1- Microeconomics is thebranch of economics that deals with which of the following topics?

A. The behavior of individualconsumers.

B. Unemployment and interestrates.

C. The behavior of individualfirms and investors.

D. The behavior of individual consumers, firms andinvestors.

2- Which of the followingstatements would you consider to be a normative one?

A. Faster economic growth shouldresult if an economy has a higher level of investment.

B. Changing the level ofinterest rates is a better way of managing the economy than using taxation andgovernment expenditure.

C. Higher levels of unemployment will lead to higherlevels of inflation.

D. The average level of growthin the economy was faster in the 1990s than the 1980s.

3- Which of the following isa positive statement?

A. When the price of a good goesup, consumers buy less of it.

B. When the price of a good goesup, firms produce more of it.

C. When the Federal governmentsells bonds, interest rates rise and private investment is reduced.

D. All of the given options.

4- Suppose an industriousstudent (hoping to improve the grade on an upcoming economics exam) organizes astudy group by reserving a meeting room, compiling study materials, andattracting fellow students.

This student would mostlikely be which of the following factors of production?

A. Land.

B. Labor.

C. Capital.

D. Entrepreneurship.

5- The two opposing forcesthat reach balance in the market equilibrium are:

A. Government and scarcity.

B. Competition and monopoly.

C. Demand and supply.

D. Science and policy.

6- A supply curve reveals:

A. The quantity of outputconsumers are willing to purchase at each possible market price.

B. The difference betweenquantity demanded and quantity supplied at each price.

C. The maximum level of outputan industry can produce, regardless of price.

D. The quantity of output thatproducers are willing to produce and sell at each possible market price.

7- The demand for books is:Qd = 60 - 2P

The supply of books is: Qs =3P

Refer to the above Scenario,What is the equilibrium price of books?

A. 5

B. 10

C. 12

D. 20

8- Assume that steak andpotatoes are complements. When the price of steak goes up, the demand curve forpotatoes

A. Shifts to the left.

B. Shifts to the right.

C. Remains constant.

D. Shifts to the right initiallyand then returns to its original position.

9- Coffee and cream:

A. Are both luxury goods.

B. Are complements.

C. Are both more inelastic indemand in the long run than in the short run.

D. Have a positive cross price elasticity of demand.

Quiz 01 ECO402

Spring 2009 VU

10- The price of good A goesup. As a result the demand for good B shifts

to the right. From this, wecan infer that:

A. Good A is used to producegood B.

B. Good B is used to producegood A.

C. Goods A and B aresubstitutes.

D. Goods A and B arecomplements.