater than 1 - equal to 1 - less than 1 - equal to zero
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{Assume that the market for computers begins in equilibrium. Then, there is a decrease in a price of Pentium processors used in the production of computers. When the new equilibrium is reached, - the price and quantity of computers will both have risen - the price and quantity of computers will both have fallen - the price of computers will have risen and the quantity will have fallen + the price of computers will have fallen and the quantity will have risen
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{Assume that the market for the stock of Microsoft begins in equilibrium. Then, both buyers and sellers expect that the new Linux (a competitor of Microsoft Windows) will be a large success, reducing Microsoft sales. When the new equilibrium is reached, - the price and quantity of the stock will both have risen - the quantity of the stock will fall and the price will rise - the quantity of the stock will fall but the effect on price cannot be determined + the price of the stock will fall but the effect on quantity cannot be determined
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{Which of the following is a correct representation of the budget constraint in a world with only food and shelter, where M=income,   = price of food,   = shelter price, S=the quantity of shelter, and F=the quantity of food. a.  		b. c.   		d. None of the above is correct
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{Indifference curves that intersect would be illogical constructs because a. more is better than less b. of diminishing marginal utility c. of the transitivity property of indifference theory d. of both a and c above
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7.	The marginal rate of substitution between food and shelter for a given point on an indifference curve a.	is equal to the absolute value of the slope of the indifference curve at that point b.	 is equal to the rate at which the consumer is willing to exchange the two goods in the marketplace c.	reflects the relative values the consumer attaches to the two good d.	is described, in part, by each of the above statements
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8.	 As long as all prices remain constant, an increase in money income results in     a.  an increase in the slope of the budget line	        b.  a decrease in the slope of the budget line c. an increase in the intercept of the budget line         d.  a decrease in the intercept of the budget line 9.	If the demand curve for a good is downward sloping, then the good must be a. normal			b. Inferior	c. Giffen d. either (a) or (b)		e. either (b) or (c)
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10.	Which is true of a price-consumption curve for good X? a.	Nominal income falls as the price of X falls b.	The absolute price of X falls, but the relative price between X and the good Y stays the same c.	It is always downward sloping for a normal good d.	It represents only those market baskets that are optimal for the given price ratio and preference pattern, and therefore a demand curve can be plotted from it
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11.	If the prices of both goods increase by the same percent, the budget line will a.  shift parallel to the left 			b. shift parallel to the right c. pivot about the x axis			d. pivot about the y axis
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12.	 The “compensated” demand curve is the demand curve that a. shows only the income effect		       	b. shows only the substitution effect c. shows both the income and substitution effects	d. shows the Giffen good demand curve
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13.	All points on or below a budget constraint a. are attainable with the given income					      b. are equally desirable c. represent market basket combinations that exhaust the income available	d. All of the above
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14.	A consumer buys only jellybeans and wrinkle remover and the more of any one he buys, the lower the marginal utility of that good. In spending all his income, his marginal utility of a pound of jellybeans is 12 and his marginal utility of a jar of wrinkle remover is 15. The price of jellybeans is GHC 8 per pound and the price of wrinkle remover is GHC 11 per jar. For maximum satisfaction, this consumer should a.	buy more wrinkle remover and fewer jellybeans b.	by less wrinkle remover and more jellybeans c.	buy more wrinkle remover and the same quantity of jellybeans d.	buy the same quantity of wrinkle remover and more jellybeans
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15.	When a good is an inferior good, the “non-compensated” demand curve will be a.	relatively more elastic than the compensated demand curve b.	relatively more inelastic than the compensated demand curve c.	equally elastic but with a different intercept than the compensated demand curve d.	parallel to the compensated demand curve and to the right e.	either more elastic or more inelastic depending upon the size of the income effect
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16.	Suppose that some individuals has MRS =y, income (I) = 110, and assume that Py = 1. Which of the following describe his price consumption curve? a. Y(x + 1) = 110		b. X(y + 1) = 110 c. PxX + PyY = 110		d. PXX + Y = 110
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{The marginal rate of substitution of good X for good Y is the number of units of good X	       that a customer will accept instead of good Y to increase his or her satisfaction. - True + False
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{The shape of a consumer’s indifference curve is generally assumed to be unaffected by price changes. + True - False
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{The shape of a consumer’s indifference curve is generally assumed to be unaffected by price changes. + True - False
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{A person’s tastes are like his or her fingerprints: they don’t change. - True + False
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